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Mediation Matters: A Note on the Mediation Act, 2023

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Recently, the government has notified the Mediation Act, 2023 (“the Act”) in the Gazette of India. The Mediation Bill was initially introduced in Parliament in December 2021 but was referred to the Parliamentary Standing Committee for examination. The 2023 bill was introduced after incorporating some of the recommendations of the Standing Committee.

The Mediation Act represents a significant advancement in the promotion and facilitation of mediation for the resolution of disputes, encompassing both commercial and non-commercial matters. It also aims to enforce mediated settlement agreements, establish a body for mediator registration, encourage community mediation, and make online mediation an acceptable and cost-effective process. This article explores the key features of the Mediation Act, 2023, and its potential impact on the Indian legal landscape.

Mediation Agreement

The Act requires every mediation agreement to be in writing and should unequivocally provide for the submission of all or certain disputes to mediation. Such a mediation agreement can be drafted either as a clause within the existing agreement or as a separate document. The requirement of the written mediation agreement is fulfilled if it meets one of the following criteria:

1. Executed as a formal document between parties.
2. Contained within an exchange of communications, including electronic communications under the purview of the Information Technology Act, 2000.
3. Included in any pleadings where one party asserts the existence of such an agreement, and the other party does not refute it.

Disputes Not Eligible for Mediation

The Act lists several categories of disputes that cannot be referred to mediation. These include disputes involving criminal offenses, proceedings arising from the misconduct of registered professionals, and disputes related to the imposition and collection of direct or indirect taxes, as well as tax refunds. However, the court can refer any dispute relating to compoundable offenses (including compoundable matrimonial offenses) to mediation.

The Act’s framework ensures that certain critical matters are excluded from mediation, maintaining the integrity of the judicial process in such cases.

Pre-Litigation Mediation

The Act grants parties the option to voluntarily and mutually refer their disputes to mediation before initiating a lawsuit or court proceedings. This flexibility represents a significant departure from the 2021 Bill, which initially mandated parties to attend at least two mediation sessions. The change can be attributed to the recommendations of the Parliamentary Standing Committee, which suggested making pre-litigation mediation voluntary rather than mandatory.

However, an alternative perspective suggests that the initial mandatory aspect primarily focused on compelling parties to attend informational mediation sessions only while preserving the voluntary nature of the actual mediation proceedings. According to this viewpoint, the purpose of mandatory pre-litigation mediation is to equip parties with information about the mediation process through sessions before initiating a lawsuit. After attending the mandatory information sessions, either party retains the freedom to terminate and exit the process, or, if they choose, they can proceed to participate voluntarily. We also align with this viewpoint and believe that mandatory information sessions could have been advantageous for the parties.

Mediator

Unless otherwise agreed upon by the parties, individuals of any nationality can serve as mediators, provided they possess the requisite qualifications, experience, and accreditation as prescribed by the Act. Parties have the freedom to select their mediator and establish the procedure for their appointment. If parties are unable to reach an agreement on the mediator or appointment procedure, the claiming party can apply to a mediation service provider for mediator appointment. Within seven days of receiving the application, the mediation service provider must either appoint a mediator agreed upon by the parties or select a mediator from its panel.

Time Period

Mediation proceedings under the Act must be completed within 120 days from the date of the initial appearance before the mediator. This period can be extended for a maximum of 60 days if deemed necessary. These time constraints ensure that mediation remains a prompt and efficient dispute resolution mechanism.

Mediated Settlement Agreement

Once a mediation is successfully concluded, parties must document the settlement terms in a written agreement, signed by all parties and authenticated by the mediator. An unchallenged Mediated Settlement Agreement can be enforced in accordance with the provisions of the Code of Civil Procedure, 1908, much like a court judgment or decree. The Act only permits challenges to mediated settlement agreements on specific grounds, such as fraud, corruption, impersonation, or if the mediation was impermissible under the Act.

Jurisdiction

The Act stipulates that all mediations initiated under its purview must occur within the territorial jurisdiction of the competent court or tribunal responsible for adjudicating the dispute. However, parties can mutually agree to conduct mediation in a different location or through virtual mode. Despite the choice of mediation venue, the enforcement, challenge, and registration of mediated settlement agreements will be deemed to have occurred within the territorial jurisdiction of the respective court or tribunal.

Mediation Council

The Act also envisage establishment of a Mediation Council with its head office in Delhi. The Mediation Council can:

1. lay down the guidelines for the continuous education, certification and assessment of mediators by the recognised mediation institutes;
2. provide for the manner of conduct of mediation proceedings;
3. provide for manner of registration of mediators and renew, withdraw, suspend or cancel registration;
4. lay down standards for professional and ethical conduct of mediators;
5. hold trainings, workshops and courses in the area of mediation in collaboration with mediation service providers, law firms and universities and other stakeholders, both Indian and international, and any other mediation institutes;
6. enter into memoranda of understanding or agreements with domestic and international bodies or organisations or institutions;
7. recognise mediation institutes and mediation service providers and renew, withdraw, suspend or cancel such recognition;
8. specify the criteria for recognition of mediation institutes and mediation service providers;
9. lay down standards for professional and ethical conduct of the mediation institutes and mediation service providers;
10. maintain an electronic depository of the mediated settlement agreements made in India.

Conclusion

The Mediation Act of 2023 represents a significant milestone in India’s legal framework, promoting mediation as an efficient and accessible means of dispute resolution. While it has received acclaim for streamlining the mediation process, there is room for improvement, particularly in the areas of interim relief mechanisms and mandatory attendance for informational sessions. As the Act comes into effect, it is expected to profoundly influence how individuals and businesses in India approach conflict resolution, providing a practical alternative to traditional litigation.