INTRODUCTORY

Mediation is a process whereby the disputing parties attempt to resolve their disputes with the assistance of a neutral third person. It is often considered a more flexible, affordable and faster alternative to conventional dispute resolution processes such as litigation and arbitration. Given the control the parties get to exercise over the resolution process and outcome, the chances of mediation resulting in an effective, sustainable, win-win and amicable solution are high. There is also a high likelihood of preserving the relationship between the parties post-resolution.

Mediation has been used to resolve disputes for a very long time; it has existed in several civilisations in one form or another. The resolution of conflicts by informal Panchayats, where respected elderlies of the villages acted as mediators, is often cited as an example of early mediation in India.

Owing to its innate qualities (including speed, simplicity, flexibility, affordability, sustainability, amicable nature, and the control available to the parties), mediation has gained popularity as an alternative dispute resolution process, both locally and globally. Several external reasons have also contributed to this: the pressure of the growing number of cases on the court system leading to delayed delivery of justice, the higher expenses and complex logistics for arbitration, and the demand for a time- and cost-effective dispute resolution tool by the growth of trade and commerce.

The increased use of mediation has, in India and elsewhere, exposed some of its shortcomings: the lack of enforceability of settlement agreements, the unavailability of any arrangement to deal with cross-border mediation, the challenge of maintaining professional and ethical standards for mediators, and the absence of a uniform protocol for the conduct of mediation. These and other factors led to proposals from various quarters, including the Supreme Court,[2] for a comprehensive law to promote and regulate mediation. There was also pressure from the international community to have an effective domestic law, especially since the signing of the Singapore Convention on Mediation[3]. Despite a few dissenting voices – that regulating a party-driven process may not be desirable – the idea of a stand-alone statute for mediation gained traction and eventually official acceptance.

The work on the mediation statute must have started at least two years ago. The draft Mediation Bill (the Draft Bill) was released on 5 November 2021 for public comments. The original Mediation Bill 2021 (the 2021 Bill) was introduced in Rajya Sabha in December 2021, a Parliamentary Standing Committee was appointed, resulting in a detailed report in July 2022[4], and both houses of the Parliament passed the revised Mediation Bill 2023 (the 2023 Bill) in the first week of August 2023. The President gave her assent on 14 September 2023 to the Mediation Act 2023[5] (the Act).

THE ANALYSIS

The larger question in gauging the potency of the Act is whether it can make mediation an effective alternative to the more established dispute resolution processes.

A five-pronged approach would help answer that question:

• does the Act provide conceptual clarity to mediation (so that the stakeholders clearly understand it)?

• does it recognise the essence of mediation (so that its nature is protected)?

• does it adequately support the process of mediation (so that the parties have access to a fair and comprehensive protocol)?

• does it give effect to the outcome of mediation (so that the parties can have a tangible result)?

• does it lay the foundation for a favourable ecosystem for mediation (so that a conducive culture that promotes mediation is put in place)?

01  Providing Conceptual Clarity

By defining and explaining fundamental concepts and related aspects of mediation, the Act provides adequate conceptual clarity to the stakeholders.

Mediation

The Act defines mediation as a process whereby the disputants attempt to reach an amicable settlement with the assistance of a third-person facilitator called a mediator[6], who does not have the authority to impose a settlement[7]. The definition of mediation has two functional aspects: first, the disputing parties attempting to reach an amicable settlement, and second, the third person called a mediator facilitating a settlement, but with no authority to impose such a settlement on the parties.

The term “mediation” is explained to include, amongst others, “conciliation”[8]. By effectively stating that “mediation” and “conciliation” are interchangeable terms, the Act ends the disconnect between those two terms”[9].

Mediation Agreements[10]

The Act defines, explains and prescribes some formal requirements for a mediation agreement (or an agreement to mediate).

A mediation agreement is an agreement between the parties to submit their disputes to mediation[11]. It must be in writing[12]. It may be a mediation clause in a contract or a separate agreement[13]. It may be incorporated into an agreement by reference[14]. Both existing and future disputes may be referred to mediation[15].

A mediation agreement is effectively an agreement in restraint of legal proceedings, making it void under Section 28 of the Indian Contract Act 1872 (the Contract Act)[16]. The Act, however, amends the first two exceptions to Section 28 to make mediation an exception[17], and thus, a mediation agreement stays valid despite Section 28.

Commercial Disputes

The Act explicitly promotes the resolution of commercial disputes[18]. A commercial dispute in the Act has the same meaning as in the Commercial Courts Act 2015[19]. The Act applies to international mediations[20] and mediations involving government[21] only where the dispute involved is commercial in nature.

Non-Mediatable Disputes

Generally, all matters that are civil or commercial in nature are fit for mediation. The underlying logic is that the law allows the disputing parties to resolve their disputes in any manner they prefer unless there are strong legal or public policy reasons against it.

The Act lists matters and disputes that are not fit for mediation (non-mediatable disputes)[22].

In the context of arbitration, the Supreme Court has, in Vidya Drolia,[23] classified matters that are not fit for arbitration (non-arbitrable matters) into broad categories. Thus, matters relating to actions in rem and inalienable sovereign and public interest functions of the State, matters affecting third-party rights and those requiring central adjudication, and matters made non-arbitrable by a statute are not arbitrable.

Given that the underlying reasoning for non-arbitrability and non-mediatability is the same – that the authority comes from a private agreement than the State – the broad categories mentioned by the Supreme Court in the context of arbitration have not surprisingly found their way to the Mediation Act. As such,

• declarations having the effect of right in rem[24];

• disputes which have an impact on the rights of a third party (except in matrimonial disputes where the interest of a child is involved)[25];

• disputes which by law are required not to be submitted for mediation[26]; and

• disputes involving prosecution for criminal offences[27],

cannot be mediated.

The other matters listed by the Act as not fit for mediation include:

• disputes relating to claims against certain persons – minors, deities, persons with intellectual and other disabilities, etc.[28];

• disputes relating to tax[29] and land acquisition[30] matters; and

• disciplinary proceedings against professionals (doctors and lawyers included) before any statutory authority[31].

The indicative list of non-mediatable disputes placed in the First Schedule of the Act is criticised for being too broad. There is merit in the argument that certain disputes, including compoundable criminal offences, are better placed outside the list[32]. While there is always an arguable case for enlarging the scope of matters that can be mediated, the First Schedule is an acceptable start. After all, the list can be easily amended by notification by the Central Government[33].

Types of Mediation

The Act recognises and explains various types of mediation.

Mediation is considered international when it is undertaken under the Act, relates to a commercial dispute (commercial element) and where at least one of the parties is a foreign national or resident or has its place of business outside India or is a foreign government (foreign element)[34]. A domestic mediation is not defined, but it is safe to assume that it is a mediation under the Act, which is not international.

Institutional mediation is conducted under the aegis of a Mediation Service Provider[35]. Online mediation is a mediation conducted electronically or through computer networks[36]. Community mediation attempts to settle disputes that are likely to affect peace, harmony and tranquillity amongst the residents of any locality[37]. Court-annexed mediation is conducted at the mediation centres established by any court or tribunal[38]. Pre-litigation mediation is undertaken to settle disputes before filing a suit or proceeding of a civil or commercial nature before a court or tribunal[39].

Application of the Act

The Act extends to the whole of India[40].

The Act applies to both domestic and international mediations. For the Act to apply, the mediation must be conducted in India, and (a) all or both parties should habitually reside in or are incorporated in or have their place of business in India, or (b) the mediation agreement should submit the disputes to the Act, or (c) it must be an international mediation[41]. As noted above[42], the Act applies to international mediations and mediations involving government only where the dispute involved is commercial in nature.

The Act does not apply to mediations conducted outside India[43] or those commenced before it comes into force[44]. The Act does not cover mediated settlement agreements made under the Singapore Convention.

Consolidation of Mediation Law

The Act consolidates the laws of mediation in India.

For that purpose, it amends several statutes, including the Indian Contract Act 1872, the Code of Civil Procedure 1908, and the Commercial Courts Act 2015[45]. It subsumes the part which deals with conciliation in the Arbitration and Conciliation Act 1996[46]. The provisions of the Act have an overriding effect on the conduct of mediation, notwithstanding anything inconsistent in any other law except those listed in the Second Schedule[47].

02  Recognising Party Autonomy

Mediation is a consensual process. It requires consensus between the parties to get started, continue and forge a successful outcome. The parties retain control over the process and outcome at all times. Party autonomy is the very essence of mediation.

Before the Mediation

Barring a few instances, the Act allows the parties complete freedom to commence mediation – they may agree to mediate or not mediate.

The instances that make it compulsory for the parties to go for mediation include the reference under Section 7 of the Act, where the courts have a discretionary power to refer the parties to undertake mediation at any stage of the proceedings before it[48], the compulsory pre-litigation mediation in commercial disputes of specified value under Section 12A of the Commercial Courts Act 2015[49], and motor accident compensation applications where the Claims Tribunal is required to refer the parties to mediation if the settlement provided under Section 149 of the Motor Vehicles Act 1988 has not arrived between the parties[50]. While arguably a significant aberration as a matter of principle, these departures from party autonomy may only be a minor inconvenience in practice[51].

The parties get to decide on several matters – the place[52], language[53], and mode of mediation (online or offline)[54]. They can effectively determine which court should have territorial jurisdiction over their mediation[55], how the costs of mediation should be apportioned[56], whether or not to extend the time to complete mediation[57] and whether or not to register settlement agreements[58]. The parties can decide on the procedure of appointment of mediators or even the specific mediator[59].

During the Mediation

The parties are free to continue with mediation or withdraw from mediation as they choose. There was some prohibition in the 2021 Bill against withdrawing from mediation until after the parties had attended two sessions of mediation and a discretionary cost sanction for such withdrawal[60]. The Act does not carry that prohibition.

Termination of Mediation

The parties are free to settle or not settle their disputes during or after the mediation process[61]. This freedom to self-determine is a critical pillar of party autonomy.

The Act directs mediators to protect the self-determination of the parties[62]. A mediator is also required to expressly inform the parties that he is only a facilitator, will not impose any settlement, and will not even give any assurance of settlement[63]. The Act directly states or indicates that the parties, even where they are required to mediate by the legislation or courts[64], are not bound to settle[65].

The Act can rightly claim credit for recognising party autonomy as the paramount feature of mediation and protecting it at all critical stages – at the commencement, during the pendency and at the termination – of mediation.

03  Supporting the Process of Mediation

The Act provides for the proper, smooth and timely conduct of mediation.

Mediation Proceedings

The Act proposes a definitive start and end to mediation – it states when a mediation is deemed to have commenced[66] and terminated[67].

The Act sets a time limit – a mediation must be completed within 120 days from the date fixed for the parties’ first appearance before the mediator[68]. The parties may agree to extend that period, but only for 60 days[69].

The Act lays down the manner of conduct of mediation[70]. The specific manner is yet to be prescribed, but for the time being, the rules governing the conduct of court-annexed mediations will apply[71].

These prescriptions – of the timeframe and the manner – are sometimes considered exceptions to the party autonomy rule. These indeed limit the freedom of the parties to determine how and how long they want to mediate and that legislation regulating a party-driven process must not be prescriptive. However, on the other side, the time limit puts pressure on the parties and the mediator to end the process expediently and provides some protection against parties trying to manipulate mediation to delay the resolution of the disputes. Similarly, a specific manner for the conduct of mediation sets a standard protocol[72] that guides the mediator and parties and, to some extent, controls the quality of the process. These will be more relevant when there is a power or resource imbalance between the parties.

The Act provides flexibility in the conduct of mediation – the mediator is not bound by the strict procedural rules set out in the Code of Civil Procedure 1908 or the Evidence Act 1872[73].

To encourage parties to mediate without worrying about the limitation period, the Act excludes the mediation period – from the commencement to the termination of mediation – in computing the limitation period for any proceedings relating to mediated disputes[74].

Confidentiality, Non-Disclosure, Etc.

One of the most touted features of mediation is the confidentiality that it offers. Confidentiality is critical in mediation for free and frank discussions during the process, an amicable resolution, and a cordial relationship between the parties post-resolution.

The Act requires everyone involved in a mediation proceeding – the mediator[75], Mediation Service Provider[76], parties[77] and participants[78] – to keep all related matters confidential[79]. These matters include[80] (a) acknowledgements, opinions, suggestions, promises, proposals, apologies and admissions made during the mediation, (b) acceptance of, or willingness to accept, proposals made or exchanged in the mediation, (c) documents prepared solely for the conduct of mediation, and (d) any other mediation communication including mediation agreements and mediated settlement agreements[81].

No audio or video recording of the mediation proceedings should be made or maintained[82]. No party should rely on or introduce as evidence any such confidential information in any proceeding before a court or tribunal[83]. No court or tribunal (including an arbitral tribunal) should take cognisance of such information or evidence[84].

The Act does not permit a mediator to act as an arbitrator or a party representative in any judicial or arbitral proceedings regarding a dispute that is the subject matter of mediation[85]. The parties cannot present a mediator as a witness in any arbitral or judicial proceedings[86]. The mediator or the participants are not allowed, or cannot be compelled, to disclose any communication in mediation in any adjudicatory proceedings[87]. They also cannot state the contents or conditions of any document or the nature or conduct of parties during mediation[88].

All these provisions give the parties the confidence to meaningfully undertake mediation and work towards a settlement without fearing his words or actions being used against him elsewhere or later.

However, these protections – the confidentiality and non-disclosure rules – do not attach to the following:

• information sought or provided to prove or dispute a claim or complaint of professional misconduct or malpractice of a mediator based on his conduct occurring during mediation[89];

• threat or statement of a plan to commit an offence[90];

• information relating to domestic violence or child abuse[91];

• statements made during mediation showing a significant and imminent threat to public health or safety[92].

The confidentiality rule also does not apply to a mediated settlement agreement where disclosure is necessary for its registration, enforcement or challenge[93]. It also does not apply to a mediator compiling or disclosing general information on a given mediation for research, reporting and training purposes as long as that information does not identify the parties, participants or specific disputes[94].

These exceptions are criticised for destroying the possibility of restorative justice[95]. Given its features, mediation could potentially encourage restorative justice, but that requires full and frank disclosures and open discussions. Such disclosures and discussions may reveal or involve allegations of a crime. If these exceptions to the confidentiality and non-disclosure rules, and thus potential prosecution, hang over their heads like the sword of Damocles, the parties are unlikely to communicate openly and attempt to repair the harm, and that effectively eliminates the possibility of a settlement.

For the same reasons, these exceptions will adversely affect family law mediation, a significant percentage of which involves some element of domestic violence. No party will admit to domestic violence or any other crime, leaving a considerable trust deficit between the parties. If mediation cannot lead to frank dispute analysis, disclosures, admissions and possible corrections, the underlying cause will continue to simmer, and the dispute will stay unresolved.

While the argument that mediation cannot be allowed to be used by the criminal justice system as bait to gather evidence has some merit, disregarding revelations of grave crimes like child abuse is not acceptable. The legislators and the courts should give some serious thought to this dilemma.

Role of Mediators

The mediators[96] are facilitators with no power to impose a settlement on the parties[97]. The Act requires the mediator to expressly inform the parties that he only facilitates the resolution of a dispute, that he will not impose any settlement, and that he will not even give any assurance that the mediation will result in a settlement[98]. Further, the mediator has to emphasise that it is the responsibility of the parties to decide on their claims[99].

The role of a facilitator does not, however, stop the mediators from assisting the parties in identifying issues, clarifying priorities, exploring areas of settlement and generating options to resolve the dispute expeditiously[100]. The mediators are bound to assist the parties in an “independent, neutral and impartial” manner[101] and be at all times guided by “the principles of objectivity and fairness” and “specified standards of professional and ethical conduct”[102]. They must protect the “voluntariness, confidentiality and self-determination of the parties”[103]. They may take appropriate measures for the orderly and timely conduct of the mediation process and to maintain its integrity[104].

The mediators are obliged to act promptly to avoid potential conflicts of interest[105]. As noted above[106], they are not allowed to act as an arbitrator, a party representative or a witness or disclose any communication in mediation in any adjudicatory proceedings on a dispute that was the subject matter of mediation.

The Act establishes a standard protocol for mediators’ appointment[107], replacement[108] and termination[109]. The Act suggests that there can be registered and unregistered mediators[110] – the registered mediators may have to undergo training and assessment[111], while no such requirements are spelt out for the unregistered mediators[112] except where they are of foreign nationality[113].

All of these, from emphasising the role of mediators as facilitators to setting out a protocol for their appointment and describing what they can and cannot do, play an important role in the proper conduct of mediation.

Role of Courts

While any alternative dispute resolution process requires the support of the court system to be effective, attempts by parties to take undue advantage of the curial support to delay or sabotage the agreed process must be kept in check. The courts should, therefore, enable the alternative process by assuming a supportive role.

The Act empowers the courts[114], amongst others[115], to:

• refer the parties to undertake mediation at any stage of the proceeding before it[116];

• pass a suitable interim order to protect the interest of any party in those mediations undertaken according to Section 7 reference[117]; and

• consider and decide on an application to enforce or challenge mediated settlement agreements[118].

While the courts have the power to issue a suitable interim order to protect the interests of the parties (which is extremely useful to maintain the status quo or to preserve the subject matter of dispute), this curial power appears to be limited to mediations undertaken pursuant to reference by courts under section 7 of the Act. There is no reason why such support – the interim protection – should not be extended to other mediations.

The Act recognises and defines mediation agreements[119] but does not prescribe any specific consequence for non-compliance with a mediation agreement[120]. There is no provision for a stay of proceedings[121] or reference to mediation[122].

The lack of direct remedy for breach of mediation agreements (leaving mediation agreements toothless) and the absence of interim relief to mediating parties (leaving the parties with no protection even in justifiable cases except in mediations under section 7 reference) do not seem to be in tune with the general legislative or judicial policy. These shortcomings may diminish the attractiveness of mediation, especially for businesses, and they may hesitate to include mediation clauses in the commercial contracts they enter into. It could be argued that the courts could use section 7 of the Act or their inherent jurisdiction[123] to remedy a breach of a mediation agreement. They may work, but a direct remedy would have been much easier for both the parties and the courts. The Act also missed the opportunity to finally settle the Indian position on the enforceability of mediation agreements.

Despite these omissions and inadequacies, especially regarding the role assigned to courts, it is safe to say that the Act generally supports the process of mediation by providing for the proper conduct of mediation and by setting out a facilitative role for mediators and a supportive role for courts.

04 Enforcing the Outcome

One of the major grievances against mediation was that its outcome, i.e. the mediated settlement agreement, is difficult to enforce in the event of non-compliance. For this reason, mediation is often placed on a lower pedestal than other dispute resolution processes.

Until the Act comes into force, a party who wants to enforce a mediated settlement agreement has to take the contractual route, i.e. sue on the settlement agreement for breach of contract, unless the parties had earlier decided on the consent judgment or consent award route to overcome the enforceability issue. In the latter cases, the parties commence litigation or arbitration, mediate, settle, get back to the court or tribunal with the settlement terms and seek a consent judgment or consent award on those terms. The consent judgment or consent award may then be enforced as a judgment or arbitral award. None of these routes are particularly attractive: in all these cases, the parties have to initiate litigation or arbitration, precisely what they wanted to avoid in the first place. It may be noted that the settlement agreements arrived at under Section 12A of the Commercial Courts Act 2015, until amended by the Act, had the same status and effect as if they were arbitral awards on agreed terms[124].

A mediated settlement agreement is exactly what it says – an agreement resulting from mediation between the parties settling some or all of their disputes[125].

In terms of formalities, a settlement agreement must be in writing[126], signed by the parties[127], authenticated by the mediator[128], and copied to the parties and the Mediation Service Provider, if any[129]. Registration of a mediated settlement agreement is also provided for, but it is optional[130].

Substantively, a settlement agreement must not be void under the Contract Act[131]. As such, settlement agreements whose considerations and objects are unlawful, and which are uncertain, made without consideration and made by way of wager will not be deemed lawful settlement agreements[132].

The Act makes mediated settlement agreements final and binding on the parties[133] and enforceable (except in mediations involving compoundable offences[134], motor accident compensation applications[135] and community mediation[136]) in the same manner as if they were a judgment or decree passed by a court[137]. It may be relied on by any of the parties or persons claiming through them, by way of defence, set off or otherwise in any legal proceeding[138]. This enforceability makes mediation as attractive to parties as any other dispute resolution process.

The mediated settlement agreements may be challenged by either party before the court or tribunal of competent jurisdiction[139]. However, the Act imposes substantive and procedural limits on such challenges, presumably to prevent parties from indiscriminately challenging such settlement agreements.

A challenge may be made only where a settlement agreement is made on a matter that is not fit for mediation or where fraud, corruption or impersonation is involved[140]. The challenge must be made within 90 days from the date the challenging party has received the copy of the authenticated settlement agreement[141]. A further 90 days may be allowed by the court or tribunal if there is sufficient cause[142].

These provisions on enforcement and challenge are not entirely flawless. Since impersonation is a concealment of a material fact and therefore fraud[143], its listing as a separate ground of challenge may be unnecessary. A more appropriate ground would have been the incapacity of the parties to enter into the settlement agreement[144]. Section 28 of the Contract Act (that makes agreements in restraint of legal proceedings void) may come in the way of settlement agreements that require one or more parties to refrain from future legal proceedings. The exceptions to Section 28[145] may not apply to settlement agreements as it does to mediation agreements[146]. 

Singapore Convention

The Singapore Convention[147] offers a uniform framework for the enforcement of international mediated settlement agreements. Its objective is to facilitate international trade and commerce by enabling easy enforcement of settlement agreements across borders. The Singapore Convention is expected to do to mediation what the New York Convention[148] has done to arbitration.

India is one of the early signatories to the Singapore Convention but has yet to ratify it. Given that most legal impediments that stood in the way of ratification, including the enforceability of settlement agreements, have been resolved by the Act, it is unclear why the ratification is delayed[149].

The Draft Bill had a dedicated part, Part III, for the enforcement of Singapore Convention settlement agreements. But that part disappeared when the 2021 Bill was introduced in the Rajya Sabha. The Act also does not mention the Singapore Convention – there are no provisions for the enforcement of  Singapore Convention settlement agreements. As a result, cross-border enforcement of mediated settlement agreements as envisaged by the Singapore Convention is not possible now – an Indian-mediated settlement agreement is not directly enforceable in a foreign country (including a Singapore Convention country) or vice-versa.

05 Effecting a Cultural Change

Mediation is not an extension of the conventional justice delivery system but an entirely new approach to dispute resolution.

In litigation or arbitration, the parties and the lawyers, on their behalf, fight as opponents to assert their rights over the other and win the legal battle for themselves. The lawyers are trained to fight, the parties partake in a legal battle, and the judges judge – the law is practised in an adversarial way. But when it comes to mediation, the parties and lawyers work with their counterparts as collaborators to resolve disputes in a win-win manner. The neutral does not impose a decision – instead, he assists the parties to arrive at an amicable settlement. For mediation to work, therefore, a paradigm shift in the way problem-solving is understood and practised is required. A true cultural evolution has to happen.

Everything the Act provides for – from conceptual clarity (so that everyone clearly understands what mediation is), newer types of mediation such as online mediation and community mediation (so that mediation can cater to varying situations), recognition of party autonomy, proper systems and protocols to support the mediation process, to the enforceability of the outcome – leads to a cultural shift in favour of mediation.

However, the most important step in this direction is the establishment of the Mediation Council of India as the central regulatory body of mediation in India[150]. It aims to promote mediation in India[151] and develop India as a robust centre for domestic and international mediation[152].

As the regulator, the Mediation Council will be responsible for several activities, including making certain regulations under the Act[153], reporting on the implementation of the Act[154], administering the Mediation Fund (a fund created by the Act to promote mediation)[155], and setting out the manner of conduct of mediation proceedings[156].

However, the real significance of the Mediation Council is that it plays a crucial role in creating a national mediation network and, through it, a favourable ecosystem for mediation in India. Towards this, the Mediation Council:

• recognises, sets criteria and standards, and oversees a second layer of institutions to support institutional mediation across the country – the Mediation Service Providers and Mediation Institutes[157]. The Mediation Service Providers[158], in turn, facilitate mediation – by accrediting mediators, maintaining a  panel of mediators, providing the services of mediators, and offering facilities, secretarial assistance and infrastructure for the efficient conduct of mediation[159]. The Mediation Institutes provide training and certification of mediators[160];

• supports and encourages the formation of a bigger pool of competent mediators by providing for their registration[161] and continuing education[162], and setting professional and ethical standards[163] (shared value system) for them; and

• collaborates with stakeholders and other organisations, encourages research and studies, and holds training, workshops and courses[164] to spread awareness about and increase receptiveness to mediation.

Culture is a complex social phenomenon. It takes much more than a statute to transform it, but the Act has laid a decent foundation for a cultural change in favour of mediation.

CONCLUDING REMARKS

There are shortcomings. Leaving the Singapore Convention on Mediation out of the Act is unacceptable. The toothlessness of the mediation agreements and the general unavailability of interim relief do not make sense. The exceptions to the confidentiality and non-disclosure rules may adversely affect family law mediation and the idea of restorative justice. The suggestions of mandatory mediation arguably militate against the essence of mediation. The provisions on enforcement and challenge could be improved.

There is a long way to go: the Mediation Council of India has to be established, the Mediation Service Providers and Mediation Institutes have to evolve, a bigger pool of competent mediators and mediation advocates have to emerge, the lawyers must be taken into confidence, the rules and regulations must be put in place, and greater awareness and acceptance have to happen among the stakeholders. The rate of progress has been modest – it took almost two years to pass the Act from the time the Draft Bill was released.

However, on the brighter side, the Act consolidates laws of mediation, defines mediation and its various aspects for better clarity, recognises the essence of mediation by treating party autonomy as paramount, sets out a facilitative role for mediators and an enabling role for courts, provides for proper and timely conduct of mediation, enforces mediated settlement agreements, and establishes a mediation network through the Mediation Council of India. All of these are excellent steps forward.

As they say, the proof of the pudding is in the eating. How well the provisions of the Act will work in practice, and the impact of institutionalisation on a party-driven process need to be seen. But, despite the delays, shortcomings and contingencies, there is no doubt that the Act is a good start and has the potential to promote and facilitate mediation as an effective alternative dispute resolution process in India.

FOOTNOTES

[1] The article is updated as of 30 September 2023. It was first published in ADR India on 1 October 2023.

[2] “In fact, [given] the way [the] mediation movement is catching up in this country, there is a dire need to enact [the] Indian Mediation Act ...” Justice AK Sikri in MR Krishna Murthi v The New India Assurance Co Ltd, Civil Appeal Nos. 2476-2477 of 2019, Paragraph 27, Supreme Court of India.

[3] India is one of the signatories to the United Nations Convention on International Settlement Agreements resulting from Mediation, or the Singapore Convention on Mediation (the Singapore Convention). However, the signing itself does not impose any legal duty on a signatory state to ratify a treaty – ratification is the discretion of the signatory.

[4] The Report on the Mediation Bill 2021 was presented to the Chairman of Rajya Sabha and forwarded to the Speaker of Lok Sabha on 13 July 2022.

[5] Act 32 of 2023. The Act was notified on 15 September 2023 in the Gazette of India. The Act is yet to come into force (as of 30 September 2023).

[6] A person who is appointed to be a mediator, by the parties or by a Mediation Service Provider, to undertake mediation, and includes a person registered as a mediator with the Mediation Council of India – Section 3(i) of the Act.

[7] Section 3(h) of the Act.

[8] Section 3(h) of the Act.

[9] Section 30 of the Arbitration and Conciliation Act 1996, Section 89 of the Civil Procedure Code 1908, Salem Advocate Bar Association, TN v Union of India (2005) 6 SCC 344, Afcons Infrastructure Limited and Another v Cherian Varkey Construction Company Private Limited and Others (2010) 8 SCC 24, and India’s submission to UNCITRAL Working Group 2014 on the Enforcement of Settlement Agreements resulting from International Commercial Conciliation clearly indicate that “mediation” and “conciliation” are understood as two different concepts and NOT used interchangeably in India.

Contrast that with the post-2000 global trend of using “mediation” and “conciliation” interchangeably, especially since UNCITRAL Model Law (2002) on International Commercial Conciliation. Several countries, including the US, Canada and France, adopted the Model law and followed that trend. The UNCITRAL Working Group 2014 on the Enforcement of Settlement Agreements, and later the Singapore Convention, made that trend “official”.

[10] For a brief discussion on the enforceability of mediation agreements, see the main text below under the “Role of Courts” under “Supporting the Process of Mediation”.

[11] Section 3(j) read with Section 4 of the Act.

[12] Section 4(1) of the Act. Section 4(3) of the Act explains the “writing” requirement. As such, a mediation agreement is in writing, if it is contained in or recorded as (a) any document signed by the parties; (b) an exchange of communications or letters, including through electronic form as provided under the Information Technology Act 2000; or (c) any pleadings in a suit or any other proceedings in which existence of mediation agreement is alleged by one party and not denied by the other.

[13] Section 4(2) of the Act.

[14] Section 4(4) of the Act.

[15] Section 4(5) of the Act. Also see Section 4(1) of the Act.

[16] Section 28 says that every agreement – (a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or (b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to the extent.

[17] Section 58 read with the Third Schedule of the Act.

[18] See the Preamble of the Act.

[19] Section 3(a) of the Act read with Section 2(1)(c) of the Commercial Courts Act 2015.

As such, a commercial dispute means a dispute arising out of – ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents; export or import of merchandise or services; issues relating to admiralty and maritime law; transactions relating to aircraft, aircraft engines, aircraft equipment and helicopters, including sales, leasing and financing of the same; carriage of goods; construction and infrastructure contracts, including tenders; agreements relating to immovable property used exclusively in trade or commerce; franchising agreements; distribution and licensing agreements; management and consultancy agreements; joint venture agreements; shareholders agreements; subscription and investment agreements pertaining to the services industry including outsourcing services and financial services; mercantile agency and mercantile usage; partnership agreements; technology development agreements; intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits; agreements for the sale of goods or provision of services; exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum; insurance and re-insurance; contracts of agency relating to any of the above; and such other commercial disputes as may be notified by the Central Government.

A commercial dispute shall not cease to be a commercial dispute merely because – (a) it also involves action for recovery of immovable property or for the realisation of monies out of immovable property given as security or involves any other relief pertaining to immovable property; (b) one of the contracting parties is the State or any of its agencies or instrumentalities, or a private body carrying out public functions.

[20] Section 3(g) read with Section 2(iii) of the Act.

[21] The Central Government or a State Government or agencies, public bodies, corporations and local bodies, including entities controlled or owned by such Government – Section 2(iv) of the Act. The Act does not totally exclude non-commercial disputes involving government – any non-commercial dispute, if deemed appropriate and notified by the Central Government or a State Government from time to time, may be included in the purview of the Act – Section 2(v) of the Act. Mediation is capable of delivering flexible outcomes to non-commercial disputes involving the government.

[22] Section 6 read with First Schedule of the Act.

[23] Vidya Drolia and Others v Durga Trading Corporation, Civil Appeal No. 2402 of 2019, the Supreme Court of India.

[24] First Schedule of the Act. Point 2.

[25] First Schedule of the Act. Point 5.

[26] First Schedule of the Act. See points 1, 2, 6, 7, 8, 9, 10, 11 and 12 generally.

[27] First Schedule of the Act. Point 3.

[28] First Schedule of the Act. Point 2.

[29] First Schedule of the Act. Point 7.

[30] First Schedule of the Act. Point 12.

[31] First Schedule of the Act. Point 4.

[32] The Act assigns a unique status to compoundable offences, including matrimonial offences. These offences, which are compoundable and pending, if appropriate, may be referred by a court to mediation, but the outcome of such mediation will not be deemed to be a judgment or decree of courts as in the case of typical mediated settlement agreements (for a fuller discussion on the mediated settlement agreements, see the main text under “Enforcing the Outcome”) and will be further considered by the court in accordance with the prevailing law – provisos to Section 6(1) of the Act.

[33] Section 6(2) of the Act.

[34] Section 3(g) of the Act.

[35] Section 3(f) of the Act. A Mediation Service Provider is defined by Section 3(m) read with Section 40(1) of the Act.

[36] Section 3(q) read with 30(1) of the Act.

[37] Section 43(1) of the Act.

[38] Section 3(e) of the Act.

[39] Section 3(u) read with Section 5 of the Act.

[40] Section 1(2) of the Act.

[41] Sections 2(i), (ii) and (iii) of the Act.

[42] See the main text above under “Commercial Disputes” under “Providing Conceptual Clarity” for a brief discussion on disputes of a commercial nature.

[43] Section 2 of the Act.

[44] Section 56 of the Act.

[45] Sections 58 through 65, read with Schedules 3 through 10 of the Act. The other statutes that the Act amends are the Legal Service Authorities Act 1987, the Micro, Small and Medium Enterprises Development Act 2006, the Companies Act 2013, and the Consumer Protection Act 2019.

[46] Section 61 read with Sixth Schedule of the Act.

[47] Section 55 read with the Second Schedule of the Act. The laws include the Industrial Disputes Act 1947, the Brahmaputra Board Act 1980, the Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act 1981, the Family Courts Act 1984, the Legal Services Authorities Act, 1987, the Maintenance and Welfare of Parents and Senior Citizen Act 2007, the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013, the Finance Act 20l6, and the Industrial Relations Code 2020.

[48] Section 7 of the Act.

[49] Proviso to Section 5(1) of the Act. The term “commercial disputes” is explained in the main text under “Commercial Disputes” under “Providing Conceptual Clarity” above.

[50] Section 5(6), (7) and (8) of the Act.

[51] On one side, the legislation or the courts should have no business in compelling the parties to mediate where they have not committed to mediate by way of a mediation agreement. This compulsion militates against the consensual nature of mediation. On the other side, the additional push that requires the parties to attempt mediation may in the real world be a boon to the parties who may shed their initial reluctance, engage in mediation and settle their disputes. In any event, in all cases, under Sections 5(6)-(8) and 7 of the Act, and Section 12A of the Commercial Courts Act 2015, the parties can decide not to settle – they may simply go through the mediation process without any real intent to settle.

The 2021 Bill (Clause 6) made Pre-litigation Mediation mandatory for all disputes that are capable of being mediated. The 2023 Bill (Clause 5), and eventually, the Act (Section 5), removed the compulsory element and made it optional.

[52] Section 13 of the Act.

[53] Section 15(6) of the Act. The mediator requires the consent of the parties to determine the language or languages to be used in the mediation process.

[54] Section 13 of the Act.

[55] Section 13 of the Act.

[56] Section 25(2) of the Act.

[57] Section 18(2) of the Act. The parties may agree to extend the 120-day time limit set by the Act to complete mediation for a maximum of 60 days. For a fuller discussion of this point, see the main text under “Mediation Proceedings” under “Supporting the Process of Mediation” below.

[58] Section 20 of the Act.

[59] Section 8 of the Act. Party preference is a factor even when Mediation Service Providers appoint the mediator – Section 9 of the Act.

[60] Clause 20 of the 2021 Bill – withdrawal by parties from mediation.

[61] The Act does not curtail this freedom at any point, instead, it directly or indirectly reiterates it: for example, see Sections 3(h), 5(6)-(8), 7(3), 15(2), 15(3), 16(1) and 16(2) of the Act.

[62] Section 15(3) of the Act.

[63] Section 16(2) of the Act.

[64] Under Section 7 of the Act, Section 12A of the Commercial Courts Act 2015 (proviso to Section 5(1) of the Act), or Section 5(6) of the Act.

[65] See Sections 5(6)-(8) and 7(3) of the Act, and Section 12A(4) of the the Commercial Courts Act 2015.

[66] Section 14 of the Act. On the date on which a party or parties receives notice from the party initiating the mediation to refer such dispute to mediation (where there is an existing agreement between the parties to settle the dispute through mediation), OR on the date the mediator provides his consent to appointment (where the parties have agreed to appoint a mediator of their choice for mediation and settlement of disputes between them), OR on the date of appointment of a mediator (where one of the parties applies to a Mediation Service Provider for settlement of disputes through mediation).

[67] Section 24 of the Act. On the date of signing and authentication of the mediated settlement agreement, OR on the date of the written declaration of the mediator to the effect that further efforts at mediation are no longer justified, OR on the date of the communication by a party or parties in writing (addressed to the mediator and the other parties) to the effect that the party wishes to opt out of mediation, OR on the expiry of the time limit under Section 18 of the Act.

[68] Section 18(1) of the Act.

[69] Section 18(2) of the Act.

[70] Section 15(1) of the Act.

[71] Section 57 of the Act.

[72] A protocol that is flexible enough to accommodate party preferences.

[73] Section 15(5) of the Act.

[74] Section 29 of the Act.

[75] Section 3(i) of the Act.

[76] Section 3(m) read with Section 40 of the Act.

[77] Section 3(s) of the Act.

[78] Section 3(r) of the Act.

[79] Section 22(1) of the Act.

[80] Section 22(1) of the Act.

[81] Any communication made, whether in electronic form or otherwise, through anything said or done, any document, or any information provided, for the purposes of, or in relation to, or in the course of mediation. It includes a mediation agreement or a mediated settlement agreement. Section 3(k) of the Act.

[82] Section 22(2) of the Act.

[83] Section 22(3) of the Act.

[84] Section 22(3) of the Act.

[85] Section 17(a) of the Act.

[86] Section 17(b) of the Act.

[87] Section 23(1) of the Act.

[88] Section 23(1) of the Act.

[89] Proviso to Section 23(1) of the Act.

[90] Section 23(2)(a) of the Act.

[91] Section 23(2)(b) of the Act.

[92] Section 23(2)(c) of the Act.

[93] Explanation to Section 22 of the Act.

[94] Section 22(4) of the Act.

[95] Restorative justice is an approach to justice that aims to get offenders to take responsibility for their actions, to understand the harm they have caused, to give them an opportunity to redeem themselves, and to discourage them from causing further harm. For victims, its goal is to give them an active role in the process and to reduce feelings of anxiety and powerlessness. (https://en.wikipedia.org/wiki/Restorative_justice).

[96] Section 3(i) of the Act.

[97] Section 3(h) of the Act.

[98] Section 16(2) of the Act.

[99] Section 16(1) of the Act.

[100] Section 16(1) of the Act.

[101] Section 15(2) of the Act.

[102] Section 15(3) of the Act.

[103] Section 15(3) of the Act.

[104] Section 15(4) of the Act.

[105] Section 10 of the Act.

[106] See paragraphs in the main text above that refer to mediators’ limitations to act in certain capacities under “Confidentiality, Non-Disclosures, etc” under “Supporting the Process of Mediation”.

[107] Section 8 of the Act.

[108] Section 12 of the Act.

[109] Section 11 of the Act.

[110] Section 3(i) and Section 5(3) of the Act.

[111] See Sections 38(c) and (e), and Section 41(a) of the Act.

[112] The parties appear to have the freedom to agree on any person as mediator. See Sections 8(1), 5(3), and 3(i) of the Act. Whether there should be a set of criteria for all mediators under the Act requires further discussion: on one side, there is this compelling need for party autonomy, and on the other side, the sanctity of mediation as an alternative dispute resolution process has to be preserved.

[113] Provision to Section 8(1) of the Act. Such qualifications, experience or accreditation are yet to be specified.

[114] In this context, “court” means the competent court in India having pecuniary and territorial jurisdiction and having jurisdiction to decide the disputes forming the subject matter of mediation, if the same had been the subject matter of a suit or proceeding – Section 3(d) of the Act.

[115] For example, the courts may also refer any appropriate dispute relating to compoundable offences, including matrimonial offences, to mediation – proviso to section 6(1) of the Act.

[116] Section 7(1) of the Act.

[117] Section 7(2) of the Act. The nature and extent of such orders are not specified; it is left to the discretion of the courts.

[118] Sections 27 and 28 of the Act.

[119] Section 4 of the Act. Also see Sections 2(ii), 3(j), 3(k), 3(s) and 14(a) of the Act. Contrast those with Section 5(1) of the Act, which suggests that the mediation agreements are irrelevant when it comes to optional pre-litigation mediations. Also, see the discussion above in the main text under “Mediation Agreements” under “Providing Conceptual Clarity”.

[120] Clause 20 of the 2021 Bill required the parties to attend at least two mediation sessions before they could withdraw from mediation. Failure to attend those two sessions may have resulted in a discretionary cost sanction. The Act does not carry those provisions – no compulsory participation or cost sanction.

[121] Contract with Section 8 of the Singapore Mediation Act 2017, which provides for a stay of proceedings before it where there is a mediation agreement.

[122] Contrast with Section 8 of the Arbitration & Conciliation Act 1996, which empowers the court to refer the parties to arbitration where there is an arbitration agreement.

[123] For example, Section 482 of the Code of Criminal Procedure states: “Nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice.”

[124] Section 12A(5) of the Commercial Courts Act 2015 read with Section 30(4) of the Arbitration and Conciliation Act 1996. The position is amended by Section 64, read with the Ninth Schedule of the Act.

[125] Section 19(1) of the Act. The terms of the mediated settlement agreement may extend beyond the disputes referred to mediation.

[126] Section 19(1) and (2) of the Act.

[127] Section 19(2) of the Act.

[128] Section 19(3) of the Act.

[129] Section 19(3) of the Act.

[130] Section 20 of the Act.

[131] Explanation to Section 19(1) of the Act.

[132] See Sections 24 through 30 of the Contract Act generally.

[133] Section 27(1) of the Act.

[134] Provisos to Section 6(1) of the Act. The outcome of such mediation will be further considered by the court in accordance with the prevailing law.

[135] The Claims Tribunal is required to refer the parties to mediation if the settlement provided under Section 149 of the Motor Vehicles Act 1988 has not arrived between the parties – Section 5(6) of the Act. The settlement agreement will be placed before the Claims Tribunal for its consideration – Section 5(7) of the Act.

[136] Section 44(4) of the Act.

[137] Sections 27(1) and (2) of the Act. In accordance with the provisions of the Code of Civil Procedure 1908.

[138] Section 27(2) of the Act.

[139] Section 28(1) of the Act.

[140] Section 28(2) of the Act.

[141] Section 28(3) of the Act.

[142] Section 28(3) of the Act. The 180-day period is reasonable enough to mount a challenge, but this time limit may not be applicable in certain cases (although the Act make no provisions on that), especially where fraud is discovered at a later stage.

[143] Section 17 of the Contract Act.

[144] See section 11 of the Contract Act generally.

[145] As amended by the Act.

[146] For a brief discussion on the impact of Section 28 of the Contract Act on mediation agreements, see above in the main text under “Mediation Agreements” under “Providing Conceptual Clarity”.

[147] It took effect on 12 Sept 2020. As of 14 September 2023, it has 56 signatories, of which 11 have ratified.

[148] The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, or the New York Convention, applies to the recognition and enforcement of foreign arbitral awards. It is one of the key instruments in international arbitration, is considered as one of the most successful treaties in private international law, and is adhered to by more than 160 nations.

[149] Perhaps we are waiting for more global acceptance of the Convention. As of 30 Sept 2023, only 11 countries have ratified it.

[150] Section 31 of the Act. The nature and composition of the Council (Section 32 of the Act) has come under some criticism – it has been pointed out that the Mediation Council ought to be a self-regulatory body of industry experts (like the Bar Council of India) rather than one dominated by government nominees, and that the resulting deficiency in subject matter competence and industry experience will affect the Mediation Council’s effectiveness in taking mediation forward. Further, certain powers given to the Central Government, especially those to issue directions (Section 47 of the Act), are seen as excessive executive intervention.

[151] Section 38(a) of the Act.

[152] Section 38(b) of the Act.

[153] Section 52 of the Act.

[154] Section 39 of the Act.

[155] Section 45 of the Act.

[156] Section 38(d) read with Section 15(1) of the Act. Also, see Section 38(n) of the Act on maintaining an electronic depository of mediated settlement agreements made in India.

[157] Sections 38(i), (j), (k) and (l) of the Act.

[158] Section 3(m) read with Section 40 of the Act.

[159] Section 41 of the Act.

[160] Sections 3(l) read with Section 42 of the Act.

[161] Section 38(e) of the Act.

[162] Section 38(c) of the Act.

[163] Section 38(f) read with Section 15(3) of the Act.

[164] Amongst others, Sections 38(g), (h) and (m) of the Act.