Decrypting the Mediation Act, 2023: A Catalyst for Harmonized Dispute Resolution

Decrypting the Mediation Act, 2023: A Catalyst for Harmonized Dispute Resolution

Mediation is one of the components of Alternative Dispute Resolution (“ADR”), which alsoincludes arbitration and conciliation. In India, ADR is facilitated by Section 89 of the Code of Civil Procedure, 1908. Given the surge in commercial disputes and litigation, a dedicated mediation legislation becomes crucial.

The Mediation Act, 2023 (“Act”) came by way of the Mediation Bill, 2021, which sought to institutionalise, streamline, and provide a structured framework for parties embroiled in conflicts across commercial and non-commercial matters. The Act was notified on September 15, 2023, and comprises of 11 chapters, 65 sections and 10 schedules.

The Act fosters expedited, accessible, cost-effective mode of resolution and encourages a shift towards dialogue and collaboration. It has the potential to transform India’s approach away from lengthy litigation processes.

Types of Mediation recognized under the Act:

1. Pre-litigation mediation: The Act recognises the concept of voluntary settlement of disputes before the initiation of formal legal proceedings in the court.

2. International mediation: This type of mediation entails scenarios wherein at least one of the parties reside or operate outside India or has a business outside India.

3. Community mediation: This involves disputes that would likely affect and disrupt the harmony of a locality. 

4. Online mediation: Parties may opt for online/virtual mediation and in order to ensure confidentiality, the Act places restrictions on audio and video recordings.

Key provisions of the Act:

The objective of the Act is to ‘promote and facilitate’ different forms of mediation and to ensure settlements in a time-bound manner. Following are the key provisions entailed in the Act:

1. Definition: Statutory recognition is placed on pre-litigation mediation, online mediation, community mediation and also includes conciliation under the wing of mediation, aligning with conventional international practice. As a result, Part III of the Arbitration and Conciliation Act, 1996, dealing with conciliation, would become redundant with the enactment of the Act.

2. Applicability: The Act applies to both civil and commercial disputes in India, including international commercial mediations, as long as the mediation occurs in India. It also applies to commercial disputes involving the central or state government and government-owned entities. 

��܉�܉��3. Place of mediation: Mediations may be conducted within the territorial jurisdiction of the court or tribunal of competent jurisdiction. Parties may, by mutual consent, decide to conduct mediations outside the territorial jurisdiction or opt for online mediations.

4. Matters not fit for mediation: Certain matters may not be mediated which inter aliaincludes disputes against minors or persons with intellectual disability, prosecution of criminal offences, disputes relating to direct / indirect taxation, disputes pertaining to the Telecom Regulatory Authority of India, etc.

5. Mediation Council of India (“MCI”): The Act establishes the MCI to regulate mediation systematically in India.

6. Mediation agreement: This may be a clause in an agreement or a separate agreementaltogether. Such an agreement must be made in writing.

7. Mediated Settlement Agreement (“MSA”): An MSA must be authenticated by the mediator. MSAs are binding and enforceable as a court decree or judgment.

8. Mediation Service Providers (“MSP”): Mediation proceedings may be facilitated by MSPs, such as bodies under the Legal Services Act, 1987, or court-affiliated mediation centres. These MSPs maintain mediator panels, provide infrastructure, and offer secretarial assistance, including MSA registration.

9. Confidentiality: The Act ensures confidentiality of all aspects of mediation, including documents, statements, and communications, making them privileged and inadmissible as evidence in court or legal proceedings.

Conclusion and Recommendations:

While the Act marks a transformational move towards the culture of ADR in India, there are some inherent lacunae:

1. While the Act has instituted the concept of international mediation, the practical applicability of the concept is ambiguous as the Act does not detail on the procedure for resolving international disputes. The Act is unclear on enforcing cross-border MSAs and lacks an effective framework for ensuring the enforceability of MSAs made in India outside the country.

2. Challenges to MSAs based on fraud, corruption, impersonation, or non-mediatable issues must be raised within a period of 90 days. However, concerns arise because coercion and undue influence cannot be grounds for challenge, and there is no resolution mechanism after this time limit.

3. India is a signatory to the Singapore Convention on Mediation (“Singapore Convention”), which provides that a mediation agreement between parties belonging to different countries can be enforced in any country that is a signatory to the convention. The Singapore Convention, however, hasn’t been ratified by India. This hinders the Act’s effectiveness as a comprehensive law.

4. Defining the parameters of interim relief available to parties undergoing mediation will help avoid misinterpretation and ensure time-bound resolutions. Further, the scope of mediation may be expanded to include a wider range of disputes, such as tortious liabilities, matrimonial, and custody disputes.

Nevertheless, the Act demonstrates a welcome move in the effort to balance voluntary participation with minimal judicial intervention, enabling confidentiality and equipping amicable settlement mechanisms. 

References:

1. A worthy point to be noted is that certain statutes, such as the Commercial Courts Act, 2015 require that disputes be mandatorily referred to mediation before moving towards formal litigation proceedings.

2. Department-Related Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice, “One Hundred Seventeenth Report on The Mediation Bill, 2021”, https://prsindia.org/files/bills_acts/bills_parliament/2021/SC%20Report_Mediation%20bill.pdf