Reimagining Justice Through Mediation – An analysis of The Mediation Act, 2023 – Law School Policy Review

*Shirin Khajuria

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The Mediation Act of 2023, promotes mediation as a successful dispute resolution process by emphasising institutional mediation, establishment of a regulatory council and making the mediated settlement legally binding. The legislative framework is critically examined in this article. It is argued that improved institutional capacity and public awareness are essential for successful implementation.

Introduction

Mediation as a form of dispute resolution has deep roots in India, traceable to traditional panchayat systems where village elders resolved conflicts in the community through consensus. They lacked formal statutory authority at the time, yet they were effective. This ancient system, however, went out of vogue during the British rule with the introduction of the adversarial, litigation-centric system of Courts. This has led to lack of harmony, overburdened courts and protracted disputes. As per the National Judicial Data Grid, as of 2024 there are 5.1 crore cases pending across Indian courts and India has only 21 judges per million population, instead of 50 as recommended by the Law Commission. The prolonged trials, resulting backlog and increasing costs undermine the faith of the Public in the justice system and hinder economic development. This has led to the development of Alternative Dispute Resolution methods such as Arbitration, Conciliation, and Lok Adalat in India in the 1990s through Statutory frameworks. However, Mediation, though introduced in the Code of Civil Procedure in 1989, remained largely unregulated. Recognizing that amicable settlements reached with the assistance of a neutral person, known as a ‘mediator’, can resolve disputes effectively and in a timely manner, the Mediation Act 2023 has been enacted, which marks a watershed moment in the Indian judicial system. The Act provides a comprehensive framework for domestic mediation in India, elevating it from an ad-hoc practice to a formally recognized mode of resolving disputes. This paper offers a critical appreciation of the Mediation Act, 2023 by examining its historical context, objective and key features, and placing them in the context of judicial developments, evaluating its strengths and shortcomings, and recommendations for its effective implementations.

Background and the Road to Legislation

Prior to 2023 Mediation in India was governed by multiple legislations, judicial pronouncements, guidelines and Rules of the Court. In Salem Advocate Bar Association. v. Union of India, the Supreme Court upheld the validity of Section 89 CPC and for the first time paved the way for formal mediation rules. But these applied only to court annexed Mediation Centres, the first of which was set up in the Madras High Court in 2005. The subsequent, notable Supreme Court decision in Afcons Infrastructure Ltd. v. Cherian Varkey Construction. Co. provided clarity on how courts should refer matters and the types of matters that could be referred to, and those that were unsuitable for mediation such as serious criminal offenses. These judicial interventions underscored that mediation was an important dispute-resolution tool.

The legislative push for a mediation law gained momentum in the last few years for various reasons including the exploding docket crisis. Though mediation found mention in various existing laws, there was no comprehensive law governing it, resulting in ambiguity. Accordingly, a comprehensive Mediation Bill was formulated in 2021 and after extensive parliamentary scrutiny, received Presidential assent on 15 September 2023 and is enacted as the Mediation Act, 2023.

The Mediation Act recognizes the need to promote institutional mediation. It has greatly increased India’s commitment to SDG 16, which fosters peace, justice and strong institutions, and SDG 16.3 which refers to Mediation. India’s signing of the landmark Singapore Convention on Mediation also signaled its commitment to mediation, though that convention is yet to be ratified by India. Mediation also furthers the fundamental right of ‘access to justice’ guaranteed under Article 21 of the Constitution of India, as held by the Hon’ble Supreme Court in the case of Anita Kushwaha v. Pushap Sudan.

Salient Features of the Mediation Act, 2023

As stated in the Mediation Act 2023, its aim is “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…It seeks to mainstream mediation as an integral part of the civil justice system, complementing the courts”.

1. Comprehensive Definition and Applicability: Section 3(h) defines Mediation as a “process” where parties attempt to “resolve their disputes amicably”, with the “assistance” of a third person referred to as “mediator”, “who lacks authority to impose a settlement upon the parties”. The Act gives a wide definition of mediation, which includes conciliation, pre-litigation mediation, online mediation, and community mediation. The unification of all facilitator-led settlement processes ends the semantic confusion. It also makes Part III of the Arbitration and Conciliation Act, 1996 dealing with conciliation, otiose. The Act applies to civil and commercial disputes, domestic as well as international mediations, including a foreign party, provided the mediation is conducted in India. It, however, excludes certain disputes from its ambit as ‘not fit for mediation’ those disputes that affect third party rights or require adjudication because of public interest, statutory duties or criminal sanctions.

• Mediation Agreement: Sections 4 and 5 of the Act essentially require a written mediation agreement as a standalone contract or a clause within a contract agreeing for mediation or in the form of an exchange of emails/letters, or even undisputed pleadings in a case.  However, Courts are empowered by Section 7 to refer parties to mediation at any stage of the proceedings even if there is no prior mediation agreement, if they believe an amicable settlement is possible.

• Pre-Litigation Mediation: Though the initial Bill sought to make pre-litigation mediation compulsory before filing any civil lawsuit, however due to concerns of misuse, Section 5 of the enacted law has left it to parties to opt voluntarily, by mutual consent, for mediation prior to litigation/arbitration. The only exception is where another law, for instance, the Commercial Courts Act, 2015 already makes pre-litigation mediation mandatory (Section 12A of 2015 Act). However, recent Supreme Court decisions underscore the judiciary’s support for mandatory pre-litigation mediation. In M/s Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd, which has been followed in Yamini Manohar v. T.K.D. Keerthi, the Hon’ble Supreme Court unequivocally held that pre-institution mediation in commercial suits is mandatory, and failure to do so without sufficient cause would make the suit liable to be rejected as defective and costs imposed. This has been clarified in Dhanbad Fuels Pvt. Ltd. v. Union of India. Dhanbad Fuel also demonstrate a practical sensitivity, allowing a transition period to build necessary infrastructure for mediation.

• Institutional Framework – Mediation Council and Service Providers: At the top of the institutional framework is the Mediation Council of India (MCI), a statutory body responsible for regulation and oversight of mediation. It is to lay down qualifications for mediators, recognize Mediation Service Providers (MSP), register & accredit mediators and training programs to ensure a uniform quality. It is to act as a repository of mediated settlements that the parties may wish to register. The Council is yet to be established, but the central government in March 2025 assured Parliament that steps were underway to establish the council.

The Act seeks to promote institutional mediation, alongside “ad hoc mediation”, by introducing the concept of a “Mediation Service Provider” (MSP) which includes professional mediation institutes, court-annexed mediation centres, and Legal Services Authorities [Section 40]. MSPs will maintain a panel of qualified mediators, facilitate conduct of mediation, provide necessary secretarial and other facilities and assist in the registration of settlement agreements. An organization will become an MSP only if recognized by the forthcoming Mediation Council of India and guidelines are yet to be set out for it.

• Appointment of Mediators: Chapter IV of the Act allows parties autonomy in choosing their mediator, regardless of nationality. If parties cannot agree on a mediator, they can approach an MSP to appoint a mediator from its panel. However, unlike arbitration, there is no provision to approach the Court for an appointment of a Mediator at the pre-litigation stage.

• Mediation Process, Role of a Mediator, Confidentiality and Time-Limits: These are set out in Chapter V.  The role of a mediator is defined as ‘facilitative’, and he is a ‘neutral’ who cannot impose a settlement on the parties. Confidentiality (without prejudice) is a cornerstone of mediation. This enables parties to discuss, exchange documents and offers without fear of them being used in Courts. It’s flexible and the Rules of Procedure are not applicable. Mediation may be conducted at a place convenient to parties or even online. The process commences formally when one party sends to the other a request to mediate under an existing mediation clause, or, in ad hoc referrals, from the date the mediator is appointed and accepts appointment. Mediation is time-bound, to be completed within 120 days, extendable to a maximum of 60 days with mutual consent of the parties. If no settlement is reached within the time limit, the mediator must issue a “Non-Settlement Report”, without assigning any reasons or blame to maintain its confidential and without prejudice nature.

• Exclusion of Government Disputes and a Wide Exclusion Clause: The exclusion of government-involved, non-commercial disputes undercuts the Act’s potential impact given that governments and public sector bodies are the largest litigants. The Standing Committee for considering the Bill had in fact recommended including government disputes within the ambit of the Act to reduce the burden on courts, but the final Act still allows the government to opt out except for commercial cases. Besides, several matters before specialized tribunal such as TDSAT, TRAI, SEBI, SAT are excluded, though these deal with matters that need a quick resolution. Besides, as on date, most of these Tribunals have been successfully resorting to Mediation as evident from available data.
• No Provision for Cross-Border Enforcement: Section 2 of The Act covers only those international mediations which are conducted in India, and it does not provide for enforcement in India of settlements mediated abroad. Hence, such cross-border settlements remain like a mere contract, enforceable only through litigation. This might make parties less inclined to mediate cross-border disputes. There are 18 countries including Japan, Turkey, Israel, Kazakhstan, and Sri Lanka that have ratified the Singapore Convention on Mediation, which provides a framework for enforcing international mediated settlement as orders of Court.
• Lack of mandatory Pre-Litigation Mediation – In a country like ours where awareness about Mediation process is lacking and there is an ingrained, litigation-mindset, voluntary initiation of mediation process will not yield desired results.
• Lack of guidelines on Mediator Qualifications and Training: There are no guidelines laid down on training programs, who can serve as a mediator or be an MSP, which is left to be decided by the MCI.  Lack of quality mediators and infrastructure across the country will erode confidence in the mediation process.
• Mediator remuneration is not specified: In court-annexed mediations, often services are low-cost or free, whereas private mediators charge professional fees. The Mediation Act is silent on fees. A schedule of fees would ensure that affordability does not become an issue.

Recommendation For Making the Mediation Act a Success:

Though India’s Mediation Act, 2023 is broadly in line with global best practices, to truly realize its objectives of making mediation the preferred mode of dispute resolution, several measures can be pursued and nurtured by policymakers, judiciary, and the legal community:

• Constitute the Mediation Council promptly and notify remaining provisions: The Central government should expedite appointments to the MCI for laying down clear rules on mediator qualifications, establishment of MSP etc. This will improve quality andtrust in the process and build capacity. Besides, for the Act to be effective, it should notify theprovisions that have not yet been notified to come into effect vide SO No 4384(E) dated 09.10.2023.
• Include Government Disputes and narrow the exclusion clause: The Parliament should reconsider the blanket exemption for government and its agencies in non-commercial disputes before notifying Section 2(iv). At the least, sector-specific mediation by government can be considered, especially in relation to land, tax, service matters, tax and environment. It could also be based upon the value of the dispute. This will demonstrate good faith, setting an example for private parties, and reduce caseload. Schedule I ought to be modified to reduce the disputes excluded such as those before specialised Tribunals such as CCI, Telecom Tribunal, Electricity Tribunal, SAT, SEBI, where they are simple commercial disputes, not pertaining to public policy. Mediation in such cases would help restore relationships and advance economic growth.   
• Mandatory pre-litigation mediation and carrot and stick approach: The net of mandatory pre-litigation mediation needs to be widened, and cost sanctions or incentives for attempting mediation ought to be looked into by the Legislature. This approach has been found to be useful in other countries including Italy, US, UK and Australia.  

It may be mentioned that the Courts are attempting to address these legislative lacunae through developing jurisprudence. The Hon’ble Supreme Court in case of Patil Automative and Yamini Manohar has held that pre-litigation mediation in Commercial matters is the Rule and hence, it imposed costs on the party for avoiding pre-litigation mediation. In the case of Yamini Manohar, it has held that “without some element of compulsion, many parties might never experience benefits of mediation.” It clarified that ‘mandatory’ is only to the extent of the first step, ‘resolving to resolve’, since in any case a settlement cannot be imposed upon parties. However, legislative intervention will hasten the process.

• Develop specialised mediation and embrace technology: The MCI should encourage specialised mediators for family, commercial,industrial and community disputes. Specialists bring subject-matter expertisethat fosters informed solutions. The council could also facilitate online disputeresolution platforms to reach remote areas.
• Cultural shift and rebranding: For mediation to thrive, it must shed the perception of being secondary or “alternative” and judges and lawyers must embrace it as the first option. Judges can integrate mediation intocase management by referring matters early and monitoring settlements. For a cultural shift, rebranding ADR in legal education and public discourse, as suggested by debates in the UK, is to drop the term “alternative” – it can be rebranded as “appropriate” method of dispute resolution.
• Promote awareness and integrate mediation education: Concerted awareness campaigns are needed for all stake holders. Mediation should be included in High School Education, instead of reference only to the confrontational Court system. Besides, business schools, civil service academics and judicial training should incorporate mediation in their curricula,emphasising negotiation skills, communication and problem-solving. Barcouncils could require lawyers to inform clients about mediation options andcourtsrecord this advice in writing. Mediation advocacy, public advertisements and legal literacyprograms can dispel misconceptions about mediation and highlight success stories.
• Ratification of the Singapore Convention: With ratification, if a commercial dispute is mediated and resolved anywhere in the world, the settlement could be directly enforced in India.  This would amplify India’s credibility as a hub of international business.  

Conclusion

India’s Mediation landscape is evolving. The Mediation Act, 2023 represents a landmark effort to transform dispute resolution by institutionalising mediation and making it a mainstream dispute resolution mechanism. By providing mediation a strong legal foundation, establishing institutional framework, guaranteeing confidentiality, party autonomy and enforceability of mediated settlements, the Act aims for a paradigm shift in the outlook to dispute resolution by the parties from confrontational to collaborative. It addresses the needs of an overburdened judiciary and aligns with international trends.

Recently, the National Legal Services Authority (NALSA), in association with Mediation and Conciliation Project Committee (MCPC), Supreme Court of India and under the guidance of the Chief Justice of India and Hon’ble Mr. Justice Surya Kant, judge of the Supreme Court have conceptualized a ninety days, campaign -‘Mediation for the Nation’, whereby the high courts and district courts have been directed to identify and refer pending matters for mediation, varying from family to land acquisition to service to criminal compoundable cases. The Act’s success hinges upon its robust implementation. For this, the MCI must be established and standards for mediators and mediation institutes specified, government disputes included for mediation and the Singapore Convention ratified. The Act must be implemented at the grassroot levels, by working together with regional bar associations, non-governmental organizations, Chambers of Commerce, Colleges, Panchayats and others. This law also signals new opportunities for advocates and other professionals, to serve as mediators, or mediation counsels and to be part of a less adversarial form of justice. Mediation is not a ‘lesser’ but a ‘wiser’ form of justice. Public awareness, sensitization of all stakeholders, trust building, quality of mediators and Institutes are essential for mediation to become an effective tool for timely, cost effective and amicable settlement of disputes. Ultimately, the success of the Mediation Act hinges up