Mediation Act 2023: Important features of the New Law

The Mediation Bill was passed by both houses and has now become the Mediation Act 2023. The Bill seeks 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.”

“Mediation is a voluntary, party-centered and structured negotiation process where a neutral third party assists the parties in amicably resolving their dispute by using specialized communication and negotiation techniques.”

‘Mediation is one of the methods of alternate dispute resolution’- Section 89 of Code of Civil Procedure Courts. 

Dr Prem Lata, Legal Head VOICE

Concept of Mediation 

The customary form of this concept can be traced back to the ancient Indian system, even though in modern times, some strongly associate it with American origins. Within our ancient scriptures, evidence of mediation can be found dating as far back as the time of the Mahabharata, when Lord Krishna attempted to mediate and negotiate between the Kouravas and Pandavas, albeit without success, ultimately resulting in a major war. This scriptural account conveys a significant message, highlighting that such a great conflict could have been averted if Lord Krishna’s mediation and negotiation efforts had been successful. Virtually every community, country, and culture possess a rich history of employing diverse methods of informal dispute resolution. In our villages today, the Panchayat system remains the most effective means of resolving disputes. People continue to have faith in and willingly appoint a respected individual from their community to address their grievances, avoiding the need for court battles.

Mediation in India:

  • Alternate Dispute Resolution System in the form of Arbitration and conciliation act was already in practice which went under drastic change in the year 1996 by repealing the earlier act of 1940.
  • The concept of mediation received legislative recognition in India for the first time through Industrial Disputes Act, 1947. Section 4 of the Act has provided for conciliation efforts and duty was assigned to the Presiding officer for mediating and promoting the settlement of Industrial disputes. Detailed procedures were prescribed for conciliation proceedings under the Act.  
  • The Legal Services Authorities Act, 1987 came into existence by which the National Legal Services Authority was constituted as a Central Authority. The aim of the authorities was to encourage the settlement of disputes by way of negotiations and settlements.  
  • In 1999, the Indian Parliament passed the Civil Procedure Code Amendment Act of 1999 inserting Sec.89 in the Code of Civil Procedure 1908, providing for reference of cases pending in the Courts to ADR which included mediation. The Amendment was brought into force with effect from 1st July 2002.
  • The Mediation and Conciliation Project Committee (MCPC) was established by the Honorable Supreme Court of India on April 9, 2005, with its inaugural Chairman being the Honorable Mr. Justice N. Santosh Hegde. This committee comprised other esteemed judges from both the Supreme Court and High Courts, senior advocates, and the Member Secretary of the National Legal Services Authority. During its meeting on July 11, 2005, the committee decided to launch a pilot project for judicial mediation in lower courts, which proved highly successful. This success led to the establishment of mediation centers affiliated with lower courts, High Courts, and even the Supreme Court throughout the country.
  • The recognition of mediation began to increase in prominence starting in 2002, coinciding with the enactment of several statutes such as the Companies Act of 2013, the Commercial Courts Act of 2015, the Real Estate (Regulation and Development) Act of 2016, the Insolvency and Bankruptcy Code of 2016, and the Consumer Protection Act of 2019, all of which placed a significant emphasis on mediation. However, during this period, there was a notable absence of specific procedural laws governing mediation.
  • For the first time, the Hon’ble Supreme Court of India confirmed legal and constitutional validity of the new law reforms in the case filed by Salem Bar Association, TN V/S Union of India (2003) ISCC 499.  The Law Commission of India was then directed to remove the anomaly in order to make section 89 of CPC workable. Delhi High Court started its own lawyers managing mediation and conciliation centers. Karnataka High Court also started a court-annexed mediation and conciliation centers and trained their mediators. Now court-annexed mediation centers have been started in trial courts all over the country. 

Development leading to Mediation Act 2023 

The entire conversation about a Law on Mediation started in December 2018. The United Nations General Assembly, by consensus, passed a resolution to adopt the United Nations Convention on International Settlement Agreements Resulting from Mediation and  also recommended that the Convention be known as the “Singapore Convention on Mediation”. Signing ceremony of the Convention was held in Singapore on 7th August 2019. As of 12th August 2023, the Convention has 55 signatories, including India.

In India, August A Bill was introduced in Rajya Sabha on 20th December, 2021 and was referred to Parliamentary Standing Committee, Law and Justice for examination and report. The Committee held extensive deliberations on the Bill with various Stakeholders and public at large and gave a Report (No. 117) on 13th July 2022 in two Volumes, containing the analysis and recommendations of the Committee and also the written memoranda/ submissions received by the Committee from the individuals/ experts/ institutions. After the Committee Report, again an Expert Committee was constituted by the Ministry to study the Report and finalise the Bill. So finally, after all this, the Mediation Act 2023 was introduced in Rajya Sabha on 1st August 2023, and it was passed. Now it has been passed by the Lok Sabha also on 7th of August 2023.

Important features of Mediation 

  1. Self-participation-oriented process in which litigant, advocate and even judges become participant in the mediation process and litigant gets a feeling that he is the person deciding for himself and is equally important to the entire process. Once the judge refers the case for mediation, the advocate or litigants brief the mediator. The litigants are given an opportunity to play their own participatory role in the resolution of disputes leading to win- win positions for both the parties. 
  2. Time saving &less expensive.  
  3. Pre-litigation mediation: Any party before filing any suit or proceedings of civil or commercial nature in any court, shall take steps to settle the disputes by pre-litigation mediation whether any agreement to mediation exists or not (Section 6 of the Act). 
  4. Fit cases for Mediation: All dispute relating to compoundable offences or matrimonial offences connected with or arising out of civil proceedings between the parties can be referred for mediation It introduces a list of disputes under “Schedule-I”, which will not be fit for mediation. The list includes disputes involving allegations of serious, specific fraud, fabrication of documents, forgery, impersonation, coercion, criminal offences, etc.
  5. Time specified for Mediation: The Bill provides that the mediation under it should be completed within a period of 180 days from the date fixed for the first appearance before the mediator. However, it can be further extended as agreed by the parties, but not exceeding 180 days.
  6. Establishment of the Mediation Council of India: It also provides for the establishment of the Mediation Council of India by the central government. It will consist of a chairperson, two full-time members (with experience in mediation or ADR), three ex-officio members (including the Law Secretary, and the Expenditure Secretary), and a part-time member from an industry. Functions of the Council includes Registration of mediators, recognizing mediation service providers and Mediation institutes who train, educate, and certify mediators’ body.
  7. Concept of “Community mediation “is also evolved in this act. Any dispute that disrupts the peace, harmony, and cohesion among the residents of a particular locality can be directed towards community mediation, provided there is prior mutual consent from the involved parties. This mediation process is overseen by an Authority established under the Legal Services Authorities Act of 1987, or it can be initiated by the District Magistrate or Sub-Divisional Magistrate in areas where any of the disputing parties can request mediation for resolution. 
  8. Voluntary Process: Consent of parties required. Mediation Act under Section 5(1) has made it voluntary. upholding the autonomy of parties in choosing the option and preserving Right to justice as fundamental right of a citizen. 
  9. International Mediation recognized: Section 2(iii), it states that this Act shall apply where mediation is conducted in India, even if it is an international mediation. Under Section 3(g) “international mediation” is also defined.
  10. Mediation agreement” is provided in Section 4 of the Act but under Section 5(1), there is no distinction given for disputes covered under a mediation agreement or without any such clause. Meaning thereby it is not necessary to have mediation agreement clause for referring the matter to mediator like Arbitration and conciliation act 1996.
  11. Section 3(f) of the Act outlines the provision for “Institutional mediation.” However, the Act remains silent on the consequences if an agreement that includes an institutional mediation clause is breached. This omission appears to be deliberate, possibly stemming from the Act’s clear emphasis on the voluntary nature of the mediation process.

Missing Provisions 

Some legal experts have an opinion that the Mediation Act failed to consider the fact that after the Mediation law is made, business community and commercial contracts will start including mediation agreements in their contracts. Even though “mediation agreement” is provided in Section 4 of the Act and “Institutional mediation” is provided under Section 3(f) of the Act, under Section 5(1), there is no distinction given for disputes covered under a pre-defined institutional mediation clause and of those without mediation clause.

It is further felt that no party will be willing to conduct an international mediation with an Indian party, as he will not be able to enforce the Mediation Agreement clause. Despite the recommendation of the Committee, the part on enforcement of International Mediation is omitted though under Section 2(iii), it states that this Act shall apply where mediation is conducted in India, even if it is an international mediation. Under Section 3(g) “international mediation” is also defined enactment without any ambiguity. 

The Committee believed that by taking this step, they could successfully work towards the goal of establishing India as a strong hub for both domestic and international mediation. Furthermore, addressing the primary concern raised against the 2021 Mediation Bill, which was its compulsory nature, has been resolved by making mediation a voluntary process. Given these considerations, the inclusion of a mediation clause is no longer deemed necessary, and there is now a sense of optimism as we move forward with mediation at all levels.

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