Context: 

An IBBI-appointed expert committee recommends a voluntary mediation framework under the Insolvency and Bankruptcy Code (IBC). 

IBBI Expert Committee

• Composition of Committee: It was headed by the former Law Secretary and was constituted to look into mediation under the Code and suggest a framework for effective implementation.
• The insolvency and Bankruptcy disputes are resolved under the Insolvency and Bankruptcy Code, 2016 (IBC), and Mediation does not exist as a legislative mandate under IBC.

Key Recommendations of the IBBI Expert Committee

• Balancing Approach: The committee seeks to balance the fundamental objectives of the Code i.e. time-bound reorganization and maximization of value with autonomy to seek  out-of-court resolution of a dispute through the mediation process.
• Mediation  Framework: The Committee has recommended a “voluntary” mediation framework under the Code as per the Mediation Act 2023.
  • Phased Implementation: The introduction should be phased at various stages as an effective supplement to address existing  bottlenecks while maintaining the sanctity of the timelines for various existing insolvency resolution processes.
  • Operation: It would work  as a self-contained blueprint within the Code, with independent infrastructure.
  • The mediator’s mandate is envisioned to be limited to 30-60 days.
  • Redressal Mechanism: Appropriate mechanisms have been provided for the redressal of any issues arising out of the mediation process for the third party’s rights.
    • For Example: The exclusion of financial creditors from the initial scope of voluntary mediation provisions.

What is Mediation? 

• It  is a type of alternative dispute resolution method (ADR) that involves an alternate method to resolve a legal dispute out of court.
• Mediator: He is a  neutral third party with no conflict of Interest in the matter, who will assist the parties in negotiating jointly acceptable resolution of issues in conflict. 
• Mediation doesn’t involve decision-making by a neutral third party unlike in the case of Arbitration

About the Mediation Act 2023

• Types of mediation: 
  • Voluntary: The parties under a written mediation agreement seeks mediation. Such an agreement may either be as part of a contract or exist independently. 
  • Mandatory: It is where barring certain areas of disputes, there is a legal obligation on parties to mediate before approaching a court/tribunal.
• Timeline: A deadline of  180 days which can be further extended by another 180 days by the parties is prescribed with a withdrawal provision after two mediation sessions.
• Mediation Council of India: The Mediation Act 2023 provides for the setting up of The Mediation Council of India. 
  • Functions: To register mediators, and provide recognition to  mediation service providers and mediation institutes.
• No Mediation: The areas excluded from mediation include serious allegations of fraud, criminal offenses, environmental matters reserved for the National Green Tribunal, and matters relating to competition, telecom, securities and electricity law and land acquisition. 
• Role of judiciary:  The Courts can refer any dispute for mediation relating to compoundable or matrimonial offenses connected with or arising out of civil proceedings between the parties. 
  • Compoundable offenses:  are those that can be compromised, i.e. the complainant can agree to take back the charges levied against the accused. For Example: Hurt, wrongful restraint, assault, molestation, fraud, adultery.

News Source: The Hindu