Mediation Act 2023: India's New Dispute Resolution Framework

# Mediation Act 2023: India's New Dispute Resolution Framework

India's dispute resolution landscape underwent a transformative shift with the enactment of the **Mediation Act, 2023**, which received Presidential assent on 15 September 2023. For the first time, India has a **standalone, comprehensive legislation** governing mediation as a method of alternative dispute resolution. The Act establishes a structured framework for institutional and ad hoc mediation, recognises online mediation, provides for the enforceability of mediated settlement agreements, and creates the **Mediation Council of India** as the regulatory body. This article provides a detailed educational overview of the Mediation Act, 2023, its key provisions, and its impact on Indian dispute resolution.

Background: Why India Needed a Standalone Mediation Law

Prior to the Mediation Act, 2023, mediation in India was governed by scattered provisions across various statutes:

- **Section 89 of the Code of Civil Procedure, 1908 (CPC)**: Empowered courts to refer cases to mediation, conciliation, arbitration, or Lok Adalats.

- **Section 442 of the Companies Act, 2013**: Provided for mediation and conciliation panels.

- **Commercial Courts Act, 2015**: Mandated pre-institution mediation for certain commercial disputes under Section 12A.

- **Consumer Protection Act, 2019**: Provided for mediation under Sections 37-38.

- **Industrial Disputes Act, 1947**: Provided for conciliation under Sections 4 and 12.

While these provisions promoted mediation, they were fragmented, lacked uniformity, and did not provide a comprehensive framework. There was no law governing the qualifications of mediators, the procedure for mediation, the enforceability of mediated settlements, or the regulation of mediation institutions.

The **Law Commission of India** in its **129th Report (1988)** recommended the promotion of alternative dispute resolution, including mediation. Subsequently, the Supreme Court in **Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (2010) 8 SCC 24** provided detailed guidelines on court-referred mediation and identified categories of cases suitable for ADR.

The **Mediation Bill, 2021** was introduced in the Rajya Sabha on 20 December 2021, extensively debated, referred to the Standing Committee, and finally passed as the **Mediation Act, 2023** (Act No. 32 of 2023).

Key Definitions Under the Act

Mediation (Section 3(h))

**"Mediation"** is defined as a process, whether referred to by the expression mediation, pre-litigation mediation, online mediation, community mediation, conciliation, or any other expression, whereby parties attempt to reach an amicable settlement of their dispute with the assistance of a third person referred to as the mediator, who **does not have the authority to impose a solution upon the parties**.

This definition is broad enough to encompass various forms of facilitated negotiation.

Mediator (Section 3(i))

A **"mediator"** is a person appointed to mediate and who assists the parties in arriving at a settlement. Importantly, the mediator does not adjudicate the dispute and has no power to impose a decision.

Mediation Service Provider (Section 3(k))

A **"mediation service provider"** means a mediation institute recognised under the Act that provides mediation services, including the appointment of mediators, management of mediation proceedings, and training of mediators.

Pre-Litigation Mediation (Section 5)

One of the most significant provisions of the Act is **Section 5**, which provides for **pre-litigation mediation** -- that is, mediation before a suit or proceeding is filed in any court or tribunal.

Key Features

- Before filing any suit or proceeding, whether or not there is a mediation agreement, a person **may** voluntarily choose to resolve the dispute through pre-litigation mediation.

- Where a mediation agreement exists between parties containing a clause requiring mediation before litigation, the parties **should** attempt pre-litigation mediation.

- The court or tribunal, at any stage, may refer the parties to mediation if it deems fit and the parties consent (or in cases where pre-litigation mediation is mandated by any other law).

Pre-Litigation Mediation Under the Commercial Courts Act

**Section 12A of the Commercial Courts Act, 2015** already mandates pre-institution mediation for commercial disputes (unless urgent interim relief is required). The Mediation Act, 2023 supplements this by providing the procedural framework.

Institutional Mediation vs. Ad Hoc Mediation

Institutional Mediation

**Institutional mediation** is conducted through a **mediation service provider** (mediation institution) recognised under the Act. The institution:

- Maintains a panel of qualified mediators

- Provides administrative support (venue, scheduling, communication)

- Ensures compliance with procedural standards

- Charges fees according to its schedule

Ad Hoc Mediation

**Ad hoc mediation** is conducted without the involvement of a mediation institution. The parties select a mediator on their own and conduct the mediation independently. While ad hoc mediation is recognised, the Act encourages institutional mediation for greater structure and reliability.

Mediator Qualifications and Appointment

Qualifications (Section 10 and Second Schedule)

The Act prescribes qualifications for mediators. Under **Section 10**, a mediator must:

- Be a person of standing and ability

- Have qualifications and experience as prescribed in the **Second Schedule** of the Act

- Be registered with a mediation service provider recognised under the Act

The Second Schedule prescribes that a mediator must have completed a **minimum of 40 hours of training** from a recognised mediation training institute. The training must cover mediation skills, communication, negotiation, ethics, and legal aspects.

Appointment Process

- In institutional mediation, the mediation service provider appoints the mediator from its panel, with the consent of the parties.

- In ad hoc mediation, the parties agree on the mediator.

- The parties may be assisted by the Mediation Council or the court in appointing a mediator if they cannot agree.

Disqualification and Removal

A mediator must be **independent and impartial**. Section 10(3) requires the mediator to disclose any circumstance that may give rise to justifiable doubts as to their independence or impartiality. The mediator can be replaced if such doubts arise.

The Mediation Process (Sections 18-20)

Commencement

Mediation commences on the date when the parties agree to mediate or on the date the mediator is appointed, whichever is later.

Conduct of Mediation

**Section 18** outlines the conduct of mediation:

1. The mediator shall assist the parties in reaching a settlement, having regard to the circumstances of the case, the wishes of the parties, and the need for a speedy settlement.

2. The mediator may meet with the parties **jointly or separately** (caucus sessions).

3. The mediator may make suggestions for settlement but **cannot impose** any solution.

4. The process is **flexible** -- the mediator may adapt the procedure to the specific needs of the case.

5. **Legal representatives** may participate with the consent of the parties.

Time Limit (Section 18(2))

Mediation must be completed within **180 days** from the date of the first appearance before the mediator. This period may be extended by a further **180 days** with the consent of the parties. This ensures that mediation does not become an indefinite process.

Termination

Mediation terminates:

- When the parties reach a settlement

- When the mediator, after consultation with the parties, determines that further mediation is unlikely to succeed

- When either party withdraws from the mediation

- Upon expiry of the time limit (including any extension)

Confidentiality (Section 22)

**Section 22** provides a robust confidentiality framework:

- All mediation communications (including statements, admissions, and proposals made during mediation) are **confidential**.

- No mediation communication shall be disclosed in any proceeding before any court, tribunal, or other authority.

- The mediator shall not be compelled to disclose any communication or testify in any proceeding.

- **Exceptions**: Confidentiality may be breached only:

- With the consent of all parties

- Where disclosure is required by law

- Where disclosure is necessary for the enforcement of a mediated settlement agreement

- Where it is necessary to prevent harm to public health or safety

This confidentiality provision is critical for fostering open and honest communication during mediation.

Mediated Settlement Agreement (Section 19)

Formation

When the parties reach a settlement through mediation, the agreement is recorded in writing as a **Mediated Settlement Agreement (MSA)**. The MSA must:

- Be in writing

- Be signed by the parties and authenticated by the mediator

- Contain the terms of the settlement

- Be clear and unambiguous

Enforceability (Section 27)

**Section 27** is one of the most important provisions of the Act. It provides:

- A mediated settlement agreement resulting from mediation conducted under this Act shall be **final and binding** on the parties and persons claiming under them.

- It shall be **enforceable as a judgment or decree** of a court under the Code of Civil Procedure, 1908, or where applicable, under any other law.

- The MSA can be enforced in the same manner as a court decree, providing the same legal force as a judgment.

Registration

Under **Section 19(4)**, the mediated settlement agreement may be registered under the **Registration Act, 1908**, if it relates to immovable property or any matter that requires registration.

Challenge to the MSA

Under **Section 28**, a mediated settlement agreement may be challenged before a competent court on the following grounds:

- **Fraud** -- the settlement was obtained by fraud

- **Corruption** -- the mediator was corrupt

- **Impersonation** -- a party was impersonated

- **Disputes relating to matters not fit for mediation** -- the subject matter falls within the non-mediable category

The grounds for challenge are intentionally narrow, ensuring that mediated settlements enjoy a high degree of finality.

Non-Mediable Disputes (Section 6 and First Schedule)

**Section 6** read with the **First Schedule** specifies disputes that are **not fit for mediation**:

1. Disputes relating to claims against minors or persons of unsound mind

2. Criminal prosecution

3. Disputes affecting the rights of third parties who are not parties to the mediation

4. Disputes relating to levy or collection of taxes

5. Proceedings under the Insolvency and Bankruptcy Code, 2016

6. Disputes involving allegations of serious fraud or fabrication of documents

7. Environmental disputes

8. Disputes relating to proceedings before the National Company Law Tribunal (under certain provisions)

9. Such other disputes as may be notified by the Central Government

These exclusions ensure that matters requiring judicial adjudication or involving public interest are not diverted to mediation.

Online Mediation (Section 30)

Recognising the digital transformation accelerated by the COVID-19 pandemic, **Section 30** provides for **online mediation**:

- Mediation may be conducted using **electronic means** (video conferencing, teleconferencing, or other digital platforms).

- Online mediation has the **same legal validity** as in-person mediation.

- The mediated settlement agreement in online mediation is enforceable in the same manner as an in-person settlement.

- The Mediation Council may prescribe standards for online mediation platforms.

This provision makes mediation accessible to parties across geographical distances and is particularly relevant for cross-border or inter-state disputes.

Mediation Council of India (Sections 31-42)

The Act establishes the **Mediation Council of India** as the regulatory body for mediation in India.

Composition (Section 32)

The Council consists of:

- A **Chairperson** (a retired judge of the Supreme Court or a High Court, or an eminent person)

- **Two full-time members** (persons having knowledge and experience in mediation, law, or related fields)

- **One part-time member** from the Ministry of Law and Justice

- **One part-time member** from a recognised body of commerce, industry, or trade

- The **Chief Executive Officer** (who is the Member-Secretary)

Functions (Section 38)

The Mediation Council performs the following functions:

1. **Recognition** of mediation service providers and mediation institutes

2. **Registration** of mediators

3. **Setting standards** for mediation training programmes

4. **Laying down guidelines** for the conduct of mediation

5. **Promoting** mediation as a preferred method of dispute resolution

6. **Maintaining a panel** of mediators at the national level

7. **Monitoring** the quality of mediation services

8. **Advising** the Central Government on matters relating to mediation

Community Mediation (Section 43)

**Section 43** introduces the concept of **community mediation** -- a mechanism for resolving disputes at the community or local level. Key features:

- Any dispute likely to affect the peace, harmony, and tranquillity of a community may be referred for community mediation.

- The authority administering community mediation may consist of persons of standing in the community.

- This provision institutionalises the traditional Indian practice of resolving disputes through community elders and panchayats.

International Mediation and the Singapore Convention

Section 4: International Mediation

The Act defines **"international mediation"** as mediation relating to a commercial dispute where:

- At least one party has its place of business in a country other than India, or

- The subject matter of the dispute is most closely connected to a country other than India

Singapore Convention on Mediation

India signed the **United Nations Convention on International Settlement Agreements Resulting from Mediation** (the **Singapore Convention**) on 7 August 2019. The Mediation Act, 2023 lays the groundwork for ratification and implementation of the Singapore Convention.

Under the Singapore Convention:

- Mediated settlement agreements arising from international commercial disputes can be directly enforced in the courts of signatory countries.

- This provides cross-border enforceability of mediated settlements, similar to the New York Convention for arbitral awards.

Section 27(2) of the Mediation Act provides that the Central Government may, by notification, apply the provisions of the Act to international mediation, subject to conditions and exceptions.

Comparison: Mediation Act vs. Arbitration and Conciliation Act

| Aspect | Mediation Act, 2023 | Arbitration & Conciliation Act, 1996 |

|---|---|---|

| **Nature** | Non-adjudicatory; mediator facilitates settlement | Adjudicatory; arbitrator decides the dispute |

| **Outcome** | Mediated Settlement Agreement | Arbitral Award |

| **Binding nature** | Final and binding (like a decree) | Final and binding (like a decree) |

| **Challenge** | On limited grounds (fraud, corruption) | Under Section 34 (public policy, etc.) |

| **Costs** | Generally lower | Can be significantly higher |

| **Time** | 180 days (extendable by 180 days) | 12 months (extendable by 6 months) under Section 29A |

| **Formality** | Informal and flexible | More formal and structured |

| **Party autonomy** | Parties control the outcome | Arbitrator controls the outcome |

| **Confidentiality** | Mandatory under Section 22 | Optional (unless parties agree) |

Impact on the Indian Judicial System

The Mediation Act, 2023 is expected to have a significant positive impact on India's dispute resolution landscape:

1. **Reducing court pendency**: By diverting suitable cases to mediation, the Act can help reduce the backlog of over 5 crore pending cases.

2. **Faster resolution**: With a mandatory time limit of 180 days (extendable to 360 days), mediation offers a faster path to resolution than litigation.

3. **Cost savings**: Mediation is significantly cheaper than litigation, benefiting individuals and businesses alike.

4. **Preserving relationships**: Unlike adversarial litigation, mediation facilitates amicable settlements that preserve business and personal relationships.

5. **Attracting foreign investment**: A robust mediation framework enhances India's reputation as a business-friendly jurisdiction with efficient dispute resolution mechanisms.

6. **Professionalisation of mediators**: The establishment of the Mediation Council and prescribing qualifications for mediators will create a professional cadre of trained mediators.

Frequently Asked Questions (FAQ)

**Q1: Is mediation under the Mediation Act 2023 mandatory?**

No. Mediation under the Act is generally **voluntary**. However, pre-litigation mediation may be mandatory where required by a specific statute (such as Section 12A of the Commercial Courts Act, 2015 for commercial disputes) or where a mediation agreement exists between the parties.

**Q2: Is a mediated settlement agreement enforceable as a court decree?**

Yes. Under Section 27, a mediated settlement agreement is final and binding on the parties and is enforceable as a judgment or decree of a court.

**Q3: Can any dispute be referred to mediation?**

No. The First Schedule to the Act lists non-mediable disputes, including criminal prosecutions, tax disputes, insolvency proceedings, and others. Only disputes that are not listed in the First Schedule can be referred to mediation.

**Q4: What are the qualifications required to become a mediator?**

A mediator must have completed a minimum of 40 hours of training from a recognised mediation training institute and must be registered with a mediation service provider recognised under the Act. The specific qualifications are prescribed in the Second Schedule.

**Q5: Is online mediation valid under the Act?**

Yes. Section 30 expressly provides for online mediation through electronic means. The mediated settlement agreement in online mediation has the same legal validity and enforceability as an in-person settlement.

**Q6: Can a mediated settlement agreement be challenged?**

Yes, but only on very limited grounds under Section 28: fraud, corruption, impersonation, or where the dispute relates to non-mediable matters.

**Q7: What is the Mediation Council of India?**

The Mediation Council of India is the regulatory body established under the Act to recognise mediation service providers, register mediators, set standards for training, and promote mediation in India.

**Q8: How is the Mediation Act different from arbitration?**

In mediation, the mediator facilitates settlement but cannot impose a decision; the parties control the outcome. In arbitration, the arbitrator hears evidence and arguments and renders a binding decision (award). Mediation is generally less formal, faster, and cheaper than arbitration.

---

Disclaimer

This article is published for **educational and informational purposes only** and does not constitute legal advice or a solicitation for legal services. The information provided is based on the Mediation Act, 2023 (Act No. 32 of 2023), relevant rules, and judicial pronouncements as of the date of publication. The Act is in the process of being implemented, and certain provisions may be notified at different dates. Laws and their interpretations are subject to change. Readers are advised to consult a qualified legal professional for advice specific to their circumstances. The author and JuristCo.com disclaim any liability for actions taken based on the contents of this article.