India - Redefining Dispute Resolution - The Mediation Act, 2023

The Mediation Act which received Presidential assent on September 15, 2023,

marks a significant shift in India’s legal landscape. By codifying mediation into a

standalone statute, the Act seeks to institutionalise a process that was previously

fragmented across various laws, aiming to reduce the massive backlog of over 44

million cases in Indian courts.

Key Objectives of the Act

The primary goal of the legislation is to promote mediation as a cost-effective and

time-efficient alternative to traditional litigation. Key objectives include:

• Establishing a uniform legal framework for mediation practices across India.

• Strengthening confidence in mediation as a credible, amicable means of

  settling disputes.

• Encouraging community mediation to resolve local and family conflicts.

• Promoting online mediation to keep pace with technological advancements.

Salient Features and Provisions

The Act introduces several transformative features designed to streamline the

mediation process:

• Mandatory Pre-Litigation Mediation: Parties are now encouraged—and in

many civil and commercial cases, mandated—to attempt mediation before

filing a lawsuit. However, parties can "opt-out" after attending at least two

sessions.

• Time-Bound Process: Mediation must typically be completed within 120

days from the first appearance before the mediator, with a possible extension

of up to 60 days if both parties agree.

• Mediation Council of India (MCI): The Act establishes the MCI to regulate

the profession. Its duties include registering mediators, recognising mediation

institutions, and setting standards for training and certification.

• Enforceability of Agreements: A Mediated Settlement Agreement (MSA)

now final and binding. It is enforceable in the same manner as a court decree,

providing it the same legal weight as a judgment.

• Confidentiality: To protect the interests of all parties, the Act mandates strict

confidentiality. Statements or admissions made during mediation cannot be

used as evidence in subsequent legal proceedings.

Scope and Applicability

The Act applies to mediations conducted in India where:

1. All parties are habitually resident or incorporated in India.

2. The mediation agreement explicitly states the Act shall apply.

3. An international commercial dispute involves at least one party based outside

India.

Note on Government Disputes: The Act applies to the Government only in

commercial disputes or other specific matters notified by the authorities.

Challenges and the Road Ahead

While hailed as a "game changer" the Act faces certain criticisms. A primary

concern is that it does not yet incorporate the Singapore Convention for the

enforcement of international settlement agreements reached outside India.

Additionally, the exclusion of non-commercial government disputes is seen by some

as a missed opportunity, given the state is India's largest litigant.

Despite these hurdles, the Mediation Act, 2023, represents a "leap forward" in

fostering a culture of amicable resolution, potentially transforming India into a global

hub for Alternative Dispute Resolution.