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The Mediation Act 2023 has been notified in the gazette of India after receiving the assent of the President of India on September 15 2023. The act aims to promote and facilitate institutional mediation for resolution of commercial and other disputes. It also seeks to encourage community mediation and to make online mediation as acceptable and cost effective process.
Key Features of Mediation Act 2023 | |
| Settlement of Disputes through Mediation | The act requires persons to try to settle civil or commercial disputes through mediation before approaching any court or tribunal. |
| Pre-Litigation Mediation | The Act permits parties to a dispute (regardless of whether they have executed a mediation agreement) to voluntarily and mutually refer their dispute to mediation prior to filing a suit or instituting proceedings before any court. Pre-litigation mediation has been made voluntary(departure from earlier bill). |
| Time Period for completion of Mediation | Mediation proceedings under the Act must be completed within a period of 120 days from the date of the first appearance before the mediator, which may be extended for a maximum period of 60 days. |
| Setting up of Mediation Council of India | The act provides for the setting up of The Mediation Council of India. Its functions will include registering mediators,recognising mediation service providers and mediation institutes. |
| Forms of Mediation | The act aims to govern two forms of mediation-voluntary and mandatory.A voluntary mediation is where parties under a written mediation agreement seek mediation. Such an agreement may either be as part of a contract or exist independently.A Mandatory mediation is, where barring certain areas of disputes, there is a legal obligation on parties to mediate before approaching a court/tribunal. |
| Areas excluded from Mediation | The areas excluded from mediation include serious allegations of fraud, criminal offenses, environmental matters reserved for the National Green Tribunal, and matters relating to competition, telecom, securities and electricity law and land acquisition. |
| Court’s Role during Mediation | The act will not prevent any court from referring any dispute to mediation relating to compoundable or matrimonial offenses connected with or arising out of civil proceedings between the parties. |
| Introduction of Concept of Community Mediation | Disputes likely to affect peace, harmony and tranquility amongst the residents or families of any area or locality can be mediated and settled by a panel of mediators appointed by the concerned Authority. |
What is Mediation and what are other forms of alternate Dispute Mechanisms(ADR)?
Mediation- Mediation is a voluntary process in which parties try to settle disputes with the assistance of an independent third person (the mediator). It does not impose a solution on the parties but creates a conducive environment in which they can resolve their dispute. The mediation process depends on the choice of parties and there are no strict or binding rules of procedure.
In India, mediation was legitimized by Section 89 of the Civil Procedure Code, 1908 before the enactment of Mediation Act 2023.
Mediation is part of ADR (Alternate Dispute Mechanism).
| Alternate Dispute Mechanism- ADR refers to means by which disputes are settled outside the traditional court system. In India, modes of ADR include arbitration, negotiation, mediation, and Lok Adalats. | ||||||||||||||||||||||||||
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What is the significance of Mediation Act 2023?
Reduction of huge pendency of court cases cases- The act obligates each party to take steps to settle their dispute through pre-litigation mediation before approaching an Indian court. It will reduce the filing of claims before Indian courts. Our courts are already overburdened with 70 thousand cases in pending in Supreme Court and 60 lakh cases are pending in High Courts.
Strengthening of Alternative Dispute Resolution (ADR)- The bill would facilitate quick disposal of disputes outside of traditional court systems.Mediation results in the amicable resolution of disputes in civil, commercial, family, and matrimonial affairs. It helps develop a collaborative approach and protects relationships between disputants. The act would mitigate the risk of deterioration of the parties’ relationship due to a publicly fought dispute.
Promotion of ease of doing business- The act has the potential to have a significant positive impact on the country’s economy and business environment by avoiding delays in the standard process through the courts.
Emergence of India as a centre of Mediation in the world- The mediation act 2023 can put India on the global map as a dispute friendly jurisdiction and attract foreign investments. For Ex- Singapore’s robust mediation ecosystem has attracted greater foreign investments.
Promotion of peace, law and security in the country- The Act provides for provision of community mediation to settle any dispute likely to affect peace, harmony and tranquillity amongst the residents or families of any area. This will promote peace, law and security in the society by building consensus amongst the communities.
Faster outcomes- The Act provides a maximum time period of 180 days for mediation settlement. The judicial courts normally dispose of civil matters within 3 years on an average.
Mediation is a cost effective method- Mediation is a cost-effective dispute resolution process. For Example- According to an article published in Harvard Business Review mediation through outside counsel has an estimated cost of $700,000 and going to courts has an estimated cost of $2.5 million over a period of three to five years.
Mediation provided similar position to commercial arbitration in India- As the recent amendments to the Arbitration and Conciliation Act (A&C Act) prioritised institutional arbitration of disputes, the Act also places emphasis on institutional mediation in India. It envisages “mediation service providers” to provide mediation services, secretarial assistance and infrastructure for the efficient conduct of mediation. This will help in generating more avenues of employment and growth in the country.
Fulfilment of India’s commitment to Singapore Convention on Mediation- India is a signatory to the Singapore Convention on Mediation (United Nations Convention on International Settlement). This act is an important step towards fulfilment of Singapore convention.
Read More- Singapore Convention
What are concerns with the Mediation Act 2023?
Enforcement of settlement agreement- A settlement agreement is essentially a contract between the parties. Sometimes, grounds for challenging are detected at a later stage. However there are limited grounds listed in the act to challenge the enforcement of a settlement agreement. Further only a period of 90 days is given to raise any challenge to the settlement agreement. The settlement agreement clause needs to be re-looked.
“Exceptional circumstances” for seeking interim relief from courts not defined- The Act entitles a party to move the Court, before the commencement or during mediation, for interim relief, only in “exceptional circumstances”.The phrase “exceptional circumstances” is lacking in definition within the Bill.
Challenges with the “online” and “community” mediation introduced by the Act- There are challenges to online mediation in India. As per recent Niti Aayog report only 55% of India have access to the internet and only 27% possess compatible devices for effective online mediation. Further the act makes it mandatory to have a panel of three mediators for community mediation.This would impact the flexibility that the act seeks to bring for mediation settlement.
Applicability to ‘only commercial’ govt disputes- Government is the biggest litigant in the country. The act limits the mediation to solely government’s “commercial disputes”. This will not bring down the pendency of cases.
Composition of the Mediation Council- The Mediation Council has three members-a retired senior judge, a person with experience of Alternative Dispute Resolution (ADR) law and an academic who has taught ADR. However, it doesn’t include a single mediator with actual practical knowledge of mediation.
Excludes the Chief Justice of India from making appointments- The mediation is a form of dispute resolution and in the judiciary’s domain, but the bill has left the Chief Justice of India from the picture for making appointments.
Long list of disputes which cannot be mediated- The act provides for a long list of disputes which should not be mediated. For example, Fraud, Disputes relating to claims against minors, Patents and copyright cases, proceedings before the TRAI etc. This hampers the overall objective of alternate dispute mechanism.
Impacts cross-border mediation- The mediation act treats international mediation when conducted in India as a domestic mediation. Further, the settlement conducted in India is given the status of a judgment or decree of a court.
But, the Singapore Convention does not apply to settlements that already have the status of a judgment or decree. Hence, conducting cross-border mediation in India will leave out the tremendous benefits of worldwide enforceability. This will impact India’s growth as mediation centre of the world like Singapore.
What Should be the way forward for strengthening mediation in India?
Providing Institutional Support- Establishing well-equipped and accessible mediation centres at various levels, from local communities to national levels. Government should facilitate opening of mediation centres. For Example: Recently, Uttar Pradesh got its first mediation & arbitration centre in the form of ‘Centre for Excellence in Mediation and Arbitration or CEMA.
Training and Certification for Mediation- Developing comprehensive training programs for mediators, lawyers, and judges to ensure that there is a pool of skilled professionals proficient in mediation techniques.
Integration of Mediation with Legal Curriculum- Incorporating mediation education within law school curricula can prepare future legal professionals to consider mediation as a primary or complementary method for dispute resolution.
Ensuring proper cross border mediation- To ensure worldwide enforceability, the settlement conducted in India should not be given a status of a judgment or decree of a court.
Need to remove ambiguities in the Act- The are certain elements in the Act like “exceptional circumstances” for seeking interim relief, which are open-ended and ambiguous, which must be addressed urgently.
Enhancement of awareness about the Mediation Act- The National and State Legal Services Authorities should disseminate more information regarding mediation and ADRs, so that they become the first option explored by potential litigants.
Alternate Dispute Resolutions has proven successful in clearing the backlog of cases in various levels of the judiciary.For Ex- Lok Adalats alone has disposed more than 50 lakh cases every year on average in the last three years. A similar impact can be observed with Mediation also. Hence, the government should address the concerns in the Mediation Act 2023 and ensure proper implementation of the same.
Read More- The Hindu
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