Introduction
Mediation has been a part of India’s dispute resolution
landscape and several Indian statutes, such as the Arbitration and
Conciliation Act, 1996, the Code of Civil Procedure, 1908, the
Commercial Courts Act, 2015, have recognized mediation as a means
of alternative dispute resolution, but there was no standalone
legislation governing the conduct of mediation in India. In order
to remove the inconsistencies in several existing legislations, the
Central Government vide notification1 dated September
14, 2023, notified the Mediation Act, 2023
(“Act“) with the aim to promote and
facilitate mediation2 for resolution of disputes in a
time bound manner and enforce mediated settlement agreements in a
cost-effective manner. In this article, we discuss and analyze some
of the key aspects of the Act and its potential for an amicable
dispute resolution in India.
Key Provisions of the Act
Applicability: The Act is applicable to (i)
mediations being conducted in India and (ii) where all or both
parties habitually reside in or are incorporated or have their
place of business in India; or the mediation agreement provides
that the dispute would be resolved as per the provisions of the
Act; or there is an international mediation; or there is a
commercial dispute where one of the parties is a government or a
government entity; or to such other government disputes as may be
notified.
India is a signatory to the United Nations Convention on
International Settlement Agreements Resulting from Mediation
(popularly known as Singapore Convention on Mediation) which
provides for the enforcement of mediated settlement agreements in
the courts of the home country of the counter party, but the Act
has not included within its purview the enforcement of mediated
settlement agreements where such mediations are conducted outside
of India. Thus, the Act has missed the opportunity to allow
enforcement of mediated settlement agreements reached between
parties outside of India.
Exclusions: Unlike the Arbitration &
Conciliation Act, 1996, where issues related to non-arbitrability
of disputes has not been specified, the First Schedule of the Act
prescribes an indicative list of matters which are deemed unfit to
be resolved by mediation, such as matters pertaining to,
prosecution for criminal offences; levy, collection, penalties or
offences, in relation to any direct or indirect tax or refunds;
proceedings under the Competition Act, 2002, Securities and
Exchange Board of India Act, 1992; non-commercial disputes by or
against the government; land acquisition and determination of
compensation under land acquisition laws and any other subject
matter of dispute which may be notified by the Central
Government.
The Act also does not apply to disputes that affect the rights
of a third party who are not a party to the mediation proceedings,
except only in matrimonial disputes where the interest of a child
is involved.
Mediation in Criminal Disputes: While the First
Schedule to the Act excludes prosecution of criminal offences from
the ambit of mediation, the Act enables a court to refer any
dispute relating to compoundable offences including the matrimonial
offences to mediation. In such a case, the outcome of mediation
will not be deemed to be a judgment or decree of court and the
mediation outcome must be considered by the court.
Eligibility of Mediators: The Act defines
mediator as a person (of any nationality) who is appointed under
the Act to be a mediator, by the parties, or by a mediation service
provider, and includes a person registered as mediator with the
Mediation Council of India (“MCI“) as
may be established by the Central Government.
Appointment of Mediators: The Act recognizes
the autonomy of the parties to decide the procedure and to appoint
any person as a mediator. For this, parties may enter into a
written agreement to mediate either before or after the dispute
arises. In case the parties fail to reach an agreement, then the
party initiating the mediation can make an application to a
mediation service provider for the appointment of a mediator.
Similar to the appointment and disclosure regime applicable to
arbitrators, the Act requires a person appointed to be a mediator
to pre-disclose in writing to the parties regarding any
circumstance or potential circumstance that may constitute any
conflict of interest or that is likely to give rise to justifiable
doubts as to his independence or impartiality as a mediator.
Further, a mediator so appointed cannot act as an arbitrator or a
counsel of a party in any arbitral or judicial proceeding which is
subject matter of the mediation proceedings or be presented as
witness in any proceeding.
Mediation Procedure: The Act enables the
parties to voluntarily and with mutual consent opt for mediation
before filing any suit or proceedings of civil or commercial nature
in any court. However, the pre-litigation mediation in matters of
commercial disputes of specified values would continue to be
governed by the Commercial Courts Act, 2015 and the rules framed
thereunder. Further, every mediation must be undertaken within the
territorial jurisdiction of the court or tribunal of competent
jurisdiction to decide the subject matter of dispute. However, the
parties may by mutual consent agree to conduct mediation at any
place outside the territorial jurisdiction of the court or
tribunal, or by way of online mediation, and in such case the
mediation shall be deemed to have been undertaken within the
territorial jurisdiction of the court or tribunal of competent
jurisdiction for the purpose of enforcement, challenge and
registration of the mediated settlement agreement.
Despite recognizing that parties may voluntarily resort to
mediation, the Act does stipulate a timeline for completion of
mediation proceedings i.e., 120 (one hundred and twenty) days from
the date fixed for the first appearance before the mediator, with a
maximum extension of 60 (sixty) days.
Mediated Settlement Agreement: The Act defines
a mediation settlement agreement as an agreement in writing entered
between some or all the parties resulting from mediation, settling
some or all the disputes between such parties, and authenticated by
the mediator. Such an agreement is final and binding on the parties
and shall be enforced in accordance with the provisions of the Code
of Civil Procedure, 1908, in the same manner as if it were a
judgment or decree of a court.
The mediated settlement agreement may be challenged by a party
by filing an application within a period of 90 (ninety) days from
the date on which such party received a copy of the mediated
settlement agreement on limited grounds of fraud, corruption,
impersonation, or where the mediation was conducted in disputes
falling within the First Schedule to the Act. The Act restricts the
grounds for challenge which do not include grounds such as duress
and coercion, or fraud which may discovered only after the expiry
of the limitation period.
Non-Settlement Report: Where no settlement is
reached to between the parties under mediation within the
time-frame for concluding the mediation process, or if the mediator
is of the opinion that the parties will not be able to reach to a
settlement, the mediator is required to prepare a
‘non-settlement report’, without disclosing any details for
the reasons thereof or about the parties’ conduct in its
report, and submit the same to the parties, or the mediation
service provider, in case of institutional mediation. It may be
noted that the Act protects the interest of the parties by
excluding the time spent from commencement of mediation up to
submission of non-settlement report (or up to the termination of
mediation, as the case may be) while calculating the limitation
period for any subsequent proceedings.
Confidentiality: The Act requires the mediator,
mediation service provider, the parties and participants involved
in the mediation process to maintain confidentiality with respect
to all the matters pertaining to the mediation process and the
parties are also not permitted to use any such material as evidence
in any subsequent proceedings before a court.
Conclusion
Mediation process in India has finally been codified through the
Act representing a significant milestone in the evolution of
alternative dispute resolution in the country. Hopefully with the
new enactment, mediation in India will gain legitimacy and
credibility as a preferred method for resolving commercial, civil,
and family disputes. By making the mediated settlement agreement
binding and enforceable on parties, the Act has empowered parties
to seek resolution through mediation with confidence, knowing that
the outcomes can be legally binding and enforceable. This would
further deter either party from unreasonably withdrawing from the
terms of the settlement. Notably, the Act recognizes online
mediation which can be resorted to at any stage of mediation with
the written consent of the parties. It has also provided for
community mediation with the prior consent of the parties for
disputes relating to peace, harmony, and tranquility amongst
residents or families. Even though the rules and regulations for
the establishment and functions of MCI, recognition of mediation
institutes and mediation service providers are awaited, it is
believed that opting for mediation will significantly contribute to
easing the burden on the overburdened judicial system by providing
a faster, cost-effective, and less adversarial means of dispute
resolution.
Footnotes
1. INotification No.
CG-DL-E-15092023-248775, Ministry of Law and Justice, 2023,
available at: https://egazette.gov.in/WriteReadData/2023/24
8775.pdf.
2. Section 3(h) “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;
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