Mediation in Consumer-Related Disputes

The much-awaited Consumer Protection Act, 2019 introduces mediation in consumer-related disputes, reflecting a general shift in the legal system to promote non-adversarial avenues for dispute resolution. The consumer redressal mechanism under the previous Consumer Protection Act, 1986 was widely criticized for its delay in the resolution of consumer disputes. An alternative form of dispute resolution shows promising potential for the prompt delivery of justice.

The article seeks to highlight the fundamental changes brought in by the Consumer Protection Act, 2019 to the consumer redressal mechanism. It would examine the provisions under the Act, the Consumer Protection (Mediation) Regulations, 2020, and the Consumer Protection (Mediation) Rules, 2020.

Introduction

The availability of effective remedies to consumers and the enforcement of their rights form the core principles of consumer protection. Consumer law faces the challenge of providing speedy, inexpensive, and informal justice to consumers. There has been a recent shift in the legal system to promote alternative forms of dispute resolution, including in the realm of consumer protection where there are several non-adversarial avenues for consumer redressal. For example, ADR is an important part of the European Commission‘s concept of consumer policy which has encouraged its Member States to establish ADR schemes for the resolution of consumer disputes.[1] Alternative Dispute Resolution (ADR) mechanisms, such as mediation and ombudsmen schemes are undoubtedly more cost and time effective.

Mediation, a voluntary process in which a neutral third party assists disputing parties in resolving conflict, is novel to consumer protection in the Indian context. It was recently incorporated into the consumer protection law in India by the Consumer Protection Act, 2019 (the “2019 Act”). The much anticipated 2019 Act came in to force from 20th July 2020, replacing the erstwhile Consumer Protection Act, 1986. One of the most notable changes brought in is the introduction of mediation in consumer-related disputes under Chapter V of the 2019 Act. Upon the satisfaction that there exists a scope of the settlement of the dispute, the Consumer Commissions may refer to the matter placed before them to mediation.  

The consumer redressal mechanism under the Consumer Protection Act, 1986 was widely criticized for its delay in the disposal of cases, despite the act providing specific timelines for the resolution of complaints filed. This was the only recourse available to aggrieved consumers for dispute settlement. To address this problem, the 2019 Act provides for an alternative dispute resolution mechanism, thereby increasing access to justice by preventing long-drawn legal battles. Consumer Protection (Mediation) Regulations, 2020 (the “Regulations”), and the Consumer Protection (Mediation) Rules, 2020[2] (the “Rules”) further lays down detailed provisions for the appointment of mediators and the procedure of mediation.

Establishment of Mediation Cells

Under Section 74, the 2019 Act provides for the establishment of Consumer Mediation Cells at three levels – National, State, and District with each being attached to the National, State, and District Commissions respectively. Section 3(1) of the Rules requires every Mediation Cell set up in a Commission to have a panel of mediators on the recommendation of a selection committee consisting of the President and a member of that Commission.

The qualifications and experience required for empanelment as a mediator are provided in the Regulations, which provides that the following persons shall be eligible to be impaneled with a Mediation Cell—

  • Retired Judges of Supreme Court of India;
  • Retired Judges of the High Courts;
  • Retired Members of a Consumer Commission;
  • Retired District and Session Judges retired Additional District and Session Judges or other retired Members of the Higher Judicial Services of a State;
  • Retired Judicial officers, having experience of not less than ten years;
  •  an advocate with a minimum experience of ten years at Bar;
  • the mediators impaneled with the Mediation Cell of the Supreme Court of India, High Court or a District Court;
  • a person having experience of at least five years in mediation or conciliation;
  • Experts or other professionals with at least fifteen years’ experience or retired senior bureaucrats or retired executives.

The Regulations also provide for the procedure for empanelment, the manner of training impaneled mediators, the fee payable to the empanelled mediator, the terms and conditions for empanelment, the code of conduct for impaneled mediators, the grounds on which, and how, impaneled mediators shall be removed or empanelment shall be canceled and other related matters.[3] The panel of mediators is valid for five years, and the impaneled mediators may be considered for re-empanelment for another term.

Matters Capable of Being Mediated

Section 4 of the Rules enlist matters which cannot be referred to mediation under any circumstance. They include:

  • matters relating to proceedings in respect of medical negligence resulting in grievous injury or death;
  • matters which relate to defaults or offenses for which applications for compounding of offenses have been made by one or more parties;
  • cases involving serious and specific allegations of fraud, fabrication of documents, forgery, impersonation, coercion;
  • cases relating to prosecution for criminal and non-compoundable offenses;
  • cases which involve public interest or the interest of numerous persons who are not parties before the Commission

Apart from the aforementioned instances, the Commission may choose not to refer the case to mediation if it appears that no elements of a settlement exist that mediation is otherwise not appropriate. The commission is therefore conferred discretion in determining whether a particular case is fit for mediation or not.

The Conduct of Mediation Proceedings

At the first hearing of the complaint after its admission, or any later stage, if it appears to the District Commission that there exist elements of a settlement which may be acceptable to the parties, it may direct the parties to give their consent to have their dispute settled by mediation.[4] The consent is to be given in writing within 5 days. Upon the receipt of such consent, the District Commission shall within five days, refer the matter for mediation.

Considering his suitability for resolving the consumer dispute involved, the Commission nominates a mediator from the panel of mediators. The nominated mediator must disclose any personal, professional, or financial interest, the circumstances which may give rise to justifiable doubt as to his independence or impartiality, and such other facts as may be specified by regulations.[5]

The role of mediator during the mediation process is to attempt to facilitate a voluntary resolution of the disputes between the parties, assist them in removing the misunderstandings, and generating options to resolve their disputes.[6] The mediator cannot impose any term or any settlement upon the parties. Therefore, the mediator is a neutral third-party. While the mediator is not required to observe the provisions of the Code of Civil Procedure, 1908, or the Indian Evidence Act, 1872, he shall be guided by the principles of natural justice and fair play.

If an agreement is reached between the parties concerning all or some of the issues involved in the consumer dispute, the terms of such agreement is to be reduced to writing and signed by the parties or their authorized representatives[7], provided that the mediator shall explain the terms of the agreement to the parties, before obtaining their respective signatures on it.[8] Upon the signing of the settlement, a settlement report is prepared by the mediator and forwarded to the Commission. The Commission shall then, within seven days of the receipt of the settlement report, pass an order recording such settlement of consumer dispute and dispose of the matter accordingly. The settlement agreement is not discharged by the death of the party and is enforceable by or against the legal representative of the deceased party.[9]

The Regulations require that the mediation be completed within the specified time limit i.e., three months. The mediation shall stand terminated on expiry of three months from the date of the first appearance before the mediator unless the time for completion of mediation is extended by the Consumer Commission.[10] Where there is a failure of settlement by mediation and no agreement is reached between the parties within the specified time, the District Commission shall proceed with the complaint, hearing the issues involved in the consumer dispute and adjudicating accordingly.

Expenses & Costs of Mediation

In a successful mediation, the mediator is paid a consolidated fee fixed by the President of the respective Consumer Commission depending on the nature of the dispute submitted to mediation. Such fee is shared equally between the disputing parties. In an unsuccessful mediation, only half the fee would be paid.[11] The Draft Regulations, 2019 provided that the fee of the mediator shall not exceed Rs. 2000/- per case under any circumstances but as far as the production of witnesses, experts, or production of documents is concerned, each party will have to bear such expenses. This however has not been incorporated into the final Regulations.

The Rules also provide a refund fee to the party whose dispute has been referred to mediation. The complainant is entitled to receive the full amount of application fee paid in respect of the consumer complaint if a settlement is reached between such parties.[12]

Safeguarding the Credibility of the Mediation Process

There are several provisions in the 2019 Act which safeguard the credibility and integrity of the mediation mechanism. The parties and mediator are required to maintain confidentiality in respect of the events that transpire during the mediation proceedings and cannot use or rely upon any information, the document produced, the proposals and admissions made or the views expressed during the mediation proceedings.[13] No audio or video recording of the mediation proceedings is allowed either. There is a Code of Conduct for the mediators to follow, which includes not communicating with any of the parties, not accepting gifts or hospitality from any of the parties, disclosure of any past relationship or connection with any of the parties, etc.[14] These provisions ensure that the mediators are impartial and independent in their resolution of the dispute.

The 2019 Act also ensures that mediation is facilitated by qualified professionals, and further provide for the evaluation of the progress and efficacy of the Mediation Cells. The Regulations make it obligatory for mediators to undergo training in conducting mediation[15] which ensures that they have the requisite skills and expertise to resolve consumer disputes. Since the concept of mediation is new in the consumer protection field, proper training of mediators is essential to the success of this mechanism. Under Section 16 of the Regulations, every Mediation Cell is required to submit a quarterly report to the concerned Commission containing the following information, namely:

  • a list of its impaneled mediators, including experience and qualifications of each of them;
  • the number of cases pending before it at the beginning of the quarter
  • the number of cases referred to it during the quarter;
  • the number of cases disposed of during the quarter;
  • the number of cases pending at the end of the quarter;
  • the number of cases assigned to each mediator, the number of cases disposed of by him during the quarter and the number of cases in which the mediation referred to him was successful;
  • the number of cases in which the mediation was not successful;
  • the fee paid to each mediator during the quarter.

This section provides for a kind of monitoring mechanism where the performance of the Mediation Cells is periodically reviewed.

Conclusion

There was a pressing need to make a resolution mechanism of consumer disputes more effective, and the 2019 Act has succeeded in finding a solution to the problem. Mediation as a mode of consumer redressal will improve the dispute resolution mechanism and also ease the burden of the consumer commissions, who have a backlog of cases pending before them for adjudication. The provisions relating to the mandatory training of mediators and the Code of Conduct do lend a sense of credibility and belief in the mediation process. While the efficiency and efficacy of the ADR mechanism remain to be seen, its introduction in the consumer protection realm has received wide acceptance from the legal fraternity.  

FAQs

  1. Does the Indian law provide for mediation in consumer-related disputes?
  2. What are the advantages of mediation in consumer-related disputes?
  3. How is the process of mediation carried out under the Consumer Protection Act, 2019?
  4. What are the expenses and costs of mediation under the Consumer Protection Act, 2019?
  5. How is the confidentiality and credibility of the mediation process safeguarded under the Consumer Protection Act, 2019?

References


  • [1] Report on the Alternative Dispute Resolution: Mediation and Conciliation (LRC 98-2010)https://www.lawreform.ie/_fileupload/reports/r98adr.pdf
  • [2] Notification G.S.R. 450(E)
  • [3] Section 75(2), 2019 Act
  • [4] Section 37(1), 2019 Act  
  • [5] Section 77, 2019 Act 
  • [6] Section 12(1), Regulations
  • [7] Section 80, 2019 Act
  • [8] Section 12(2), Regulations
  • [9] Section 7, Rules
  • [10] Section 11, Regulations
  • [11] Section 8, Regulations
  • [12] Section 5, Rules
  • [13] Section 13(1), Regulations
  • [14] Section 10, Regulations
  • [15] Section 9, Regulations

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