This article is probing into the possibilities for mandatory mediation mechanism to the disputes in Motor Accidents in India. In Indian judiciary, especially the Motor Accidents Claims Tribunal (MACT) is branded with an image of breeding a ‘mountain of pending cases’. The use of Mediation is being explored, but not practiced with robustness; and the possibilities of Alternative Dispute resolutions (ADR) are enormous in the arena of Insurance dispute resolutions. Mediation in ADR is simple, less technical, quick, cheaper, and more responsible to the actual realities of the situation in an accident claim case. Auxiliary, this paper deals with the best practices for Mediation in motor accidental cases in the backdrop of pendency of large number of cases and the requirement for amending the Motor Vehicle Act, 1988, is studied.
India has the largest number of road accidents in the World. Average number of death per day are more than 300, meaning more than 10 persons die every hour. In the year 2017, there were 4, 64, 910 unfortunate road accidents, and 1, 47, 913 life’s were claimed, and caused injuries to 4, 70, 975 persons. Road accidents in India is a “harsh reality” , and large number of accidents are giving “rise to phenomenal quantum jump” in claim cases, as observed by the Supreme Court of India , in Mr. Krishna Murthy v. The New India Assurance Co. Ltd and others, this year. Pendency of Motor Accidental Cases (hereafter MAC) data is frightening. The total number of MAC in India, as of now, is 8, 66, 874, which is 13.65% of the total civil disputes pending, as per the National judicial data grid. A total of 30. 81% of the MAC are in pendency between 1 to 3 years, 11. 59% are between 3 to 5 years, and 7.5% are between 5 to 10 years, and 2% are between 10 to 30 years.
2.0 Research Objectives & Design:
In the backdrop of the immediate and emergent requirement for insurance claim dispute resolutions, given the context of huge pendency, within the mainstream and in the alternative mode, with adjudicatory and non-adjudicatory procedures, how best the Mandatory Mediation can be suitable for the insurance industry dispute resolution is being examined from the existing laws and regulations. Further, the paper is exploring the possibilities to bridge the gap in law, by suggesting appropriate amendments to the existing legislations, by enabling the insurer and the insured to an acceptable, quick, and cheaper dispute resolution method by empowering the insured for a negotiated and mediated resolutions.
The Research Design used for this study is descriptive method, and the tools are analytical, based on the existing legislations, circulars, case laws and case studies.
3.0 Legal Framework for Insurance dispute resolutions in India:
In India, life Insurance laws are governed under the Insurance Act, 1938, and the Insurance Laws (amendment) Act, 2015; and the Life Insurance Corporation Act, 1956. Insurance other than life is governed by the General Insurance Business Nationalization Act, 1972. The other major legislations are: – The Marine Insurance Act, 1963, The Insurance Regulatory & Development Authority of India Act, 1999(hereafter IRDA), Insurance Rules, 1939, Insurance Ombudsman Rules 2017; and the Motor Vehicle Act 1988, and the amendments thereof.
3.1 The Motor Vehicle Act, 1988:
The Motor Vehicle Act, 1988, and amendments thereof covenants with the provisions as to motor vehicle accidental claim resolutions. The claims arising out of self or other (third party) disputes are resolved under the same. A special Tribunal named Motor Accident Claims Tribunal (hereafter MACT) is created for the same. The Tribunal can formulate its own process in proceedings. The Tribunal shall follow summary procedure for adjudication of claims filed. Claimants in the dispute are those who suffered injuries or damages in an accident, and the parties, self or third parties, can make the claim application to the concerned MACT, in the location where the claimant resides or carries business in normal course of life. The laws that determine claim are the Law of Torts (the acts of wrong doing) and the Fatal Accident Act, 1855.
4.0 Insurance Claims & Disputes:
Dispute between the Insured and Insurer usually arise when the insured’s claim is rejected, either in part, or in full. Usually, disagreements as to the scope and ambit of the Insurance clauses , as to nature of case, cause of action, delay in submission of claim, insufficient documents submission, validity of documents , quantum of dispute and amount of compensation, exclusion clauses, regulatory and legal non- compliances, and non-adherence to the terms and conditions intensify the cause to the dispute.
Rules governing the interpretation of insurance policies and terms is being crystalized through the Supreme Court decisions at various points.
5.0 Mediation in Insurance Disputes:
Insurance Mediation sanctions the parties to the claim dispute to get a perception about the resolution though a neutral third person called Mediator. The Mediator herein is ought to be an Insurance expert. The Mediation style adopted herein are either facilitative or evaluative or a mix of both, based on Mediator’s assessment of what is the best to serve the purpose for a final resolution.
Policy holder and the Insurer’s counsel need to study the disputes in detail, as to facts, circumstances , findings, exclusions, limitations, jurisdictions , documentations e.t.c before assisting the party in Mediation.
Mediation involving multiple Insurance companies and parties are complex in nature, and the legal counsels to act more effectively herein for proper guidance. This is more relevant where the multiple defendants with indemnification and subrogation claims.
6.0 Co-Mediation & Binding Mediation:
Parties are free to use, or may agree for co-mediation – to use two mediators, one from each side to represent and mediate. Also, parties have the option to choose binding mediation, and the Mediator can decide the dispute within the consented parameters for an amicable permanent resolution. Here the Mediator can look in to those concessions that the parties are willing to make and can limit his or her rulings to those issues on which they are unable to agree. The other method often preferred is Med-Arb, wherein Mediation, if failed, shall be decided by the Arbitration process- either by same Mediator as Arbitrator; or reference to a new Arbitrator to decide finally.
7.0 Motor Accident Mediation Authority:
Supreme Court of India, in civil appeal in Mr. Krishna Murthy V. The New India Assurance Co. Ltd and Other, in 2019, urged the government of India to amend the Motor Vehicle Act, 1988, suitably to incorporate mandatory mediation, and recommended for making use the National Legal Service Authority (NLSA), to work on the project and to develop a module for Motor Accident Mediation Authority (MAMA). Till formulation of MAMA, the Supreme Court directed to all MACTs to compulsorily to refer motor accident cases to District Mediation Authority for an early resolution of the disputes.
An Insurance claim resolution process, ensuring the participation of regulatory bodies like IRDA, with Mediation followed by Arbitration, wherever Arbitration clauses supported, with recommended amendments, by encompassing mandatory mediation, can resolve the disputes in the domain specific segment of motor vehicle Insurance by quicker, cheaper and efficient resolutions. The resolution methods to be fine-tuned and supported with required amendments requisitely to be institutionalized under a single umbrella, by giving options to the party, either to be mediated under the governmental structure like MAMA , as proposed by the Supreme Court of India, or through the accredited Mediation Institutes or Mediators. Thus, the domain specific dispute resolution in Insurance, with the required amendments, with a collaborative ADR, can transform the existing antiquated MACT governed adjudicatory law and practice in India.
- Mark Plumer, New Appleman, Insurance Law Practical Guide, Vol 2, Chapter 25, 2008.
- Civil Appeal No. 2476- 2477 of the Supreme Court of India, Mr. Krishnamurthy V. The New India Assurance Co. Ltd & Others, 2019(India).
- The Motor Vehicle Act, 1988, No. 59, Acts of Parliament, 1988(India).