EMERGING PATTERNS IN CONSUMER LITIGATION: EVIDENCE FROM BANGALORE MEDIATION CENTRE

Introduction

 

“Discourage litigation. Persuade your neighbours to compromise whenever you can. Point out to them how the nominal winner is often a real loser in fees, expenses, and waste of time.”[i] (Lincoln 1850).

A recent article (Vohra 2017)[ii] pointed to the requirement of an evidence based approach towards understanding matrimonial cases and mediation. However, much needs to be understood about the requirement of inserting mediation through a legislation in the first place which has been done so through the Consumer Protection Bill, 2015. The Bill was first introduced in the Lok Sabha (House of the People) on 10th August, 2015. This bill is intended to overcome the problems which had emerged in the complex ever changing consumer rights landscape of India. The Bill includes various provisions such as establishment of Consumer Mediation Cell, Empanelment of Mediators, Preference for Nominating Mediators from Panel, Duty of Mediator to Disclose Certain Facts, Procedure of Mediation etc. One of the most striking feature in the Bill is the introduction of a dedicated chapter on mediation (Chapter V). This was done as per the recommendation of the Standing Committee on Food, Consumer Affairs and Public Distribution. The committee said that the Chapter on mediation was introduced so as to “give legislative basis to resolution of consumer disputes through mediation thus making the process less cumbersome, simple and quicker (Committee Report 2016).[iii] With the Bill pending in Parliament and scholarly criticism[iv] (Narsimhan 2015 & Pathak 2015) mounting, the provisions related to mediation also need to be critically analysed. The incorporation of the “mediation clause” in the Statement of Reason and Objects of impending Bill[v] prima facie is a commendable addition as it reinforces the importance of mediation while settling consumer disputes under the new Act. This article will explore the potential reasons as to why the introduction of mediation in the Act is unlikely to have any significant impact on the business community as mediation is already on the rise even without a legislative backing.

 

Mediation and The Business Perspective

The rising power of business entities in India coupled with the lack of consumer awareness about Alternative Dispute Resolution (ADR) mechanisms has resulted in companies having the upper hand when it comes to resolving consumer disputes. It is well known that litigation and not mediation is usually the preferred mode of settling disputes in India (The Hindu 2016).[vi] A study conducted by the Centre for Public Policy Research on Commercial Dispute Resolution in India found that companies and entrepreneurs continue to prefer litigation to Alternative Dispute Resolutions (Sivaraman 2017).[vii] Remarkably, negotiation (50%) and a combination of mediation and arbitration (20%) were the favoured choices for resolving disputes between parties. The study also noted the lack of compliance for ADR process and absence of judicial backing were the main reasons for adoption of formal litigation. It comes as no surprise that the astronomically slow wheel of justice has constantly shied the Indian consumers away from launching a formal litigation unless it is compelling to do so. In some cases, a meagre compensation is meted out and that too only after an arduous length of litigation in the Consumer Courts (Times of India 2015).[viii]

This is also obvious given that consumers do not really prefer to file cases in consumer forums unless it is “economically rational”[ix] to do so, especially when the other party is a ‘big business’. This idea of economic rationality which shapes consumer attitudes is bound to impact the proposed effect of mediation as provided for in the Bill and arguably, making insertion of mediation redundant. An analogy can also be drawn from the available data on civil litigation which highlights the attitudes of the Indian population towards going to courts. Eisenberg et al[x] show that there is a fall in the rate of civil litigation in lower courts and high courts in India the past decade. This study informs us that, broadly speaking, pursuing civil litigation is not the most preferred option when it comes to resolving disputes. Therefore, we can deduce that the behaviour of a litigant in India is usually to avoid litigation and this could be the reason why mediation can hold the key to the future of dispute resolution. It is necessary to raise consumer awareness through campaigns regarding mediation procedures alongside implementation of the provisions on mediation. Unless the fear of litigation and the myth of involvement of complex legal procedures is quelled amongst the consumers, mediation claims would rarely arise and businesses would prefer formal litigation. In a country where there is a problem of judicial pendency, mediation has the potential to become the source of respite from formal litigation. Yet, it should be noted that change in business attitude is more important than having a law per se. Unless this shift is achieved, it is unlikely that any progress can be made on the implementation aspect of the law.

Unequal Parties And The Statistics Behind

The imbalance in bargaining power between parties in formal litigation is also one of the vital factors which makes mediation an attractive alternative. The rise of e-commerce has resulted in an alteration of the nature of relationship between parties involved. In many cases the other party is a multinational company and for a consumer to mediate through an empanelled mediator might ease the inequality in the power dynamics. On a comparative scale, in countries such as United States where the law[xi] requires designing and implementation of various alternative dispute resolutions methods mediators have reported 80-90 percent success rate.[xii] This could be explained as the fear of reputation loss might be higher due to a brand image oriented consumer market. This focal point of difference in consumer behaviour pattern can be, along with other factors, the root cause as to why mediation has not taken off more widely in India. There is no doubt that the choice of going to a mediator seems to be one which is extremely appealing and can be the potent agent of change in consumer litigation but at the same time it is conditioned by external factors. Therefore, the very choice of going to mediation which is now made available through the legislation is a great step towards consumer empowerment. It is the opinion of some scholars that consumers would be attracted to online dispute resolution more than formal litigation due to its relative convenience, and significantly lesser cost. (Mann 2009)[xiii] However, it must be noted that mediation is on the rise even before the introduction of this Bill and a look at the General Statistical Report by the Bangalore Mediation Centre (hereafter BMC) reveals the same.[xiv]

Table I: Data on the mediations from 01/01/2007 to 28/02/2017 by BMC.

Title Data as per 28/2/2017
Cases referred for mediation 56759
Cases mediated 44385
Cases Settled 28685
connected cases 6885
Solved cases 35570
Cases not mediated 10039
Cases unfit for mediation 704
Cases discontinued as one or more necessary parties did not appear for a follow-up mediation 3706
cases could not be mediated as one or more necessary parties did not appear for mediation at all 3706
Pending cases 2335
Hours put in by mediators 102098
Average time (minutes per case) 146
Average number of sessions per case 1.26

 

The number of cases pending at the beginning of the period was zero and it is relevant to note that the BMC has referred to a total 56759 cases from 1/1/2007 till 28/02/2017. During this time period, 44385 (~78%) were mediated and 28685 (~65%) settled. In addition, 6885 connected cases were resolved making it 35570 solved cases. Of the 10039 cases not mediated, 704 (~1.24%) were found to be unfit for mediation and 3706 (~7%) discontinued as one or more necessary parties did not appear for a follow-up mediation. And 4425 (~8%) cases could not be mediated as one or more necessary parties did not appear for mediation at all. A total of 2335 (~4%) cases are still pending. The mediators have clocked 102098 hours in order to settle the disputes. The average time per case is of 146 minutes per case with 1.26 as average number of sessions per case. The data reflects that despite the absence of a legislation incorporating mediation it was already on the rise.

Lack of Research & Possible solutions

Despite the favourable statistics presented above, there is an absence of nationwide quantitative data.[xv] Much research needs to be conducted in this area especially outside the bounds of urban consumer courts. This further discourages the companies involved in litigation to pursue mediation as there is no evidence of the same being beneficial or preserving business resources. The need to pursue further research focusing how businesses perceive mediation while resolving consumer disputes is necessary to understand its impact on consumers. Any solution to consumer related disputes needs to have a two-way approach in order to preserve the interests of both the parties. One of the solution could be further amendment of the 2015 Bill to replace voluntary with mandatory mediation. There is research to show that there is no undue pressure to accept unfair settlements in mandatory mediation in the United States (Wissler 1997).[xvi] But it should be noted that mandatory mediation programs may produce a somewhat lower rate of settlement than voluntary programs in small claims and common pleas cases (Wissler 1997).[xvii] However, it should also be kept in mind that the study quoted was conducted in an American context and therefore taking inspiration from such research might not reproduce the same results in India. Mandatory mediation can be explored in resolving consumer disputes so that it would work in the best interest of businesses as well as the consumer. A second possible solution could be resorting to online mediation. It defies common logic to notice that at a time when High Courts are serving summons to people through WhatsApp,[xviii] why cannot we implement a system whereby disputes can be resolved online or through simple mediation procedures? The advantages of shifting the mediation proceedings online are quite apparent considering the rising penetration of internet in the country.[xix] Not only would it reduce the time taken to redress the dispute but online mediation would also significantly improve access to justice. One of the initiatives of moving towards online mediation is through establishment of the Online Consumer Mediation Centre (OCMC) at National Law School of India University, Bengaluru under the aegis of Ministry of Consumer Affairs, Government of India. The aim of the Centre is to provide “for a state-of-the-art infrastructure for resolving consumer disputes both through physical as well as online mediation through its platform.[xx] This along with other initiatives such as the effort by the current government to push for digitalisation of the court system and the launch of “Tele Law” program reflects the ongoing thrust for a futuristic court system. The Tele Law program, established in partnership with National Legal Services Authority (NALSA), attempts to ease the delivery of legal aid by expert panels of lawyers stationed at State Legal Service Authorities, through digitally furnished Common Service Centres (CSCs). Armed with a team of 1,000 para-legal and video conferencing facilities, these CSCs are expected to enable community participation and capacity building in rural regions and will be launched as a pilot project in 1,800 gram panchayats across the nation.[xxi] Integration of mediation facilities within this system can be envisaged. This seems to be an apt time for pushing online mediation and promoting it within the government’s e-court framework. Despite the numerous hurdles, the very introduction of mediation is a bold step and a welcome change. It is surely on the rise as the data suggests and the legislation might end up acting as support mechanism rather than the driver for change.

 

REFERENCES

[i] Abraham Lincoln, Fragment: Notes for Law Lecture (ca. 1850), 2 The Collected Works Of Abraham Lincoln 81, 81 (Roy P. Baseler, ed., Rutgers University Press 1953). These wise words spoken by Mr. Lincoln 167 years before this article was typed and it highlights two major points. Firstly, a compromise between the parties is the best solution to a dispute. Secondly, litigation is a waste of time and money.

[ii] Kritika Vohra, Mediating Matrimonial Disputes in India, Vol. 52 Econ. Pol. Wkly. (2017).

http://www.epw.in/journal/2017/52/special-articles/mediating-matrimonial-disputes-india.html

[iii] The Consumer Protection Bill, 2015 (16-9) Dept. of Consumer Aff. (Standing Committee Report) April 2016 (India) at 10.

[iv] Sakuntala Narasimhan, Consumer Protection Act An Unequal Fight, 50(5) Econ. Pol. Wkly. 20, 22 (2015); Akhileshwar Pathak, Amending the Consumer Protection Act, 1986, 50(43) Econ. Pol. Wkly. 27, 28 (2015).

[v] Consumer Protection Bill 2015 reads as:

“…[T]he provision of ‘mediation’ as an Alternate Dispute Resolution Mechanism has been added… aimed at giving legislative basis to resolution of consumer disputes through mediation, thus making the process less cumbersome, simple and faster.” (Emphasis supplied)

[vi] Editorial, Mediate, not litigate, The Hindu (May 15, 2016),

http://www.thehindubusinessline.com/opinion/editorial/mediate-not-litigate/article8603944.ece

[vii] Madhu Sivaraman, Declogging Courts: Divert All That Can Be Diverted for Arbitration And Mediation, Swarajya Mag. (May 25, 2017), https://swarajyamag.com/ideas/declogging-courts-divert-all-that-can-be-diverted-for-arbitration-and-mediation (Last Visited May 30th, 2017).

[viii] Vaibhav Ganjapure, Dry cleaner to compensate for damage to saree 18 years ago, Times of India (Oct. 2, 2015)

http://timesofindia.indiatimes.com/city/nagpur/Dry-cleaner-to-compensate-for-damage-to-saree-18-years-ago/articleshow/49199398.cms (State Consumer Disputes Redressal Commission, Nagpur Circuit Bench, directed a dry cleaner to pay total damage of over Rs 7,000 for “deficiency in service” after 18 years.).

[ix] Robert S. Moog, Democratization of Justice: The Indian Experiment with Consumer Forums 142 in Beyond Common Knowledge Empirical Approaches to Rule of Law (Jensen & Heller eds. 2003). See also, Robert Moog, India’s Consumer Forums: Access and Justice for a Reasonable Price? at Centre for Law & Policy Research (June 5, 2013).

[x] Eisenberg Theodore, Sital Kalantry & Nick Robinson, Litigation as a Measure of Well-Being, 62(2) De paul L. Rev. 247–92 (2013). Work also cited in Alok Prasanna Kumar, Are People Losing Faith in the Courts? 52(16) Econ. Pol. Wkly 10-11 (2017).

[xi] Judicial Improvements Act of 1990, Pub. L. No. 101-650, tit. I, 104 Stat. 5089 (codified at 28 U.S.C. §§ 471-482 (Supp. 1992). The Civil Justice Reform Act addresses the dual problems of cost and delay in federal civil litigation.

[xii] U.S. Dep’t of State, Mediation and the Courts 4(3) Issues of Democracy 15 (1999).

[xiii] Bruce L. Mann, Smoothing Some Wrinkles in Online Dispute Resolution, 17 Int’l J.L & Info. Tech. 83, 84 (2009). (“Most people in a dispute would likely be more attracted to online dispute resolution than formal litigation because it is less costly, more convenient, operates outside the formal court structure, and does not require legal representation.”); An Online Consumer Mediation Centre (OCMC) is established at National Law School of India University, Bengaluru under the aegis of Ministry of Consumer Affairs, Government of India which could really be the starting point of a revolutionary mode of settling consumer disputes.

[xiv] http://nyayadegula.kar.nic.in/statistics.html

[xv] Alok Prasanna Kumar et al., Strengthening Mediation in India: Interim Report on Court Annexed Mediation (2016), https://static1.squarespace.com/static/551ea026e4b0adba21a8f9df/t/579ee7be5016e10ca2ae65f0/1470031920694/Interim+Report_Strengthening+Mediation+in+India.pdf; Vishnu Konoorayar et al., Alternative Dispute Resolution in India – ADR: status/effectiveness study (2014). http://nbn-resolving.de/urn:nbn:de:0168-ssoar-410340. Interestingly, the data available is usually restricted to urban metropolitan cities which also reflects the structural urban bias.

[xvi] Roselle L. Wissler, The Effects Of Mandatory Mediation: Empirical Research On The Experience Of Small Claims And Common Pleas Courts, 33 Will. & Mary 565, 565 (1997).

[xvii] Id.

[xviii] Online Desk, Bombay High Court Sets New Precedent, Serves Summons Via WhatsApp, The New Indian Express (Apr. 28, 2017), http://www.newindianexpress.com/nation/2017/apr/28/bombay-high-court-sets-new-precedent-serves-summons-via-whatsapp-1598742.html

[xix] Mary Meeker, KPCB-Internet Trends 2017-Code Conference (2017), http://www.kpcb.com/internet-trends.

[xx] NLSIU, Online Mediation Website, https://onlinemediationcenter.ac.in

[xxi] Sayan Ghosal, Law Ministry launches digital initiatives for legal access in rural areas, Bus. Standard India, (April 21, 2017),                http://www.business-standard.com/article/economy-policy/law-ministry-launches-digital-initiatives-for-legal-access-in-rural-areas-117042001008_1.html (last visited May 2, 2017).

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EMERGING PATTERNS IN CONSUMER LITIGATION: EVIDENCE FROM BANGALORE MEDIATION CENTRE

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