1/24/25, 4:15 PM India: The Mediation Act 2023 - will the ADR wave pick up momentum?

diation Act 2023 - will the ADR wave pick up momentum? | International Bar Association

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India: The Mediation Act 2023 - will

the ADR wave pick up momentum?
Monday 11 March 2024

Payel Chatterjee
Trilegal, Mumbai

Shuchita Choudhry
Trilegal, Mumbai

The Indian judiciary has been saddled with never ending litigations. Pre-
institution mediation was viewed as a ray of hope towards reducing such
burden, but in reality, it was just a stepping stone before initiating
litigation. As per recent statistics published by the National Legal Services
Authority (available here and here), a statutory body established under the
Legal Services Authorities Act, 1987, approximately 0.11 million cases were
settled through mediation between April 2022 to June 2023. However,
when viewed from a macro perspective, the number remains low with more
than ten million civil cases pending before Indian courts. One reason might
have been that until now, India lacked a statutory mediation framework in
place.

Above: Judicial data grid at 13 September 2023

Both the Houses of Parliament, having passed the Mediation Bill, 2021 ('Bill')
in August 2023, had finally reinforced the importance of the fastest
growing mode of alternate dispute resolution in India. The Bill received the
presidential assent in September, with India having its first ever
independent legislation on mediation, ie, the Mediation Act, 2023
('Mediation Act'). The Mediation Act provides for a comprehensive
framework to promote and invigorate mediation as a successful mode of
alternate dispute resolution.

The objective of the Mediation Act, accessible here, is to 'to promote and
facilitate mediation, especially institutional mediation, for resolution of
disputes, commercial or otherwise, enforce mediated settlement
agreements, provide for a body for registration of mediators, to encourage
community mediation and to make online mediation as acceptable and
cost-effective process and for matters connected therewith or incidental
thereto'.

The Mediation Act has been introduced with the primary goal of
establishing mediation as a recognised and acceptable mode of alternate
dispute resolution and granting validity to the settlements arrived
thereunder, irrespective of its nature – domestic or involving foreign parties,
however conducted in India. The key features of the Mediation Act include:

voluntary option to parties to mediate any civil and commercial disputes

before instituting any legal proceedings in court whether or not any
mediation agreement exists;
setting out requirements of a mediation agreement, i.e., mediation
agreement must be in writing, by or between parties and anyone
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claiming through them, to submit to mediation all or certain past,

present or future disputes;
a provision for the parties to seek interim relief in exceptional
circumstances from a court or tribunal having competent jurisdiction
before the commencement of, or during the continuation of the
mediation proceedings;
upholding party autonomy and giving a right to the parties to appoint a
mediator and determine the procedure of appointment, qualifications,
experience, and accreditation;
allowing parties to approach a mediation service provider for
appointment of mediator, within a stipulated timeframe of seven days;
framework to prevent conflict of interest, providing for disclosure
requirements and obligating the mediator to be independent, neutral and
impartial;
every mediation to be undertaken within the territorial jurisdiction of the
court or tribunal of competent jurisdiction to decide the subject matter of
the dispute, except in cases where parties mutually agree to conduct the
mediation at any place outside of the territorial jurisdiction or online;
setting up a Mediation Council of India with functions such as
registration of mediators, train and certify mediators and setting out
standards of professional and ethical conduct of mediators;
list of disputes which are excluded from mediation such as disputes
involving criminal prosecution, serious allegations of fraud, rights of third
parties, land acquisition and proceedings before the Securities and
Exchange Board of India, and the Securities Appellate Tribunal, under the
Securities and Exchange Board of India Act, 1992;
upper time limit of 180 days for concluding the mediation proceedings;
treating mediation agreements as final, binding, and enforceable in the
same manner as a court decree;
limiting the grounds of challenge to a mediation agreement to fraud,
corruption, impersonation and where the mediation was conducted in
disputes not fit for mediation;
provision for community mediation that may be attempted to settle
disputes likely to impact peace and harmony amongst residents of a
community; (ix) obligation to maintain confidentiality; and lastly
extending application to international mediations (where one party is a
foreign party) conducted in India, amongst several others.

Three striking aspects that invite attention of users:

Firstly, the Mediation Act provides for a voluntary option to parties to

mediate any civil and commercial disputes before instituting any legal
proceedings in court. Initially, when the Bill was introduced in Rajya Sabha,
the Bill provided for mandatory mediation before institution of any legal
proceedings. However, the Mediation Act was amended from mandatory
mediation to voluntary mediation on the recommendations of the
Parliamentary Standing Committee which observed that 'by mandating pre-
litigation mediation, parties will have to wait for several months before
being allowed to approach a court or tribunal. This may result in delaying
of cases.' This is in stark contrast with the already existing mandatory pre-
institution mediation in commercial disputes provided under the
Commercial Courts Act, 2015.

Secondly, in today’s digital times, the Mediation Act institutionalises online

mediation, i.e., mediation conducted by 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. This may be seen
as welcome step encouraging parties in different jurisdictions to mediate.

Thirdly, the Mediation Act excludes a provision for enforcement of

settlement agreements arising out of international mediation conducted
outside India where one party may be an Indian party. This may not be seen
in favour of international trade and cross-border dispute resolution and at
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par with the international framework such as the United Nations

Convention on International Settlement Agreements Resulting from
Mediation (2019), to which India is a signatory.

India is witnessing a phenomenal rise in economic growth, foreign

investments, and international disputes. The question remains whether the
Mediation Act will auger well and achieve its objective in today’s cross-
border business world. The larger issues that daunt us are whether the
parties, either Indian or foreign, will voluntarily opt for mediation. We have
witnessed over the years that industry players lack faith in mediation and
often treated mediation as an informal checkbox exercise. The need of the
hour is to break the so-called myths surrounding alternate dispute
resolution mechanisms, by including private players and public-sector
undertakings to voluntarily opt for mediation, reaping the benefits of the
Mediation Act and recognising mediation as a formal alternate dispute
resolution mechanism.

Further, non-inclusion of government parties unless it qualifies as a

commercial dispute may also draw sufficient criticism given government is
the biggest litigant in the country. Like all other ADR modes, key is the
intent of parties, which determines the faith of a dispute. The judiciary
along with the legislature have taken strides to make mediation a success,
but lot remains to be done. Possibly, one of the modes of encouragement
could come in from the judiciary on referring parties to mediation if such
clause exists as predominantly done in case of arbitrations.

As a starting point, once the Mediation Council of India is constituted, pro-

active steps need to be undertaken to promote mediation. This includes the
largest litigator in India, i.e., government/ public sector undertakings to
include mandatory mediation in their contracts; having multi-tier dispute
resolution clauses, collaborating with the business community, corporates,
and in-house counsels to spread awareness; cutting through all medium
and small cities in India which are business-centric and promote mediation
within the micro, small and medium enterprises; and demonstrate
effectiveness of mediation with empirical data and share practical examples
of success stories. Having said that, the Mediation Act is a step in a right
direction. It will break the unwavering perception of the business
community on mediation and foster confidence to include institutional
mediation in dispute resolution clauses.

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