Mediation Act 2023: Highlights and Key Feature

The Mediation Act, 2023 was officially notified by the Ministry of Law
and Justice on September 15th, 2023. Mediation has a long history in
India, particularly through the use of Panchayats for resolving
community conflicts. Despite its effectiveness, mediation lost
popularity during British rule, leading to an increase in disputes and
delays in the adversarial legal system.

The Code of Civil Procedure, 1908 under Section 89(1) allows courts to
suggest various methods of dispute resolution, including mediation.
This provision has been widely accepted and implemented by Indian
courts, resulting in the establishment of mediation centers throughout
the country. However, private mediation lacked structure and legal
recognition, limiting its effectiveness and discouraging participation.

To address these issues, the Mediation Act 2023 has been brought to
enhance the efficiency of mediation and establish a comprehensive
legal framework for its practice in India.

Mediation offers several benefits, including its voluntary and non-

adversarial nature, the flexibility and confidentiality of the process, its
speed and cost effectiveness, and the finality of consensual
settlements. Additionally, mediation can help alleviate the burden on
courts by reducing the number of cases going to trial.

Currently, mediation in India can be court-referred, private (based on

contractual agreements), or provided under specific statutes like the
Commercial Courts Act, 2015, the Consumer Protection Act, 2019, or
the Companies Act, 2013. Mediation services are offered by private ADR
centers, mediation centers, as well as court or tribunal-established
mediation centers known as court-annexed mediation centers.

Several countries, such as Australia, Singapore, and Italy, have separate

laws on mediation. In India, there were multiple suggestions, including
by the Supreme Court in 2019 and the High-Level Committee in 2017, to
enact separate legislation for mediation. In 2020, a committee
appointed by the Supreme Court recommended and drafted an
umbrella legislation to give legitimacy to dispute settlement through
mediation. The Mediation Act, 2023 aims to promote mediation,
especially institutional mediation, and provide a mechanism for
enforcing mediated settlement agreements.

“Mediation” as defined under the Mediation Act

“Mediation” includes a process, whether referred to by the expression

mediation, pre-litigation mediation, online mediation, community
mediation, conciliation or an expression of similar import, whereby
parties attempt to reach an amicable settlement of their dispute with
the assistance of a third person referred to as mediator, who does not
have the authority to impose a settlement upon the parties to the
dispute;

The main goal of the Mediation Act 2023 is to broaden the range of
mediation practices that can be legally recognized, such as pre-
litigation mediation, online mediation, and community mediation. These
practices will now be included under the definition of ‘mediation’. This
change is in line with international standards, as the terms ‘mediation’
and ‘conciliation’ are commonly used interchangeably, as previously
acknowledged by the Supreme Court of India and documented in the
Singapore Convention.

As a result, Part III of the A&C Act becomes unnecessary and the
Mediation Act seeks to remove the provisions on conciliation from the
A&C Act.
Applicability of the Mediation Act

This Act shall apply where mediation is conducted in India, and—

(i) all or both parties habitually reside in or are incorporated in or have

their place of business in India; or

(ii) the mediation agreement provides that any dispute shall be resolved
in accordance with the provisions of this Act; or

(iii) there is an international mediation; or

(iv) wherein one of the parties to the dispute is the Central Government
or a State Government or agencies, public bodies, corporations and
local bodies, including entities controlled or owned by such
Government and where the matter pertains to a commercial dispute; or

(v) to any other kind of dispute if deemed appropriate and notified by

the Central Government or a State Government from time to time, for
resolution through mediation under this Act, wherein such
Governments, or agencies, public bodies, corporations and local bodies
including entities controlled or owned by them, is a party.

Disputes Fit for Mediation (Section 6)

Section 6 of the Act provides that:

“A mediation under this Act shall not be conducted for resolution of any
dispute or matter contained in the indicative list under the First
Schedule: Provided that nothing contained herein shall prevent any
court, if deemed appropriate, from referring any dispute relating to
compoundable offences including the matrimonial offences which are
compoundable and pending between the parties, to mediation”

The First Schedule of the Act provides a comprehensive list of disputes

that are not suitable for mediation. These include disputes involving
minors or people with intellectual disabilities, criminal prosecutions,
tax-related issues, matters before regulatory bodies such as the
Telecom Regulatory Authority of India and the Telecom Disputes
Settlement and Appellate Tribunal, and cases under the Competition
Act, 2002. The Act also extends its applicability to non-civil and non-
commercial disputes, including compoundable offenses and
matrimonial disputes. This provision offers clarity in identifying
disputes that can be resolved through mediation. It surpasses the A&C
Act, which relies on judicial precedents to determine the non-
arbitrability of disputes.

Pre-Litigation Mediation (Section 5)

Section 5 of the Act mandates pre-litigation mediation, irrespective of

the existence of a mediation agreement before filing any suit or
proceeding of civil or commercial nature in any court. It provides that
irrespective of any mediation agreement, the parties may voluntarily,
and with mutual consent, refer the dispute for settlement by mediation
before filing any case of civil or commercial nature in any court. This
excludes commercial disputes of specified value that are subject to
compulsory pre-litigation mediation under the Commercial Courts Act,
2015. Further, any court/tribunal may at any stage of a proceeding,
refer the parties to undertake mediation, irrespective of whether there
is a mediation agreement or not.

Meditation Agreement (Section 4)

A mediation agreement can be included as a clause in a written

agreement or as a separate written agreement. According to the
Mediation Act, a written agreement can be any document signed by the
parties or an exchange of communications or letters, including
electronic communication as permitted by the Information Technology
Act, 2000. Additionally, if one party alleges the existence of a
mediation agreement in any pleadings or other proceedings and the
other party does not deny it, that would also be considered a valid
written agreement. Furthermore, parties can choose to submit a
dispute to mediation even after the dispute has already arisen between
them.

Appointment of Mediators (Section 8):

The Act says unless otherwise agreed by the parties, a person of any
nationality may be appointed as a mediator. However, the provision in
Section 8(1) limits the freedom of choice by stating that a foreign
mediator must possess the qualifications, experience, and
accreditation as prescribed. In the absence of an agreement, the
parties can request the Mediation Service Provider to appoint a
mediator from their panel. The selection should consider the
preferences of the parties (Section 9) and the mediator’s suitability in
resolving the dispute.

Before being appointed, the proposed mediator must disclose any

circumstances, whether personal, professional, financial or otherwise,
that could create a conflict of interest (Section 10) or raise doubts
about their independence or impartiality. This requirement aligns with
the disclosure standards outlined in the UNCITRAL Model Laws and the
International Bar Association (IBA) Guidelines on Conflict of Interest in
International Arbitration. The obligation to disclose continues
throughout the proceedings, and the mediator must promptly inform
the parties if any such circumstances arise. The parties can choose to
waive any conflicts through written agreement.

Furthermore, a mediator who has been appointed cannot act as an

arbitrator or represent a party as counsel in any arbitral or judicial
proceedings related to the mediation proceedings. They also cannot be
presented as a witness in any proceeding.

Role of Mediator (Section 16)

Section 16 of the Act provides for Role of Mediator. The mediator’s

responsibility is to help the parties involved in a dispute reach a
voluntary resolution. This involves assisting them in identifying the
problem, improving their understanding of the situation, clarifying what
is most important, exploring potential agreements, and emphasizing
that the ultimate decision regarding their claims is up to them.
Importantly, the mediator must not force a resolution upon the parties
or guarantee that mediation will lead to a settlement

Time-limit (Section 18)

According to the Act, the mediation proceeding must be completed

within 120 days from the date of the mediator’s first appearance. This
deadline can be extended by a maximum of 60 days if both parties
agree. Additionally, the Commercial Courts Act 2015, which applies to
pre-institution mediation, is also proposed to be amended. Currently,
this Act requires the mediation process to be completed within three
months from the date the plaintiff applies for it, with a possible
extension of two months with the consent of the parties. Therefore,
while party autonomy is respected, the Mediation Act aims to strike a
balance by establishing clear timelines that prevent unnecessary
delays and ensure that mediation remains a structured and productive
process.

Registration and Enforcement of Mediation Agreement

Section 19 and 20 of the Act deals with registration of Agreement and

Chapter VI deals with enforcement of Mediation Agreement. Mediated
settlement agreement arrived at between the parties, other than those
arrived in a court or tribunal referred mediation or award of Lok Adalat
or final award of the Permanent Lok Adalat under section 21 or section
22E of the Legal Services Authorities Act, 1987, may, at the option of
parties, be registered with an Authority constituted under the said Act,
or any other body as may be notified by the Central Government, in
such manner as may be specified and such Authority or body shall
issue a unique registration number to such settlement agreements.

This can be done within 180 days (with a possible extension) of

receiving the authenticated copy of the agreement. Registration is not
mandatory, and the implications is provided under Explanation which
says- For the removal of doubts, it is clarified that nothing contained in
this sub-section shall affect the rights of parties to enforce the
mediated settlement agreement under section 27 or challenge the
same under section 28

Enforcement

A mediated settlement agreement resulting from a mediation signed by

the parties and authenticated by the mediator shall be final and binding
on the parties and persons claiming under them respectively and
enforceable as per the provisions of sub-section (2).

The mediated settlement agreement shall be enforced in accordance

with the provisions of the Code of Civil Procedure, 1908, in the same
manner as if it were a judgement or decree passed by a court, and may,
accordingly, be relied on by any of the parties or persons claiming
through them, by way of defence, set off or otherwise in any legal
proceeding.

Grounds of Challenging Mediation Agreement (Section 28)

A mediated settlement agreement may be challenged only on all or any
of the following grounds, namely:—

(i) fraud;

(ii) corruption;

(iii) impersonation;

(iv) where the mediation was conducted in disputes or matters not fit
for mediation under section 6.

An application for challenging the mediated settlement agreement shall

not be made after ninety days have elapsed from the date on which the
party making that application has received the copy of mediated
settlement agreement.

Provided that if the court or tribunal, as the case may be, is satisfied
that the applicant was prevented by sufficient cause from making the
application within the said period of ninety days, it may entertain the
application within a further period of ninety days.

ONLINE MEDIATION (Section 30)

Online mediation including pre-litigation mediation may be conducted

at any stage of mediation under this Act, with the written consent of
the parties including by the use of electronic form or computer
networks but not limited to an encrypted electronic mail service, secure
chat rooms or conferencing by video or audio mode or both. The
process of online mediation shall be in such manner as may be
specified. The conduct of online mediation shall be in the
circumstances, which ensure that the essential elements of integrity of
proceedings and confidentiality are maintained at all times and the
mediator may take such appropriate steps in this regard as he deems
fit.

MEDIATION COUNCIL OF INDIA (Chapter VIII)

The Mediation Act establishes the Mediation Council of India (MCI) as a

corporate body responsible for various duties, including the
development of India as a strong center for domestic and international
mediation. The head office of the Council shall be at Delhi. The MCI will
also oversee the conduct of mediation proceedings, handle the
recognition, renewal, cancellation, or suspension of Mediation Service
Providers, maintain an electronic depository for mediated settlement
agreements, and submit an annual report on the implementation of the
Mediation Act’s provisions to the Central Government. Additionally, the
MCI will have the authority to create rules and regulations in alignment
with the Mediation Act.

The Council shall consist of the following members, namely:—

(a) a person of ability, integrity and standing having adequate

knowledge and professional experience or shown capacity in dealing
with problems relating to law, alternative dispute resolution preferably
mediation, public affairs or administration to be appointed by the
Central Government—Chairperson;

(b) a person having knowledge and experience in law related to

mediation or alternative dispute resolution mechanisms, to be
appointed by the Central Government—Member;

(c) an eminent person having experience in research or teaching in the

field of mediation and alternative dispute resolution laws, to be
appointed by the Central Government—Member;

(d) Secretary to the Government of India in the Department of Legal

Affairs, Ministry of Law and Justice or his representative not below the
rank of Joint Secretary— Member, ex officio;

(e) Secretary to the Government of India in the Department of

Expenditure, Ministry of Finance or his representative not below the
rank of Joint Secretary— Member, ex officio;

(f) Chief Executive Officer—Member-Secretary, ex officio; and

(g) one representative of a recognised body of commerce and industry,

chosen by the Central Government—Part-Time Member.

Mediation Service Providers

Section 40 provides that mediation proceedings may be conducted by
a Mediation Service Provider which includes a body or an organization,
or b) an authority constituted under the Legal Services Act, 1987, c) a
court annexed mediation center, or d) any other body as notified,
provided any of these are recognized by the MCI (defined below) for
conduct of mediation proceedings under the Mediation Act. The
Mediation Service Providers are tasked with the duty to inter alia
accredit mediators and maintain a panel of mediators, provide all
facilities such as secretarial assistance and infrastructure for the
conduct of mediation proceedings, facilitate registration of mediated
settlement agreements.