“TOPIC: MEDIATION ACT 2023

NAME OF AUTHOR: SANA SURESH JANABNDHU

NAME OF INSTITUTION: MAHARASHTRA NATIONAL LAW UNIVERSITY,

NAGPUR.

COURSE: BBA.LLB (3RD YEAR)

EMAIL: sanajanbandhu@nlunagpur.ac.in

Abstract:

“A major legislative achievement intended to strengthen India's alternative conflict resolution

system is the Mediation Act 2023. In order to make mediation procedures more accessible,
effective, and efficient for settling civil and business disputes, this Act proposes extensive
revisions. Important clauses include the creation of mediator standards, the requirement for
pre-litigation mediation in some circumstances, and the use of digital platforms for
mediation. The goal of the Act is to lessen the load on the court system and encourage a
cooperative approach to conflict resolution by cultivating a culture of peaceful settlement.
The main components of the Mediation Act 2023, its expected effects on the legal system, and
possible implementation difficulties are all critically examined in this article.”

Key words:
Mediation Act 2023, Alternative Dispute Resolution, Civil Disputes, Commercial Disputes,
Mediator Standards, Pre-Litigation Mediation, Digital Mediation, Conflict Resolution,
Legislative reform
 MEDIATION ACT 2023
The Mediation Bill, 2023 ('Mediation Bill') was passed by the Rajya Sabha on 2nd August
2023 and by the Lok Sabha on 7th August 2023. It received the President's assent on
15th September 2023 to be known as the Mediation Act, 2023 ('Mediation Act').

So,

What is Mediation?

Under the Act, Mediation is defined expansively to include any process where parties request
a third person (mediator) to assist them in reaching an amicable settlement and includes

(a) pre-litigation mediation;

(b) online mediation;

(c) community mediation;

(d) conciliation; or any other expression having a similar meaning.

Mediation is a structured process where a neutral person uses specialized communication and
negotiation techniques to assist the parties in arriving at an amicable settlement of their
disputes. The concept of Mediation is an ancient and deeply rooted practice in our country. It
has been practised in the form of the panchayat system for centuries, in which certain
respected elders of the village acted as mediators between the conflicting parties and helped
to resolve their disputes.

MEDIATION IN INDIAN LAWS!

Section 89(1) of the Code of Civil Procedure, 1908 allows courts to recommend various
dispute resolution methods like arbitration, conciliation, judicial settlement, or mediation.
Indian courts have been actively using this provision. As per the "Survey of Dispute
Resolution in India, 2023," conducted collaboratively by the Federation of Indian Corporate
Lawyers (FICL) and the Centre for Trade and Investment Law (CTIL),
Mediation/Conciliation has been rated as the second most preferred way to resolve disputes
in India. In India, there are mediation centres established throughout the country. However,
private mediation lacked a clear structure and legal recognition, which made people hesitant
to participate. To address these issues and make mediation more effective, the Mediation Act
has been introduced, aiming to provide a solid legal framework and improve the overall
mediation process. The Mediation Act seeks to institutionalise and formalise the mediation
process, which is likely to improve the efficiency and effectiveness of the same.

SCOPE:

The Mediation Act extends the scope of mediation to civil and commercial disputes while
providing an indicative list of disputes which are not suitable for mediation. The disputes
involving minors or individuals with intellectual disabilities, criminal offenses, tax-related
issues, land acquisition issues, and certain regulatory matters are considered unfit for
mediation under the Mediation Act.

Applicability:

1. The Act only applies to mediations conducted in India, and

2. where all, or both, parties reside / are incorporated / have their place of business in
India; or
3. the mediation agreement provides for the disputes thereunder to be resolved by the
Act; or
4. where there is an international mediator; or
5. commercial disputes where the central / state government is a party; or
6. any other dispute notified subsequently.
7. The First Schedule sets out the list of disputes which are not fit for mediation:
8. These are disputes involving criminal prosecutions, land acquisitions or pertaining to
minors, deities and persons with intellectual disabilities.
9. Even disputes involving persons who are not parties to the mediation are not covered
by the Act.
10. Disputes in regulated subjects like competition, telecom, electricity, securities,
environment, and taxation.
11. Non-commercial disputes by or against the government (or their agencies).
12. This Act does not apply to Lok Adalat and Permanent Lok Adalat proceedings under
the Legal Services Authorities Act, 1987.
Mediator(s)

A mediator is a person who is appointed to undertake mediation – (a) by the parties or (b) by
a mediation service provider. This includes a person registered as a mediator with the
Mediation Council of India.

o Qualification: Unless the agreement between the parties provides otherwise, a

mediator must be registered with the Mediation Council or be empanelled with (a) a
court annexed mediation centre; (b) an authority constituted under the Legal Services
Authorities Act, 1987; or (c) a mediation service provider.
o Appointment: Parties may appoint a mediator by – (a) reaching an agreement; or (b)
making an application to mediation service provider for appointment.
o Termination: A mediation service provider may terminate the term of a mediator
upon (a) receipt of an application from either party; (b) receipt of information about
the mediator’s conflict of interest; or (c) the mediator’s withdrawal from the
proceedings. If and when terminated, the mediator may be replaced in the manner set
out under the Act.
o Admissibility and privilege against disclosure: Subject to just exceptions, no
mediator (or participant including experts and advisers) will at any time be permitted,
or compelled to disclose to any court, tribunal, or in any adjudicatory proceedings,
any communication, contents, conditions or any information of which they have been
acquainted during the mediation.

KEY FEATURES OF THE MEDIATION ACT.

A. Definition of Mediation:

The Mediation Act provides for a comprehensive definition of mediation which includes pre-
litigation mediation, online mediation, community mediation, and conciliation within the
umbrella of 'mediation.'

This aligns with international practice, where the terms 'mediation' and 'conciliation' are often
used interchangeably, as previously recognized by the Supreme Court of India, and
documented in the Singapore Convention. Consequently, the Mediation Act renders the
conciliation procedure as provided in the Arbitration and Conciliation Act, 1996,
insignificant.
  Prelitigation mediation: The Mediation Act recognizes the mediation process where
irrespective of any mediation agreement, the parties voluntarily undertake for
settlement of dispute prior to filing of any case of civil or commercial nature before
the court.
 International mediation: Mediation undertaken between parties relating to
commercial dispute where at least one of the parties resides or has place of business
outside India.
 Community mediation: The Mediation Act provides for community mediation where
mediation is undertaken to resolve disputes likely to affect the peace and harmony
amongst residents of a locality. Community mediation is required to be conducted by
a panel of three mediators.
 Online mediation: Mediation undertaken electronically, through internet-based
communication tools. Online mediation can take place pursuant to written consent of
parties at any stage of mediation under this Mediation Act. The Mediation Act
clarifies that even if the parties agree to undertake online mediation, for the purpose
of enforcement, challenge, and registration of the mediated settlement agreement, the
same shall be deemed to have been undertaken within the territorial jurisdiction of the
court of competent jurisdiction.

B. Mediation Council of India:

The Meditation Council is yet to be set up by the central government. The Mediation Act
provides for establishment of a regulator i.e., the Mediation Council to register, recognize and
regulate mediation institutions and mediators in India. The Meditation Council would also be
tasked to promote international and domestic mediation in India, facilitate and conduct
continuous training, education, and certifications in mediation, and also maintain a depository
of mediation settlement agreements made in India.
 C. Institution or Authority for Conducting Mediation:

Mediation proceedings may be conducted by a Mediation Service Provider which includes:

I. body or an organization which conducts of mediation in accordance with rules and

regulations framed under the Mediation Act and is recognised by the Mediation
Council of India;
II. an authority constituted under the Legal Services Mediation Act, 1987;
III. a court annexed mediation centre; and
IV. any other body as notified by Central Government.

The authorities constituted under the Legal Services Act, 1987, court annexed mediation
centres and bodies notified by Central Government are deemed to be mediation service
providers recognised by the Mediation Council.

D. Mediation Agreement:

The Mediation Act provides for mediation agreement to be 'in writing' to mean either

(a) any document signed by the parties, or

(b) an exchange of communications or letters including through electronic form, or

(c) any pleadings or any other proceedings in which existence of mediation agreement is
alleged by one party and not denied by the other. Mediation agreement may be in the form of
a clause in an agreement or separate agreement.

E. Mediator Under the Mediation Act:

Any person, regardless of nationality, can be chosen as a mediator through a process agreed
upon by the parties. However, when it comes to foreign mediators, there are specific
qualifications, experience, and accreditations that need to be met, as prescribed. The
disputing parties are free to agree upon the name of the mediator and the procedure for their
appointment. If there is no agreement, the parties can request for appointment of a mediator
from the panel maintained by the Mediation Service Provider, taking into account their
preferences and the mediator's suitability for resolving the dispute.

The proposed mediator must disclose in writing any circumstances, be it personal,

professional, financial, or otherwise, that could potentially create a conflict of interest or raise
doubts about their independence or impartiality.
Additionally, a mediator appointed in this manner cannot simultaneously serve as an
arbitrator or act as a counsel/representative for any party involved in an arbitration or judicial
proceeding that is the subject of the ongoing mediation. They cannot be presented as a
witness in any such proceeding.

F. Role Of Mediator:

The mediator's role is to assist the parties independently, neutrally, and impartially, guided by
principles of objectivity and fairness. The mediator can meet with the parties separately or
together as needed.

Importantly, the mediator is not bound by the procedural rules of the Code of Civil
Procedure, 1908, or the Indian Evidence Act, 1872. This flexibility allows for a more tailored
approach in reaching a mutually agreeable settlement, respecting party autonomy in the
process.

G. Place of Mediation Proceedings:

Mediation proceedings must be typically conducted within the jurisdiction of the competent
court or tribunal responsible for deciding the disputed subject matter. However, parties can
agree to hold mediation at another location by mutual consent. Additionally, parties have the
option to conduct mediation online, provided they formally agree to it in writing.

H. Commencement of proceedings:

Mediation officially begins when a party receives notice initiating mediation, as specified in a
mediation agreement. If there is no prior agreement, mediation starts from the date of the
mediator's appointment or consent to be appointed, whichever comes first.

I. Time Period for Concluding Mediation:

The mediation process must be concluded within 120 days from the mediator's first
appearance, with an option to extend it by up to 60 days if all parties agree. Similar changes
are proposed in the Commercial Courts Act, 2015, to align pre-litigation mediation timelines.

J. Confidentiality:

Section 22 of the Mediation Act categorically provides that the Mediator, Mediation Service
Provider as well as the parties to mediation proceedings are obligated to keep confidential
several aspects, including statements, proposals, documents, and any other communication
exchanged during the mediation. Moreover, recording mediation proceedings through audio
or video is prohibited to ensure confidentiality.

Importantly, the information discussed during mediation cannot be used as evidence in court,
arbitration, or any legal proceedings. This extends the protection under "without prejudice
privilege" to parties to encourage them to engage in candid discussions towards an amicable
settlement.

K. Mediated Settlement Agreement:

o An agreement between some or all of the parties, settling some or all of the disputes
between such parties as a result of the mediation. The terms of a mediated settlement
agreement can extend beyond the terms of reference.
o Form: The agreement must be in writing, signed by the parties and authenticated by
the mediator.
o The mediated settlement agreement will be final and binding upon the parties.
o Registration: The mediated settlement agreement must be registered with an
authority constituted under the Legal Services Authorities Act, 1987 within 180 (one
hundred eighty) days of the authenticated copy from the mediator.
o Enforcement: It will be enforceable in accordance with the provisions of Code of
Civil Procedure, 1908 as if it was a decree passed by a court.

L. Enforcement and Challenge to Mediated settlement Agreement:

A Mediated Settlement Agreement can be enforced following the Code of Civil Procedure,
1908, like a court decree.

A Mediated Settlement Agreement can be challenged within 90 days before a competent

court on four grounds including fraud, corruption, impersonation, and if the dispute's subject
matter was not eligible for mediation under the Mediation Act. The parties can file an
application to challenge the settlement agreement within 90 days from receiving a copy of the
same, with the possibility of an extension of further period of 90 days, if the court believes
that there is a valid reason to do so. While the Mediation Act aims to limit the grounds for
challenge, there is a concern that errant parties might misuse these provisions, undermining
the purpose of the Mediation Act.
 M. Non-Settlement Report:

If the mediation does not lead to a settlement within the time period stipulated under the
Mediation Act, the mediator is required to prepare a non-settlement report without disclosing
the cause of non-settlement and share signed copy with the parties and, in case of institutional
mediation, submit the same in writing with the Mediation Service Provider.

N. Interim Orders by Courts:

The courts referring parties to mediation may pass interim orders to protect any party's
interests, if necessary. However, unlike section 9 of the Arbitration and Conciliation Act,
1996, the Mediation Act does not specify the nature and extent of such power.

O. Exclusion of period in respect of which a mediation has been undertaken under the
mediation act:

In computing the period of limitation fixed for any proceeding relating to disputes in respect
of which a mediation has been undertaken under the Mediation Act, the period from the date
of commencement of mediation under the Mediation Act and up to submission of non-
settlement report by the mediator or termination of mediation under the Mediation Act, shall
be excluded.

P. Fee/Expenses for mediation:

The cost of mediation, other than community mediation would be such as may be specified in
rules and regulations framed under the Mediation Act. Unless otherwise agreed by the parties,
all costs of mediation, including the fees of the mediator and the charges of the Mediation
Service Provider are required to be borne equally by the parties.

CORRESPONDING AMENDMENTS TO OTHER LEGISLATIONS:

Since the Act now applies to all civil and commercial disputes in India, naturally, the Act
incorporates corresponding amendments to existing statutes in this field, including the Indian
Contract Act, 1872, the Code of Civil Procedure, 1908, the Legal Services Authorities Act,
1987, the Arbitration and Conciliation Act, 1996, the Micro, Small and Medium Enterprises
Development Act, 2006, the Companies Act, 2013, the Commercial Courts Act 2015 and the
Consumer Protection Act, 2019.
THE REGULATOR: MEDIATION COUNCIL OF INDIA:

The central government will establish the Mediation Council of India (“Council”) as per the
constitution prescribed under the Act. The Council has been constituted to register, recognize
and regulate mediation institutions and mediators in India. The Council is also tasked to
promote international and domestic mediation in India, facilitate and conduct continuous
training, education and certifications in mediation, and also maintain a depository of
mediation settlement agreements made in India.

- While mediation in India is not new and there are several legislations that already
contemplate mediation as a means for dispute resolution / pre-litigation dispute resolution,
the Act institutionalizes the mediation regime in India demonstrating the growth and
recognition of mediation as an effective (alternate) dispute resolution mechanism.

1. A welcome framework to the mediation regime in India: The Act manages to streamline,
structure and create a regulatory framework for mediations in India in the endeavour to
resolve civil and commercial issues before they become a dispute that requires judicial
resolution. The significant provisions of the Act, viz., the mediated settlement enforcement
agreements, its finality and binding effect, its enforceability and its amenability to challenge
gives more credence to the mediation process. This pre-litigation resolution framework can
be presented to foreign investors as a factor for ease of doing business in India in as much as
it mitigates the risk, expense and delays in judicial adjudication in India.

2. Lacunas: The most significant and glaring lacuna is that the Act does not provide for
enforcement of mediated settlement agreements from international mediations conducted
outside India. The other aspects which leave too much room for interpretation are the
provisions for interim reliefs and appointment of mediators (especially when compared to the
provisions under the Arbitration and Conciliation Act, 1996).

3. Judicial Intervention: a necessary evil: The Act provides that the enforcement and
challenge of a mediated settlement agreement lies before the court or tribunal of competent
jurisdiction. While these elements are essential for making the mediated settlement
agreements final, binding and enforceable, judicial interference in India threatens the
expedited timelines of resolution of any disputes in India (much like what is happening to the
arbitration regime in India today).
4. The Act departs from the Singapore Convention on Mediation – a warranted miss or a
fundamental lacuna?

In 2019, India was amongst the first to sign the United Nations Convention on International
Settlement Agreements resulting from Mediation, also called the Singapore Convention on
Mediation. However, in 2023, when India promulgated its first standalone legislation on
mediation, it chose not to incorporate the Singapore Convention.

Fundamentally, the Singapore Convention contemplates enforcement of mediated settlement

agreements in the courts of the home country of the counter party. However, as stated above,
the Act does not provide for enforcement of mediated settlement agreements from
international mediations conducted outside India.

The Centre explains this departure by stating that since the Singapore Convention has only
just recently come into force, India would prefer to wait for greater acceptance. As only 11
(eleven) non-major economies have ratified the Singapore Convention, India would prefer to
observe the course of implementation by other major economies. However, we were
wondering in India’s decision to be overtly conscious, whether we lost an opportunity to
promulgate an all-encompassing regime where mediated settlements between parties from
any part of the world could be enforced in India.

Pre-litigation mediation:

The process of undertaking mediation for settlement of disputes prior to the filing of a suit or
proceeding of civil or commercial nature before a court or notified tribunal is as mentioned
below:

Parties may voluntarily and with mutual consent take steps to settle the disputes by pre-
litigation mediation in accordance with the Act.

o Jurisdiction: Unless agreed otherwise, mediation must be undertaken within the

territorial jurisdiction of the court or tribunal of competent jurisdiction to decide the
subject matter of dispute.
 o Timelines: The mediation process is required to be completed within 180 (one
hundred eighty) days from the date fixed for first appearance before the mediator,
with a further 180 (one hundred eighty) days period extendable by the consent of
parties.
o Withdrawal or non-appearance: A party may withdraw from the mediation after the
first 2 (two) sessions. In case the party fails to attend even the first 2 (two) mediation
sessions, costs may be imposed at the time of the subsequent litigation on the same
subject matter. Even if the parties fail to reach a settlement through pre-litigation
mediation, the court or tribunal may at any stage refer the parties to mediation if they
request.
o Costs: Unless otherwise agreed by the parties, all costs of mediation, including the
fees of the mediator and the charges of the mediation service provider will be borne
equally by the parties.
o Confidentiality: A mediator, mediation service provider, the parties and participants
in the mediation will keep confidential matters relating to the mediation proceedings
(list of these matters are set out under Section 22(1)). No party can rely on or
introduce as evidence any information or communication.

CONCLUSION:

The Mediation Act is a revolutionary development in the realm of alternate dispute resolution
as it establishes parameters for practice, elevates confidentiality, ensures enforceability. One
may say that this piece of legislation has substantially reformed the mediation landscape by
making it a more formal, efficient and harmonious mode to resolve disputes out of court.

The Mediation Act 2023, while a crucial advancement in integrating mediation into the legal
system, is not without its criticisms.

Section 28 of the Act permits challenges to mediated agreements on specific grounds such as
fraud, corruption, impersonation, or when mediation was conducted for disputes falling
outside the scope of Section 6. These challenges must be initiated within 90 days of receiving
the agreement, with a possible 90-day extension. However, these grounds for challenging the
agreement are restricted and do not encompass issues like duress, coercion, or the discovery
of fraud beyond the limitation period. Additionally, the Act does not allow non-signatories to
challenge, which presents a limitation in the framework.

Furthermore, the added process of mediation preceding the suit will also add to the already
time-consuming and exorbitant litigation and as experienced in pre-institution mediation in
commercial disputes, under Section 12A of the Commercial Courts Act, 2015, the defendants
choose not to participate in mediation rendering it nugatory.

While it represents a significant step in formalizing and advancing mediation practices, it

falls short in addressing certain practical issues, and therefore broadening the application of
the process will further streamline the process and will increase the chances of resolution of
disputes by mediation without having the need to go to trial.

Nonetheless, the Mediation Act, 2023 is a game-changing development in the realm of

dispute resolution. By establishing clear standards, enhancing confidentiality, offering
incentives, and ensuring enforceability, this legislation has substantially reshaped the
mediation landscape.

It promotes mediation as the primary avenue for resolving disputes, aiming to streamline
legal procedures while fostering a culture of collaboration and cooperation among conflicting
parties. The Act represents a significant stride toward a more efficient, effective, and
harmonious approach to dispute resolution.”
MEDIATION PROCEEDINGS : AN OVERVIEW: