An expert panel set up by the IBBI has suggested the introduction of voluntary mediation as a dispute resolution mechanism under the insolvency law.

The panel has suggested the introduction of a voluntary mediation, which means referring a matter for mediation by consensus among the parties concerned.

The expert committee was set up by the Insolvency and Bankruptcy Board of India (IBBI) to examine the scope of use of mediation in respect of processes under the Insolvency and Bankruptcy Code.

The code provides for a time-bound and market-linked resolution of stressed assets, and it came into force in 2016.

The IBBI said the panel has recommended a phased introduction of voluntary mediation as a dispute resolution mechanism under the IBC while maintaining the sanctity of the timelines for various existing insolvency resolution processes.

“The core essence of the framework is its independence and flexibility to provide room for quick incorporation of implementational learning,” it said.

The panel has proposed the establishment of a dedicated and specialised NCLT-annexed insolvency mediation cell with an independent secretariat to administer, oversee and manage the conduct of insolvency mediations under the Code.

The panel has taken a cautious approach and endeavoured to balance the fundamental objectives of the code, i.e. ‘time-bound reorganisation’ and ‘maximisation of value’, with autonomy to parties to voluntarily opt for the ‘out-of-court’ mediation process to enhance the efficiency of the insolvency resolution process.