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Companies can avail formal mediation mechanism under companies law

For the first time under the companies law, corporates can now opt for formal mediation and conciliation mechanism with central government-empanelled mediators and conciliators.

By: | New Delhi | Updated: September 23, 2016 6:51 PM
A Ministry official said this is the first time a formal mechanism is being put in place for mediation and conciliation under the Companies Act 2013. (Thinkstock)

A Ministry official said this is the first time a formal mechanism is being put in place for mediation and conciliation under the Companies Act 2013. (Thinkstock)

For the first time under the companies law, corporates can now opt for formal mediation and conciliation mechanism with central government-empanelled mediators and conciliators.

In this regard, the Corporate Affairs Ministry has notified the Companies (Mediation and Conciliation) Rules, 2016.

A Ministry official said this is the first time a formal mechanism is being put in place for mediation and conciliation under the Companies Act 2013.

Notifying the rules earlier this month, the Ministry has made it clear that the role of a mediator or conciliator would be only that of a facilitator.

The Ministry, which is implementing the Companies Act, has also sought applications from experts for empanelling them as mediators and conciliators. It would be maintaining a panel of experts for mediation and conciliation.

“The parties shall be made to understand that the mediator or conciliator facilitates in arriving a decision to resolve the dispute and that he shall not and cannot impose any settlement…,” as per the rules.

In case a party fails to attend a session or meeting fixed by the mediator or conciliator “deliberately or wilfully” for two consecutive times, then the mediation or conciliation would be deemed to have failed.

Such a situation should be reported to the central government, tribunal or appellate tribunal as the case may be, according to the rules.

The process for any mediation or conciliation should be completed in three months from the date of appointing experts from the panel. After that time frame, the process would stand terminated unless the tribunal extends the period.

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