The Mediation Act 2023: Normative or Realistic

Abstract

The Mediation Act, 2023, represents a monumental shift in India's approach to dispute resolution. It introduces a robust framework for mediation, a non-adversarial process driven by impartial mediators, which offers an efficient, cost-effective, and collaborative alternative to traditional litigation. This article provides an in-depth exploration of the Mediation Act, tracing its origins, and outlining its key provisions. The Act's primary objectives include enforcing mediated settlement agreements, regulating mediator standards, promoting various forms of mediation, ensuring confidentiality, and expanding access to justice. While the Act presents several commendable changes, it also raises concerns such as distinctions between registered and unregistered mediators, rigid timelines for challenging agreements, and exclusion of specific disputes. Nonetheless, the Mediation Act signifies a critical step towards establishing mediation as a cornerstone of India's dispute resolution landscape, offering the potential for swifter, cost-effective, and more accessible justice. Its ultimate success hinges on robust implementation and adaptability to address these concerns and create an environment conducive to the growth of mediation.

Introduction

In the rapidly evolving landscape of legal frameworks and dispute resolution mechanisms, the Mediation Act, 2023 (referred to as the 'Act’), has emerged as a transformative milestone in India. Mediation, a voluntary and collaborative dispute resolution process, has gained global recognition as a highly effective alternative to traditional litigation. Recognizing the need to promote mediation as the preferred method for dispute resolution, the Indian government introduced the Mediation Act, 2023. This groundbreaking legislation aims to streamline and enhance the mediation process across various legal contexts. This article provides an in-depth exploration of the key provisions and implications of the Mediation Act, shedding light on its potential impact.

Rise of Mediation

Mediation is a non-adversarial process where a neutral third party, known as a mediator, assists disputing parties in reaching a mutually acceptable agreement. Unlike litigation, mediation encourages open dialogue, active participation, and creative problem-solving. It is widely preferred by disputing parties for its speed, efficiency, and cost-effectiveness.

Background of Mediation Act, 2023

While mediation has been recognized and utilized in India, especially in commercial disputes, the absence of a governing framework has been a significant challenge. Although Indian courts have referred parties to mediation under Section 89(1) of the Code of Civil Procedure 1908 (CPC), there was a pressing need for a more comprehensive legal structure to support and regulate mediation.

In response to this need, the Mediation Bill was introduced in the Rajya Sabha on December 20, 2021. A Parliamentary Standing Committee on Personnel, Public Grievances, Law, and Justice, led by Sushil Kumar Modi, reviewed the Bill and submitted its findings on July 13, 2022. The Bill received approval from both the Rajya Sabha and the Lok Sabha on August 1, 2023, and August 7, 2023, respectively. Finally, the Mediation Act, 2023, received the President’s assent and was officially published in the Gazette of India on September 15, 2023.

Objective of the Mediation Act, 2023

The primary objective of the Act is to promote and facilitate mediation, especially institutional mediation, for the resolution of disputes, whether commercial or otherwise. The Act encompasses several critical goals:

1. Enforce Mediation Agreements: The Act provides a mechanism for the enforcement of mediated settlement agreements (MAs). Once parties agree to settlement terms, the agreement is documented, signed by all parties, and authenticated by the mediator. Authenticated MAs can be enforced as if they were court judgments. (Section 19 and 20).
2. Mediator Registration: The Act establishes a mediator registration body to regulate and maintain standards for mediators, mediation service providers, and training institutions (Chapter VIII).
3. Community Mediation: The Act encourages community mediation, bringing dispute resolution closer to local communities (Section 6).
4. Online Mediation: To bridge geographical gaps and reduce costs, the Act allows for virtual mediation. However, clear rules for online mediation procedures and conduct are necessary to ensure its security and effectiveness (Section 30).
5. Confidentiality: The Act emphasizes the confidentiality of mediation proceedings, protecting all mediation-related information from disclosure (Section 25)
6. Enhancing Access to Justice: The Act broadens the scope for greater availability and improved access to mediation services. Court-annexed mediation remains a crucial component, offering its services either for free or at a minimal cost. Private mediation, now termed ‘institutional mediation,’ is introduced, where service providers offer mediation services. Parties have the freedom to select a mediator best suited for their case. (Section 7)

Key Highlights of the Act

1. Applicability of the Mediation Act

The Mediation Act applies in various scenarios:

(a) Residency or Incorporation: When one or both parties habitually reside, are incorporated, or have their place of business in India.

(b) Mediation Agreement: When a mediation agreement explicitly stipulates that disputes shall be resolved under this Act.

(c) International Mediation: In cases involving international mediation.

(d) Government Involvement: When the Central Government, State Government, or affiliated agencies, public bodies, corporations, and local bodies, including entities under their control, are parties to a commercial dispute.

(e) Government Notification: When the Central or State Government, as well as associated entities, deem it appropriate to resolve other types of disputes through mediation under this Act.

2. Disputes Fit for Mediation (Section 6)

Section 6 of the Act outlines the types of disputes eligible for mediation. It specifies that mediation cannot be conducted for disputes or matters listed in the First Schedule. Notable exclusions encompass disputes involving minors, individuals with intellectual disabilities, criminal prosecutions, tax-related matters, regulatory issues, and cases under the Competition Act, 2002.

Moreover, the Act extends its applicability beyond civil and commercial disputes to encompass non-civil, non-commercial disputes, including compoundable offenses and matrimonial matters. This provision offers clarity by identifying disputes amenable to mediation and surpasses the Arbitration and Conciliation Act, which relies on judicial precedents to determine the arbitrability of disputes.

3. Pre-Litigation Mediation (Section 5):

Section 5 of the Act introduces the concept of pre-litigation mediation. It mandates mediation before initiating any suit or proceeding of a civil or commercial nature, regardless of the existence of a mediation agreement. This provision emphasizes the voluntary and consensual nature of mediation. However, it excludes commercial disputes of specified value that are subject to compulsory pre-litigation mediation under the Commercial Courts Act, 2015. Additionally, any court or tribunal may refer parties to mediation at any stage of proceedings, irrespective of the presence of a mediation agreement.

4. Mediation Agreement (Section 4):

 The Mediation Act recognizes mediation agreements, which can be incorporated as a clause in a written agreement or as a separate document. These agreements can take various forms, including documents signed by the parties, exchanges of communications or letters (including electronic communication as permitted by the Information Technology Act, 2000), or even allegations of the existence of a mediation agreement in pleadings or proceedings. Parties also retain the flexibility to submit a dispute to mediation after its initiation.

5. Appointment of Mediators (Section 8)

Section 8 of the Act addresses the appointment of mediators. It stipulates that unless otherwise agreed by the parties, a person of any nationality can serve as a mediator. However, a foreign mediator must meet prescribed qualifications, experience, and accreditation standards. In cases without prior agreement, parties may request a mediator's appointment from the Mediation Service Provider. This selection considers party preferences and the mediator's suitability for resolving the dispute. Proposed mediators must disclose any circumstances, personal, professional, financial, or otherwise, that could raise conflicts of interest or doubts about their impartiality. This requirement aligns with international standards and continues throughout the proceedings.

6. Role of Mediator (Section 16)

Section 16 outlines the mediator's role in the mediation process. The mediator acts as a facilitator, assisting parties in reaching voluntary resolutions. Their responsibilities include helping parties identify issues, improving understanding, clarifying priorities, exploring potential agreements, and emphasizing that the final decision lies with the parties themselves. Importantly, mediators cannot force settlements or guarantee outcomes.

7. Time-Limit (Section 18)

The Mediation Act imposes time limits on mediation proceedings. According to the Act, the mediation process must conclude within 120 days from the mediator's initial involvement. Parties may extend this period by up to 60 days if mutually agreed upon. This provision promotes structured and productive mediation while respecting party autonomy. Additionally, the Commercial Courts Act 2015, which applies to pre-institution mediation, is set to be amended, stipulating even stricter timelines.

8. Registration and Enforcement of Mediation Agreement

Sections 19 and 20 of the Act govern the registration of agreements, while Chapter VI addresses the enforcement of mediated settlement agreements. Parties can opt to register mediated settlement agreements within 180 days (with the possibility of extension) from receiving the authenticated copy of the agreement. Registration is optional. The Act clarifies that registration does not affect parties' rights to enforce or challenge mediated settlement agreements under other sections.

9. Enforcement of Mediated Agreement (Section 27)

Mediated settlement agreements signed by parties and authenticated by the mediator are deemed final, binding, and enforceable under the provisions of the Code of Civil Procedure, 1908. These agreements can be relied upon in any legal proceeding, serving as defense, set-off, or otherwise.

10. Grounds of Challenging Mediation Agreement (Section 28)

Section 28 outlines the limited grounds on which mediated settlement agreements may be challenged, including fraud, corruption, impersonation, or if the mediation involved disputes or matters not suitable for mediation as per Section 6. Parties must file challenges within ninety days of receiving the agreement, with a possible extension of an additional ninety days if sufficient cause is demonstrated.

11. Online Mediation (Section 30)

The Mediation Act acknowledges the importance of online mediation, allowing for its use at any stage of mediation. Parties must provide written consent for online mediation, which may employ various electronic forms and communication methods while maintaining the integrity and confidentiality of proceedings.

12. Mediation Council of India (Chapter VIII)

The Act establishes the Mediation Council of India (MCI) as a pivotal body responsible for fostering domestic and international mediation development. The MCI oversees mediation proceedings, regulates Mediation Service Providers, maintains an electronic repository for mediated settlement agreements, and submits annual reports on Act implementation to the Central Government. The Council comprises members with legal expertise, mediation experience, and representation from commerce and industry bodies.

Challenges and Concerns

While the Mediation Act, 2023, is a positive step forward, it faces some challenges and concerns. These include:

1. Distinction Between Registered and Unregistered Mediators: The Act distinguishes between registered and unregistered mediators, which could lead to potential misuse..
2. Time Limit for Challenging MASs: The Act imposes a strict time limit for challenging MASs, which may not be suitable for all cases, particularly those involving fraud (Section 28).
3. Exclusion of Certain Disputes: Some exclusions, such as disputes involving minors or individuals with disabilities, have raised concerns about access to justice (Section 6).
4. Lack of Enforceability for International Mediations: The Act does not provide for the enforcement of settlement agreements from international mediations conducted outside India.
5. Representation in the Mediation Council: Some critics argue that the Mediation Council lacks adequate representation from experienced practitioners, potentially diluting mediation principles (Chapter VIII).

Conclusion

The Mediation Act, 2023, represents a significant step in promoting and enhancing mediation as a preferred method of dispute resolution in India. It addresses critical issues, encourages institutional mediation, and provides a structured legal framework. Its effectiveness will ultimately depend on its implementation, addressing concerns, and fostering a conducive environment for mediation to thrive. As mediation gains momentum, the Act may pave the way for swifter and more cost-effective resolutions, easing the burden on the Indian judicial system and providing timely justice to those in need.