Topic: The Mediation Act 2023: An Analysis

Name: Sruti Mohapatra

Roll No: 1982137

Section: BBA LLB (B)

Introduction
1
Mediation has been used extensively throughout Indian history to resolve a wide range of
disputes. The village councils, or Gram Panchayats, have long served as the community's
middlemen. Mediation is not a novel concept; it is a long-standing alternative dispute
resolution (ADR) mechanism available to disputing parties. One other noteworthy aspect of
mediation is that it can be tailored to meet the needs of the parties, which makes it a very
adaptable and flexible approach to dispute resolution. The recently passed Mediation Act, 2023
is therefore seen as progressive by the legal community and business community.

India signed the Singapore Convention on Mediation (the "Singapore Convention") on

August 7, 2019, but it hasn't been ratified yet3. Consequently, the Singapore Convention on
Mediation—which is analogous to the Arbitration and Conciliation Act, 1996 ("A&C Act")'s
adoption of the "United Nations Convention on the Recognition and Enforcement of Foreign
Arbitral Awards"—is not incorporated into the Mediation Act. The Singapore Convention
takes into account and provides a framework for the cross-national enforcement of settlement
agreements reached through international mediation.

On July 13, 2022, the Standing Committee issued its 117th Report on the Mediation Bill to
make various suggestions to its provision. In furtherance to this, the Mediation Bill 2023 was
passed by the Rajya Sabha on August 2, 2023, and by the Lok Sabha on August 7, 2023. The
Bill received assent from the President on September 15, 2023, and the Bill came to be
known as the “Mediation Act, 2023” (“Mediation Act”).

Key Features of the Mediation Act, 2023

Section 2 provides for the application of the Act to mediations conducted in India and

• All or both parties habitually reside in or are incorporated in or have their place of
business in India; or
• The mediation agreement provides that any dispute shall be resolved in accordance
with the provisions of the Mediation Act; or
• There is an international mediation; or

• Wherein party to the dispute is the Government or its authorities and where the matter
pertains to a commercial dispute; or

1 https://www.nishithdesai.com/NewsDetails/10748
 • To any other kind of dispute, if deemed appropriate and notified by the Government
for resolution through mediation under this Act wherein the Government or its
authorities is a party.

Therefore, the Act will be applicable to disputes involving the Government or its authorities
only when either the dispute is commercial in nature, or such dispute is notified to be
resolvable through mediation.

3(g) defines international mediation as mediation that relates to a commercial dispute arising
out of a legal relationship, contractual or otherwise, under any law for the time being in force
in India, and where at least one of the parties is:

• An individual who is a national of, or habitually resides in, any country other than
India; or

• A body corporate with its place of business outside India; or

• An association or body of individuals having a place of business outside India; or

• Government of a foreign country.

2
Mandatory pre-litigation mediation- Under Section 5(1), The Mediation Act states that,
regardless of any mediation agreement, the parties may voluntarily and mutually refer the
dispute to mediation before filing any case of civil or commercial nature in any court.17 This
does not apply to commercial disputes of a specified value18 that are subject to mandatory
pre-litigation mediation under the Commercial Courts Act of 2015.19 Furthermore, regardless
of whether a mediation agreement exists or not, any court/tribunal may refer the parties to
mediation at any stage of a proceeding.

Section 6 states that the mediation shall not be held to resolve any dispute or matter listed on
the indicative list in the First Schedule. The first schedule contains disputes involving
allegations of serious and specific fraud and document fabrication. Forgery, impersonation,
coercion, disputes involving claims against minors and persons of unsound mind, suits for
declaration of title against the government, declarations having the effect of right in rem,

2 https://www.mondaq.com/india/arbitration--dispute-resolution/1390584/alternative-dispute-resolution--
ananalysis-of-the-mediation-act-2023
 disputes involving criminal prosecution, and so on. Section 6(2) allows the central
government to amend the First Schedule if it deems it necessary or expedient.

3
Mediators:

Under the Act, the parties are free to choose the mediator and the procedure for appointing a
mediator. The Act does not specify any qualifications for a person to be appointed as a
mediator; however, where the mediator is of a foreign nationality, he or she must have such
qualifications, experience, and accreditation as may be specified. If the parties are unable to
reach an agreement on the appointment of a mediator and the procedure for doing so, they
may apply to a mediation service provider for the appointment of a mediator.

Appointment of Mediators- Section 8(1) states that unless otherwise agreed upon by parties, a
person of any nationality who possesses such qualification, experience, and accreditation as
may be specified may be appointed as a mediator. Parties are free to agree upon the mediator's
name and the procedure of their appointment. In case parties are not able to reach a consensus,
then they can seek appointment of a mediator by way of an application to a mediation service
provider.

4
Mediated Settlement Agreements: Form, Registration, Enforcement and Challenge

1. Form: The agreement must be (a) in writing, (b) between some or all parties in the
mediation, (c) settling some or all disputes between such parties, and (d) authenticated by
the mediator and signed voluntarily by all parties. Furthermore, unlike Section 16 of the
A&C Act, which requires the scope of the award to be limited to the scope of disputes
referred to arbitration under the arbitration agreement, the terms of the mediated settlement
agreement may extend beyond the scope of matters that have been referred to mediation.
As a result, unlike the A&C Act, which limits the award to the issues directly referred to
arbitration, this approach recognises that disputes can be multi-faceted. leading to a more
comprehensive and lasting solution.

2. Registration: Parties may register a mediated settlement agreement other than one
reached in a court or tribunal referred mediation or under the Legal Services Authorities

3 https://parinamlaw.com/analysis-of-the-key-provisions-of-the-mediation-act-2023/

4 https://www.nishithdesai.com/NewsDetails/10748
 Act, 1987, with the authority under the said act or as otherwise specified, within 180 days
(subject to extension) of receiving the authenticated copy of the Agreement. However,
registration is not required. The Mediation Act makes no mention of the consequences of
not registering.

3. Non-settlement Report: If no agreement is reached between the parties within the time
specified, or if the mediator believes that no settlement is possible, the mediator must
submit a signed non- settlement report to the parties in the case of an ad hoc mediation and
to the Mediation Service Provider (defined below) in the case of an institutional
mediation.4 In furtherance of the parties' interests, the non-settlement report would be
subject to confidentiality, and the mediator would not reveal the reasons for non-settlement
or any information related to the parties' conduct during the mediation.

4. Finality and Enforcement: A mediated settlement agreement is final and binding on the
parties. Further, it shall be enforceable as a decree or judgement of a court.

5. Challenge: There are four grounds for challenging a mediated settlement agreement:
fraud, corruption, impersonation, and the subject matter of the dispute was not subject to
mediation under Section 6 of the Mediation Act. An application to challenge the
settlement agreement must be filed within 90 days of receiving a copy of the mediated
settlement agreement, subject to an extension at the discretion of the court in the case of
sufficient cause. While the Mediation Act is well-intended in that it limits the grounds for
challenge, they may be abused by obstinate parties, defeating the purpose of the Mediation
Act. As a result, judicial precedent interpretation may provide

5
Mediation Council of India:

The central government will establish the Mediation Council of India.

5 https://www.thehindubusinessline.com/business-laws/will-the-mediation-act-2023-change-the-way-
partiesresolve-disputes/article67395541.ece
The Council 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 body.

Functions of the Council include: registration of mediators, and recognising mediation service
providers and mediation institutes.

Online mediation:

Chapter VII of the Act recognises online mediation conducted with the use of electronic form
or computer networks and can be resorted to at any stage of mediation with the written
consent of the parties. To facilitate and promote online mediation, the Act under Section
22(5) stipulates that a mediated settlement agreement includes an agreement resulting from
online mediation.

Community mediation:

Under Chapter X, the Act provides for the different kinds of disputes that can be settled
through community mediation with the prior consent of the parties, i.e., disputes relating to
peace, harmony, and tranquillity amongst residents or families.

Potential Impacts of the Act:

The Mediation Act 2023 has the potential to significantly impact the Indian legal system,
bringing about several positive changes:

• Reduced Court Backlog: By encouraging pre-litigation mediation, the Act can

significantly reduce the number of cases filed in courts, leading to faster resolution of
disputes and reduced backlog.
• Cost-Effectiveness: Mediation is generally a more cost-effective and time-efficient
way to resolve disputes compared to litigation, benefitting both individuals and
businesses.
• Improved Access to Justice: The Act can improve access to justice, particularly for
those who cannot afford lengthy and expensive legal proceedings.
 • Enhanced Dispute Resolution: Mediation can lead to more creative and sustainable
solutions compared to court judgments, catering to the specific needs and interests of
the parties involved.
• Promoting Amicable Relationships: Mediation encourages collaboration and
communication, fostering amicable relationships even after resolving the dispute.

Challenges and Future Implications :

Despite its potential benefits, the Act faces certain challenges that need to be addressed:

• Lack of Awareness: Many individuals and businesses remain unaware of the benefits
of mediation, hindering its widespread adoption.
• Limited Availability of Mediators: Ensuring the availability of qualified and trained
mediators throughout the country is crucial for effective implementation of the Act.
• Enforcement of Mediation Agreements: While the Act provides legal recognition to
mediation agreements, ensuring their enforcement in all courts remains a challenge.
• Integration with Court System: Seamless integration of mediation into the court
system is vital for successful implementation of the pre-litigation mediation mandate.

Overcoming these challenges requires a multi-pronged approach, including:

• Increased awareness campaigns: Educating the public and legal professionals about
the benefits and processes of mediation.
• Investing in mediator training: Developing comprehensive training programs to ensure
the availability of qualified and skilled mediators.
• Strengthening enforcement mechanisms: Establishing efficient and consistent
procedures for enforcing mediation agreements across courts.
• Promoting collaboration: Fostering closer collaboration between the judiciary,
mediator associations, and legal professionals for seamless integration of mediation
into the legal system.
Conclusion

The Mediation Act 2023 represents an important step forward in India's efforts to promote
ADR mechanisms. The Mediation Act's passage through the legislative process, including the
Standing Committee's recommendations, demonstrates a conscientious effort to strike a
balance between voluntary participation and judicial intervention - all while protecting the
confidentiality and privileged communications of parties seeking to settle disputes amicably.
The creation of MCI, the provisions for mediated settlement agreements, and the role of
mediation service providers all contribute to the establishment of a comprehensive mediation
framework. While there are still challenges, the Act's potential to improve access to justice,
lower litigation costs, and facilitate amicable dispute resolution is undeniable. By addressing
existing challenges and effectively implementing the Act, India can harness the power of
mediation and contribute to a more efficient and accessible justice system for all.