Entries by Compass Team

From Conflict to Harmony: Our Recent Mediation Triumph

September 25, 2023 /0 Comments/in /by

We routinely receive applications for conflict resolution through Alternative Dispute Resolution (ADR), and while each case may initially appear similar, they are inherently unique. The distinct nature of conflicts, the demeanor of the parties involved, their objectives, and the subject matter at hand, financial considerations, and more all contribute to this uniqueness. Every case we mediate using ADR leaves an indelible mark of wisdom and reinforces our belief in the effectiveness of ADR.

In February 2023, our Compass Conflict Resolution Center encountered a complex real estate mediation case. Here are the key details:

Landowner “A” had signed a development agreement with a builder under specific terms and conditions. Funds were disbursed to Landowner A for the initial payment, and the builder initiated ground-breaking equipment procurement, secured loans, and commenced phase 1 of construction.

Unexpectedly, Landowner “B”  entered the scene, asserting their legal heir status and claim to a financial share. When Landowner A and the builder refused to yield, Landowner B resorted to legal action and obtained a stay order, halting the project. The builder suffered the most, burdened by financial liabilities, commitments to homebuyers, and legal battles.

All three parties initiated numerous lawsuits and counterclaims, leading to protracted court battles that spanned several years. These legal conflicts inflicted significant financial strain and emotional stress on all involved, resulting in health issues.

The builder, referred by one of our previous clients,  approached me for an  advice on expediting the legal process. I explained the court process, emphasizing that, as an advocate, I could represent them effectively but had limited control over court proceedings and timelines.

Taking the initiative, I introduced mediation as a potential solution. I elaborated on the mediation process, its approximate timelines, cost-effectiveness, and advantages. Initially, the builder was skeptical, viewing mediation as mere “broker work” and compromise lacking in status. He questioned its legal validity and permanence. Despite my assurances that we could return to court if mediation failed, he rejected the idea, and my attempts to persuade him were fruitless.

Weeks later, the builder requested another meeting. This time, he was accompanied by Landowner A and displayed genuine interest in mediation. With two parties on board, there was hope.

Over three hours of discussion, both parties agreed to give mediation a chance. Over four challenging months, I initiated numerous dialogues, with Landowner B being the most resistant. It required considerable energy, time, and patience to build trust and bring all parties to the table.

We encountered several impasses during this period, with at least one party threatening to leave, pushing the process back to square one. After an additional three months of rigorous and meticulous meetings, I observed a shift in mindset among the parties, moving from principle-based positions to needs-based considerations. I seized this opportune moment to establish a neutral ground for collaboration rather than competition.

In August 2023, a momentous occasion unfolded when the mediation successfully concluded. On this day, the involved parties came together to formally sign a settlement agreement. What made this accomplishment truly heartening was the unanimous contentment shared by all parties involved. Each participant not only secured tangible benefits in the form of their fair share but also managed to preserve their relationships. Remarkably, this achievement was accomplished within the remarkably brief span of just seven months.

As an ADR professional, I employed several techniques, including avoiding confrontation, effective communication, empathy, focusing on the future, empowering all parties by creating a neutral ground, accommodating everyone’s interests, conducting private caucuses, follow-up, patience, and persistence.

Throughout this journey, I embraced continuous self-reflection and improvement, recognized the importance of cultural sensitivity, practiced reality testing, and learned to manage emotions, among other lessons. My most significant takeaway was earning the trust of the parties and gaining the confidence to tackle even the most complex cases in the future.

Effective mediation is not about imposing solutions but guiding parties toward discovering their own answers to their disputes. Success in mediation often hinges on the mediator’s ability to adapt these techniques to the specific needs and dynamics of each conflict, tailoring the approach to the situation at hand and the personalities involved, resulting in more satisfactory outcomes for all parties involved

~Priya Iyengar~

Impact of Mediation Bill 2023 on  Companies Act 2013: A Comparative Assessment

September 10, 2023 /0 Comments/in /by

The field of dispute resolution in India has been continuously evolving, with recent legislative developments poised to significantly impact how disputes are settled, particularly in the corporate sector. One such development is the proposed Mediation Bill, 2023, which seeks to revamp and enhance the mediation framework in India. In this post we will undertake a comparative analysis of the potential impact of the Mediation Bill, 2023, versus the existing provisions under Section 442 of the Companies Act 2013.

 



Mediation Bill, 2023: A Paradigm Shift in Dispute Resolution

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Section 442 of Companies Act 2013:  A complimentary statutory provision for  Mediation Bill 2023.

Section 89 of the CPC empowers parties in civil suits to explore alternative avenues for resolving their disputes, emphasizing the importance of voluntary, consensual, and confidential dispute resolution methods as alternatives to traditional litigation. The primary objective of Section 89 is to promote the expeditious and cost-effective resolution of disputes by diverting cases from traditional litigation to various ADR mechanisms like mediation, arbitration, conciliation, or judicial settlement.

Much like Section 89’s significant role within the Code of Civil Procedure for resolving disputes extrajudicially, Section 442 of the Companies Act 2013 also undertakes a comparable function by incorporating mediation as a means of dispute resolution.

Both of these provisions share the common goal of reducing the court’s burden by fostering settlement between the parties involved.

Section 442 of the Companies Act, 2013  provides a mechanism for resolving disputes through mediation and conciliation, promoting a more amicable and efficient resolution process between companies and their creditors or contributors while reducing the burden on the court system.

As per this Section, the Central Government shall establish a Mediation and Conciliation Panel, comprising qualified experts as specified, with the aim of facilitating mediation among parties engaged in ongoing proceedings before the Central Government, the Tribunal, or the Appellate Tribunal under this Act.

Furthermore, in instances where proceedings are ongoing, the Central Government, the Tribunal, or the Appellate Tribunal may, at its own discretion, refer any matter linked to the ongoing proceedings to a suitable number of experts from the Mediation and Conciliation Panel.

Conclusion

Mediation as a method of dispute resolution is not a novel concept; it has deep historical roots and is firmly ingrained within Section 442 of the Companies Act 2013, serving as a means for out-of-court dispute settlement, particularly in specific areas and upon the voluntary choice of the parties involved. Despite its long-standing tradition, mediation hasn’t always received the same level of recognition and credibility as Arbitration and traditional litigation. However, through recent legislation, mediation has been elevated to a comparable status alongside Arbitration and traditional litigation, thus enhancing its standing and importance in the realm of dispute resolution.

The  Mediation Bill, 2023, and Section 442 of the Companies Act 2013 are complimentary to each other and serve critical roles in the realm of corporate dispute resolution in India. The Mediation Bill seeks to establish a comprehensive and standardized framework for mediation, promoting its use across various domains. Section 442, on the other hand, provides an in-house mechanism for dispute resolution for specific corporate disputes, offering specialization and enforceability.

Individuals or entities involved in conflicts should meticulously assess their alternatives, considering the dispute’s characteristics, complexity, readiness for mediation, and intended results. Employing a comprehensive strategy that leverages the benefits of the provisions available under both avenues provided under Sec 442 can facilitate a smooth and effective resolution of the dispute. This approach also plays a vital role in safeguarding business relationships and interests, subject to the specifics of the case and the eventual successful enactment of the Mediation Bill, 2023.

Mediation Bill 2023- Transformative Tool For Resolving Disputes

August 16, 2023 /0 Comments/in /by

For over a span of ten years, I have been actively engaged in mediating conflicts. Each case I’ve handled has reinforced the pivotal role of mediation as a transformative tool for resolving disputes. Mediation has shown its potential not only to mend fractured relationships but also to cultivate harmony, even in the most intricate and deeply entrenched conflicts.

The recent passage of the Mediation Bill in 2023 arrives as a breath of fresh air at a crucial juncture. Courts at all levels are currently burdened with an overwhelming backlog of cases, leaving uncertainty about when and how this deluge of cases will be addressed.

In summary, the Mediation Bill of 2023 holds the promise of revolutionizing the way conflicts are settled. It positions mediation as the preferred choice for parties seeking fair, efficient, and economical resolutions to their disputes. By institutionalizing mediation practices and raising public awareness, the bill sets the groundwork for a more harmonious and streamlined approach to resolving conflicts across various sectors of society.

 

Nonetheless, it’s wise to exercise patience and carefully observe whether mediation can truly align with the principles delineated in the recently passed dispute resolution bill. Just as other Alternative Dispute Resolution (ADR) approaches in India have fallen short of their intended success, mediation could encounter hurdles on various fronts and might also be susceptible to influence from particular individuals or groups.

Priya Iyengar – Founder Partner & CEO, 

Compass Law Associates; Compass Conflict Resolutions

Enforceability of Arbitration Agreements on Non-Signatory Parties

August 9, 2023 /0 Comments/in /by

In the dynamic world of business, intricate commercial arrangements often involve numerous parties and complex agreements. Conflict resolution becomes a challenge as disputes arise, particularly when non-signatory entities are involved. Two landmark judgments by the Indian Supreme Court, Cheran Properties Ltd. v. Kasturi and Sons Ltd. & Ors., and ONGC vs. Discovery Enterprises Pvt Ltd, have shed light on the “group of companies” doctrine and its implications on arbitration agreements. 

The “group of companies” doctrine is based on the idea that the intention of the parties involved is paramount in determining the scope of an arbitration agreement. 

Cheran Properties Ltd. v. Kasturi and Sons Ltd. & Ors. In Cheran Properties Ltd. v. Kasturi and Sons Ltd. & Ors., the dispute revolved around an arbitration agreement between Cheran Properties Ltd. (CPL) and Kasturi and Sons Ltd. (KSL). While CPL was a signatory to the agreement, KSL and certain other companies were non-signatories. The primary question before the Supreme Court was whether the non-signatory entities could be bound by the arbitration agreement.

The “group of companies” doctrine, as enunciated in

Chloro Controls India Pvt. Ltd. v. Severn Trent Water Purification Inc.,played a pivotal role in this case. The Supreme Court recognized that non-signatories could be bound by an arbitration agreement in specific circumstances and held that if the circumstances indicate a mutual intent between the signatories and non-signatories to be bound by the arbitration agreement, the non-signatories should also be considered bound by it.

ONGC vs. Discovery Enterprises Pvt. Ltd. (DEPL) A similar issue arose in ONGC vs. DEPL, involving a complex business arrangement between Oil and Natural Gas Corporation (ONGC) and Discovery Enterprises Pvt Ltd (DEPL). DEPL was a non-signatory to the arbitration agreement, leading to uncertainty regarding its obligation to comply with the agreement.

The Supreme Court’s approach in this case shared similarities with the Cheran Properties judgment. The Apex Court focused on the true intent of the parties involved, considering the core substance rather than mere form. The objective was to determine whether DEPL willingly assumed obligations and benefits within the business arrangement, regardless of its formal status as a non-signatory.

In ONGC vs. DEPL, the Supreme Court addressed the crucial factors that come into play when determining whether a non-signatory company within a group of companies would be bound by an arbitration agreement. These factors hold significant weight in establishing the binding nature of the agreement on entities that are not formal signatories:

Conclusion

In conclusion, the cases of Cheran Properties Ltd. v. Kasturi and Sons Ltd. & Ors. and ONGC vs. Discovery Enterprises Pvt. Ltd. offer significant insights into the complexities surrounding arbitration agreements involving non-signatory entities. The decisions in these cases uphold the principles of fairness and justice, ensuring that parties are held accountable for their actions, regardless of their formal status as signatories or non-signatories. 

Kautilya Kukunoor 

Associate Advocate – Compass Law Associates

Views are personal 

“Never cut what you can untie.” ~ Joseph Joubert

August 24, 2014 /1 Comment/in /by

It was a fantastic event! Celebrating India Mediation Day 2023 in Hyderabad, with the participation of such esteemed speakers, distinguished guests, and delegates, is a testament to the growing importance and recognition of mediation in India and around the world. I’m sure that this event served as a platform for the exchange of ideas, best […]