Introduction

1. In December 2021, the Mediation Bill of 2021 was introduced

in the Rajya Sabha, followed by a referral to the Standing
Committee on Personnel, Public Grievances, Law & Justice. On
July 13, 2022, the committee issued its 117th Report, which
included specific recommendations for the Bill. Some of these
recommendations gained approval from the Union Cabinet.
Consequently, the Mediation Bill of 2023, commonly referred to
as the 'Mediation Bill,' successfully passed both the Rajya Sabha
on August 2, 2023, and the Lok Sabha on August 7, 2023. Upon
receiving Presidential assent, it will formally become the
'Mediation Act of 2023.'
2. The Concept of Mediation is ancient and deeply rooted in
our country. It has been practised in the form of the Panchayat
system for centuries, in which respected elders of the village
worked as mediators between the parties and helped to resolve
their disputes.
3. Mediation is one of the key components of Alternative
Dispute Resolution (“ADR”) which also includes Arbitration
and Conciliation. The growing adoption of the ADR mechanism
has aided in reducing the burden on the judiciary and thus
facilitated prompt and equitable delivery of justice to the
nation's citizens. According to the "Survey of Dispute
Resolution in India, 2023," conducted jointly by the Federation
of Indian Corporate Lawyers (FICL) and the Centre for Trade
and Investment Law (CTIL), participants have ranked
Mediation/Conciliation as the second most favoured method of
dispute resolution in India.[1]
4. In its essence, Mediation constitutes a conflict resolution
methodology wherein two or more disputing parties reach a
mutually acceptable resolution, guided by a neutral third party.
It is important to note that a mediator does not hold the role of a
judge but rather functions as a facilitator, aiding the involved
parties in identifying common ground and achieving consensus.

Need of the Mediation Act.

5. During a discussion on the draft legislation on The
Mediation Bill, Union Minister for Law and Justice, Arjun Ram
Meghwal, said, "Mediation is not a new concept for an ancient
country like India. Several examples of mediation are available
in different texts and scriptures." He added that the Bill aims at
addressing and resolving the problems of the poor. The Law
Minister said that about 70,000 cases are pending in the
Supreme Court and another 60 lakh were pending arbitration in
high courts. He noted that as many as 4 crore cases were
pending in the district and subordinate courts.[2]
6. There has been a significant demand for the introduction of
a dedicated mediation law, aimed at establishing a formal
framework for the mediation process and eliminating
discrepancies found in various existing statutes, such as the
Code of Civil Procedure 1908, the Industrial Disputes Act 1947,
and the Commercial Courts Act 2015, among others.
Additionally, it became imperative to enact legislation that could
effectively address both domestic and international mediation
matters. Furthermore, India signed the Singapore Convention on
Mediation ("Singapore Convention") on August 7, 2019, which
has standardised and unified rules for mediation in international
commercial disputes; however, the ratification of the Singapore
Convention is still pending.
7. Furthermore, there is a lack of consistent procedural rules
governing the mediation process, resulting in proceedings
adhering to the guidelines prescribed by individual High Courts.
These inter-alia factors have created obstacles in fully realizing
the advantages of mediation. Additionally, some statutes such as
the Companies Act 2013, MSME Act 2006, and Industrial
Relations Code 2020, among others, include provisions for
mediation as a dispute resolution mechanism. However, in cases
falling under these statutes, post-litigation scenarios are
governed by the Code of Civil Procedure (CPC), and even pre-
litigation mediation remains unregulated.
8. It is worth highlighting Section 12A of the Commercial
Courts Act, which mandates pre-litigation mediation for all
cases brought before commercial courts, except in cases
requiring urgent relief. Regrettably, parties have sometimes
exploited this exception to circumvent mediation, resulting in
the provision's failure to achieve its intended objective.
9. Given the identified gaps in the existing legal framework, the
proposed Mediation Bill of 2021 seeks to regulate various
aspects of mediation within the Indian legal system.
Core Provisions of the Mediation Bill
10. Scope of the Mediation Bill: The Mediation Bill will
apply to mediation/conciliation proceedings carried out within
India under the following circumstances:
(i) when all involved parties reside in, are incorporated
in, or operate their businesses within India,
(ii) when the mediation agreement explicitly stipulates
adherence to this Bill,
(iii) in cases of international mediation, which pertains to
commercial disputes involving at least one party that is a foreign
government, foreign national/resident, or an entity with its
business premises located outside India. The Statement of
Objects and Reasons of the Bill states that Mediation will
subsume conciliation under Part III of the Arbitration and
Conciliation Act, 1996 and both terms “mediation” &
“conciliation” shall be used interchangeably.
11. In instances where the central or state government is a
party to the mediation, the Mediation Bill jurisdiction is limited
to (a) matters pertaining to commercial disputes, and (b) other
disputes as specified by the respective government through
notification. However, the Mediation Bill will not override the
statutes specified in the Second Schedule which include The
Industrial Disputes Act, 1947; the Industrial Relations Code,
2020; the Family Courts Act, 1984; the Finance Act, 2016; the
Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013, amongst others.
12. A broad aperture has been provided under Sections 4 & 5 of
the Bill for parties to commence mediation. This can be done
either by incorporating a dedicated mediation clause within the
contract, entering into a separate agreement, or in cases where
no prior "mediation clause" exists, the parties may opt for
mediation by mutual agreement to resolve any current or
impending disputes.
13. Pre-litigation Mediation: In case of civil or commercial
disputes, a person must try to settle the dispute by mediation
before approaching any court or certain tribunals as notified.
Even if the parties fail to reach a settlement through pre-
litigation mediation, the court or tribunal may at any stage of the
proceedings refer the parties to mediation if they request for the
same.
14. Subject matter of disputes: Section 7 of the Mediation
Bill sets forth a prohibition on specific disputes as outlined in
the First Schedule, which are ineligible for mediation referral.
These encompass disputes encompassing criminal offense
prosecution, both direct and indirect tax disputes, and conflicts
entailing the rights of third parties (with the exception of cases
involving a child's welfare in matrimonial matters).
15. Interim Reliefs: Section 8 of the Mediation Bill
incorporates a provision allowing parties to seek recourse to the
court or tribunal with appropriate jurisdiction in the event of
extraordinary circumstances, necessitating urgent interim relief
either prior to or during the mediation process. However, the
Bill refrains from providing specific details regarding what
constitutes "exceptional circumstances," leaving this matter
open to judicial interpretation.
16. Period of Mediation: As per the 2023 Bill, mediation is
to be completed within a period of 120 days, with a maximum
extension of 60 days. The Mediation Bill has fixed a time limit
of 180 days to complete mediation. Furthermore, the Bill
stipulates that parties have the right to withdraw from mediation
after the initial two mediation sessions. Nevertheless, if a party
fails to attend these first two sessions without valid justification,
resulting in the mediation's failure, such behaviour may be
considered by the court or tribunal when determining costs in
any subsequent legal proceedings involving the same subject
matter.
17. Enforceability of Mediated Settlement Agreements
(MSA): Chapter 6 of the Bill deals with the enforcement of the
settlement arrived through mediation. The Bill envisions that the
settlement would be documented in writing, bearing the
signatures of the parties involved, and officially validated by the
mediator. Following this authentication, the settlement would be
enforceable in accordance with the provisions of the Civil
Procedure Code, 1908 treating it as if it were a court-issued
judgment or decree. This stands in contrast to a settlement
agreement reached through conciliation under the Arbitration
Act (which is currently proposed for removal), which carries the
status and legal effect of an arbitral award.
18. Procedure to challenge the MSA: The threshold to contest
MSA is very narrow such as fraud, corruption, impersonation, or
if the subject matter of the dispute was unsuitable for mediation.
To initiate such a challenge, the concerned party must file an
application before the court or tribunal that holds the requisite
jurisdiction within 90 days from the date they received the
authenticated MSA copy. In cases where the court is convinced
that the applicant had valid reasons preventing them from filing
the application within the initial 90-day period, an extension of
up to another 90 days may be granted.
19. Online Mediation: To keep abreast with the acceptance of
conducting online mediation during COVID times, The Bill
embraces the concept of online mediation as a means to
overcome logistical challenges for parties to travel, etc. It offers
parties the option to engage in mediation virtually. Nevertheless,
to uphold the security and effectiveness of such online
mediation, it becomes crucial to establish clear regulations
governing the conduct of participants throughout these virtual
proceedings, as well as rigorous procedures to be adhered to
during the mediation process.
20. Confidentiality: Confidentiality is at the heart of a
mediation process and is critical to a successful resolution. The
parties must be assured that they can share sensitive information
at the session, where it is necessary to see that their true needs
and interests may be met, without fear of subsequent disclosure
to their detriment. The Bill explicitly specifies that all proposals,
admissions, as well as documents exclusively created for the
mediation process, must be treated with the utmost
confidentiality.
21. Mediation Council of India: The Mediation Bill outlines
the formation of a Mediation Council of India consisting of
seven members. The Council will consist of a chairperson, two
full-time members (with experience in mediation or ADR), three
ex-officio members (including Secretaries in the Ministries of
Law and Justice and Finance), and one part-time member (from
an industry body). This council's primary role is to foster the
practice of mediation, both within the country and on an
international scale, register mediators, recognise mediation
service providers and mediation institutes, etc.
22. Institutional mediation: Chapter 9 of the Bill envisions the
establishment of a 'Mediation Service Provider and Mediation
Institutes' whose primary functions would be to accredit
mediators, curate a panel of qualified mediators, offer necessary
facilities and administrative support for the mediation process,
and more. Furthermore, the Bill specifies that the grading of
these Mediation Service Providers would be overseen by the
Mediation Council of India.
23.Upon the official enactment of the Mediation Bill into law,
the specified statutes will undergo amendments as outlined from
Third Schedule 3 to Tenth Schedule namely:
i. The Indian Contract Act, 1872,
ii. The Code of Civil Procedure, 1908,
iii. The Legal Service Authorities Act, 1987,
iv. The Arbitration and Conciliation Act, 1996,
v. The Micro, Small and Medium Enterprises
Development Act, 2006,
vi. The Companies Act, 2013,
vii. The Commercial Courts Act, 2015,
viii. The Consumer Protection Act, 2019.
Conclusion
24. The mediation principles embedded in current Acts barring
a few like the Commercial Courts Act 2015, etc have become
somewhat outdated in the context of our contemporary times.
The Mediation Act, serving as a comprehensive framework, will
not only modernize these existing practices but also establish a
unified and harmonized approach, aligning them with the
demands of today. The age-old saying, "the proof of the pudding
is in the eating," underscores that the real evaluation occurs
during actual implementation. Any shortcomings or
deficiencies in the Mediation Act will become apparent
only when it is applied in practice.