In India, access to timely justice has become a mere theoretical fantasy due to the massive backlog of cases and procedural complexities within the judicial system. The growing burden on the Indian courts has resulted in the shift to alternative dispute resolution mechanisms like arbitration, conciliation, negotiation and mediation. Both arbitration and conciliation have long been...
In India, access to timely justice has become a mere theoretical fantasy due to the massive backlog of cases and procedural complexities within the judicial system. The growing burden on the Indian courts has resulted in the shift to alternative dispute resolution mechanisms like arbitration, conciliation, negotiation and mediation. Both arbitration and conciliation have long been legally recognised and governed under the Arbitration and Conciliation Act, 1996[1]. However, prior to the enactment of the Mediation Act, 2023[2], mediation, though recognised in practice and through judicial initiatives, lacked a uniform statutory framework, resulting in a fragmented regulatory regime.
Recognising the growing importance of mediation as an effective means of resolving disputes and the need for a comprehensive framework to govern it, the Indian legislature enacted the Mediation Act, 2023.
Legal Framework Prior to the Mediation Act 2023:
Prior to the enactment of the Mediation Act, 2023, mediation in India did not have a comprehensive and uniform framework governing it. The major statutory provision governed mediation was Section 89 of Civil Procedure Code, 1908[3], under which the Court may formulate the terms of a possible settlement and refer the same for alternative dispute resolution, including mediation. Section 89 was highly criticised for its drafting ambiguity on the grounds of vague and unstructured procedure. The constitutional validity of Section 89 was challenged in Salem Advocate Bar Association v. Union of India[4], where the petitioner contended that it violated Articles 14 and 21 of the Constitution of India[5]. However, the Supreme Court upheld its constitutional validity and held that, though Section 89 has imperfections, it does not violate the Constitution but instead requires judicial interpretation to ensure effective implementation of ADR mechanisms prescribed under the provision.
Mediation in India was shaped significantly by judicial initiatives. One such case is Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. Ltd.[6], which further strengthened the role of mediation in dispute resolution, where the Supreme Court laid down detailed guidelines for the types of disputes suitable and unsuitable for ADR, including mediation. Further, in M.R. Krishna Murthi v. New India Assurance Co. Ltd.[7], the Supreme Court strongly advocated for the institutionalisation of mediation in India and recommended the enactment of a standalone legislation to govern mediation comprehensively.
Thus, prior to 2023, mediation was governed by a scattered and evolving legal framework, which primarily lacked uniformity, clarity, and institutionalisation. This underscored the need for dedicated legislation, which ultimately led to the enactment of the Mediation Act, 2023.
The Mediation Act, 2023:
The Mediation Bill, 2021 (Bill No. XLIII of 2021), as amended and passed by both Houses of Parliament in August 2023 and subsequently received Presidential assent on 14 September 2023, thereby coming into force on 9 October 2023 as the Mediation Act, 2023. The Act consists of 11 Chapters, 65 Sections, and 10 Schedules.
Applicability of the Act: Section 2 states that the Act is applicable in a mediation conducted in India
- Where all or both the parties reside in India, or
- are incorporated in or have their place of business in India, or
- through a mediation agreement, or
- there is an international mediation, or
- when one party is the Central Government, State Government, or any government agency, public body, corporation, or local authority (including entities controlled or owned by them), and the dispute is commercial in nature, or
- any other type of dispute that the Central or State Government may specifically notify for mediation, provided that the Government or its entities are one of the parties.
What is a mediation agreement?
Section 4 speaks about mediation agreement, it states that any written agreement by the parties made to resolve conflicts through mediation. There can be a separate mediation agreement or a single mediation clause in any agreement. This also includes any written e-communication by the parties.
Non-Mediable Disputes:
Section 6 states that matters specified under Schedule I of the act cannot be resolved through mediation. They are:
- disputes prohibited by law
- matters involving minors, persons of unsound mind, or rights in rem
- criminal offences
- professional misconduct proceedings
- disputes affecting third-party rights (except certain matrimonial matters where the interest of a child is involved)
- environmental matters under the National Green Tribunal
- tax-related disputes
- competition law and telecom regulatory matters
- electricity and petroleum regulatory disputes
- securities market matters (SEBI)
- land acquisition and compensation matters
- and any other disputes notified by the Government
Procedure of Mediation under the Mediation Act, 2023:
Who is a mediator?
Mediator is the one who facilitates communication between parties; he is not a judge or arbitrator. According to Section 3(i) “mediator” means a person who is appointed to be a mediator by the parties or by a mediation service provider, to undertake mediation, and includes a person registered as mediator with the Council.
Who can be a mediator?
According to Section 8:
- Any qualified person of any nationality can be appointed by both parties as a mediator. Provided that such foreign national must have prescribed qualifications, experience, and accreditation.
- If the parties fail to agree upon such appointment, then either party may make an application for appointment of a mediator to a mediation service provider.
- On the date of receiving such application, within 7 days the service provider should appoint a mediator. If the parties have agreed on a mediator, such mediator shall be appointed. In case the parties fail to agree or the agreed mediator refuses to perform, a new mediator from the panel will be appointed.
- The person appointed as a mediator should communicate his willingness within a period of seven days from the date of receipt of such appointment.
Termination and Replacement of Mediator:
Section 11 empowers a mediation service provider to terminate the mandate of a mediator upon:
- the receipt of a request from a party to remove the mediator
- the receipt of information that there is a conflict of interest affecting the mediator
- the mediator withdraws voluntarily
Here the mandate of a mediator refers to the authority conferred upon the mediator to conduct and facilitate the mediation proceedings. It is important to note that the Section 11 of the Act primarily speaks about termination in institutional mediation.
However, Section 12 states that upon termination of the mandate of a mediator:
- In non-institutional mediation - the parties may appoint a new mediator within 7 days
- In institutional mediation - the mediation service provider should appoint a new mediator from its panel within 7 days
Though the Act does not expressly speak about the termination of a mediator in non-institutional mediation, Section 12 indirectly provides the parties in non-institutional mediation the autonomy to terminate the mandate of a mediator and to replace the mediator if they think fit.
Place of Mediation:
Section 13 states that every mediation shall ordinarily take place within the territorial jurisdiction of the court or tribunal having jurisdiction over the dispute. However, with the consent of both parties, it may be conducted at any place, even outside the territorial jurisdiction, or, as per Section 30, it may also be conducted in an online mode.
Commencement and Time Duration of Mediation Proceedings:
According to Section 14 of the Act, the mediation proceedings are deemed to have commenced:
- from the date a party or parties receive notice invoking the mediation clause under a mediation agreement.
- In case there is no such agreement,
- If the parties appoint a mediator - from the date the mediator gives consent
- where one of the parties approaches a mediation service provider- from the date the mediator is appointed
Section 18 states that the proceedings have to be completed within a period of 120 days from the date of the first appearance before the mediator. This may be extended by not more than 60 days with the consent of both the parties.
Final Process of Mediation:
When no settlement is arrived: Where no agreement is arrived at between the parties within the prescribed time period under Section 18, or where the mediator is of the opinion that no settlement is possible between the parties, the mediator is required under Section 21 to submit a non-settlement report to the Mediation Service Provider in case of an institutional mediation and in all other cases submit to the parties.
Mediated Settlement Agreement:
When the mediation proceedings succeed in resolving the dispute between the parties, a Mediated Settlement Agreement shall be executed. According to Section 19, “Mediated Settlement Agreement” means an agreement in writing and signed by the parties settling some or all of the disputes between the parties.
- In case of institutional mediation, the agreement submitted to and authenticated by the mediator will be forwarded, along with a covering letter signed by him to the mediation service provider
- In all other cases, the agreement should be submitted to and authenticated by the mediator.
The Act does not restrict the timing of such an agreement. The parties may arrive at a settlement at any stage during the mediation proceedings, in respect of all or part of the disputes which are the subject matter of mediation.
As per Section 27, a mediated settlement agreement is final and binding on the parties. Further, it shall be enforceable as a decree or judgement of a court.
According to Section 20, a mediated settlement agreement, at the option of the parties, may be registered within 180 days from the date of receiving the authenticated copy of the agreement. Even after the limitation period they may register, subject to prescribed amount of fee.
Challenging the mediated settlement agreement:
According to Section 28 of the Act, the grounds for challenging a mediated settlement agreement are:
- Fraud
- Corruption
- Impersonation
- where the subject matter of dispute was not subject to mediation under Section 6 of the Mediation Act, 2023.
An application for challenging the settlement agreement may be filed within 90 days from the date of receiving the copy of the mediated settlement agreement, subject to an extension of time as per the court's discretion in case of sufficient cause.
Termination of Mediation:
According to Section 24 of the Act, mediation proceedings are deemed to terminate in the following instances:
- the date on which the mediated settlement agreement is signed and authenticated
- the date on which the mediator declares in writing that further mediation is not possible or justified
- the date on which a party communicates in writing its decision to withdraw from mediation
- lapse of time under Section 18 of the Act.
Conclusion:
The analysis of judicial initiatives together with legislative developments demonstrates the significant evolution of the legal framework governing mediation in India. The enactment of the Mediation Act, 2023 is the result of the recognition of mediation as an effective and amicable mechanism for resolving disputes. The Act addresses the long-standing need for a comprehensive and uniform framework to govern the mediation process. The Act represents a significant step towards promoting efficiency and reducing the burden on the judicial system. It provides a well structured procedure focusing on all stages of mediation from the appointment of mediators to the termination of proceedings.
This legislation marks an important milestone, reflecting the combined efforts of the judiciary, legislature, and various stakeholders in strengthening alternative dispute resolution in India. Overall, the Mediation Act, 2023, represents a progressive step towards encouraging amicable resolution of disputes, with the potential to reshape how conflicts are approached and settled in practice.
The Arbitration and Conciliation Act, No. 26 of 1996 (India). ↑
The Mediation Act, 2023, No. 32 of 2023 (India) ↑
The Code of Civil Procedure, No. 5 of 1908, § 89 (India). ↑
Salem Advocate Bar Association v. Union of India, (2005) 6 SCC 344. ↑
The Constitution of India, arts. 14 & 21. ↑
Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., (2010) 8 SCC 24. ↑
M.R. Krishna Murthi v. New India Assurance Co. Ltd., (2019) 4 SCC 177. ↑
Author is an Advocate practicing at Madras High Court. Views are personal.