Mediation Act, 2023: Alleviate Dispute, Mediate!

September 27, 2023
The present Mediation Act, 2023

By Nihit Nagpal and Akif Abidi

“The obligation of the legal profession is… to serve as healers of human conflict… we should provide mechanism that can produce an acceptable result in shortest possible time, with the least possible expense and with a minimum of stress to the participants. This is what justice is all about.”

– Warren Burger

The aforementioned quotation is cited from the judgment of K.M. Joseph, J. in Patil Automation Pvt Ltd vs Rakheja Engineers1

The Alternate Dispute Resolution mechanisms in India have been gaining greater significance since the enactment of the Commercial Court Act, 2015. The recent enactment of the Mediation Act, 2023 marks a landmark event in developing the jurisprudence of mediation by codifying the procedure of appointment of mediators, ensuring timely resolution of the disputes, detailing which disputes are exempted from mediation.

The present Mediation Act, 2023 is an outcome of the detailed report submitted by Parliamentary Standing Committee on Personnel, Public Grievances, Law, and Justice, led by Shri Sushil Kumar Modi to Rajya Sabha Chairman. Subsequently, it was passed by the Rajya Sabha and the Lok Sabha respectively.

The scope and object of the Mediation Act, 2023 is to align the process of Mediation as per the International standards and aligned to the observations in various judgments of the Hon’ble Supreme Court.

It broadly attempts to generate greater awareness for mediation process, institutionalize mediation, appointment of mediators, and enforcement of the settlement between the parties. The object is to make the process of mediation more accessible through online mediation, and making the process overall cost effective.

Salient Features of Mediation Act, 2023

1. Applicability of the Act: Wherein all/both parties habitually reside/incorporated in/have place of business in India or if provided in any mediation agreement or in case of international mediation or wherein one of the parties is central government or its agency/public body/corporations and the subject matter is commercial in nature or any other dispute as notified by the Central government.

2. Exempted from the applicability of the Act: Certain disputes provided under the First Schedule of the Act such as prosecutions of criminal nature, direct/indirect taxation related, inquiry, investigation or proceeding under Competition Act, 2002; proceedings before TRAI, TDSAT, SEBI, SAT, National Green Tribunal and any other subject matter of dispute which may be notified by the Central Government.

3. Online Mediation: As per Section 30 of the Act, online mediation including pre-litigation mediation may be conducted at any stage of mediation with the written consent of the parties including by the use of electronic form or computer networks but not limited to an encrypted electronic mail service, secure chat rooms or conferencing by video or audio mode or both.

4. Pre-Litigation Mediation: The Act under Section 5 provides that irrespective of any mediation agreement existing between the parties, or not, the parties before filing any suit or proceedings of civil or commercial nature in any court, may voluntarily and with mutual consent take steps to settle the disputes by pre-litigation mediation

5. Timely resolution: The Act under Section 18 provides for the conclusion of the Mediation within a period of one hundred and twenty days from the date fixed for the first appearance before the mediator with an additional extension of 60 days based on the agreement of both the parties.

6. Mediation Agreement and Registration: The Act provides that the mediation agreement may be a separate agreement or a clause, but it must be written.

7. Grounds of challenge to settlement: In certain cases where fraud, deception or impersonation is involved or wherein the matter referred was unfit for mediation.

8. Establishment of the Mediation Council of India: The Central Government under Section 31 shall establish MCI at Delhi for the purposes of supervision and accreditation of the mediators, and mediation institutes.

The Mediation Act, 2023 purposefully ideates the visionary statement of former Chief Justice of India, N.V Ramanna, “Justice does not always require black gowns and elaborate arguments, the future belongs to mediation.”

The passage of the Mediation Act, 2023 is a landmark legislation mandating the institutionalized form of mediation and incorporation of online mediation. However, the voluntary nature of pre-litigation mechanism may dilute the impact of this Act. Further, establishment of Mediation Council of India is a positive way ahead but the effective working of the same can be assessed only at the later stage.

Despite the concerns, this Act has the true potential to making mediation, a more accessible and cost-effective option, which will further help in reducing the huge burden on our Courts.

1 (2022) 10 Supreme Court Cases 1

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