Assessing the Mediation Act 2023: A Leap Forward in Dispute Resolution

Introduction 

In the ever-evolving landscape of legal frameworks and dispute resolution mechanisms, the Mediation Act 2023 (referred to as the ‘Act’) has emerged as a significant milestone. Mediation offers parties involved in disputes an opportunity to resolve their issues through a collaborative and non-adversarial process, while saving time and resources. Recognizing the need to promote mediation as an effective method of dispute resolution, the Indian government introduced the Mediation Act 2023. This landmark legislation aims to streamline and enhance the mediation process in India. This article aims to assess the key provisions and implications of the Mediation Act 2023 and shed light on its potential impact on the resolution of disputes in various legal contexts. 

 

The Rise of Mediation  

Mediation has gained prominence globally as a viable alternative to traditional litigation. It is a voluntary and confidential process where a neutral third party, the mediator, assists parties in reaching a mutually acceptable agreement. Unlike courtroom battles, mediation encourages open dialogue, active participation, and creative problem-solving, making it a preferred choice for many disputing parties.  

 

Background of the Mediation Act 2023 

Mediation has emerged as an effective means of resolving disputes, especially in the context of commercial disagreements. It is known for its speed, efficiency, and cost-effectiveness. However, a significant challenge has been the absence of a governing framework for this practice, despite its recognition by Indian Courts in legal decisions and legislation. 

 

In response to this situation, the Mediation Bill (referred to as the ‘Bill’) was introduced in Rajya Sabha on December 20, 2021[1], and subsequently, the Parliamentary Standing Committee on Personnel, Public Grievances, Law, and Justice, led by Sushil Kumar Modi, submitted a report on the Bill for further examination.[2] The committee presented its findings to the Chairperson of the Rajya Sabha on July 13, 2022. The Mediation Bill was introduced in both the Rajya Sabha and Lok Sabha, and it was approved by both houses on August 1, 2023, and August 7, 2023, respectively.[3] The Mediation Act of 2023 has been granted approval by the President of India and was officially published in the Gazette of India on September 15th, 2023.[4] 

 

The Act aligns with Section 89 of the Code of Civil Procedure 1908 (CPC), which allows courts to refer parties to various dispute resolution methods, including arbitration, conciliation, judicial settlement, and mediation, when the possibility of an amicable settlement exists. 

 

Objective of the Mediation Act 2023 

The primary objective of the Act is to promote and facilitate mediation, particularly institutional mediation, for the resolution of disputes, whether commercial or otherwise. It also aims to enforce mediated settlement agreements, establish a mediator registration body, encourage community mediation, and promote the acceptance of online mediation. The Act defines mediation as a process where parties seek the assistance of a mediator, a neutral third party, to help them reach a mutually agreeable resolution of their dispute. 

 

Key Highlights of the Act 

   

Applicability: This Act applies in situations where mediation occurs in India, including cases where either or both parties habitually reside, are incorporated, or have a place of business in India.[5] It also applies when a mediation agreement specifies this Act’s applicability[6] or in international mediations[7] involving government entities or commercial disputes.[8] 

 

Pre-litigation Mediation: Initially, the Bill proposed mandatory pre-litigation mediation for parties planning to file a lawsuit, regardless of prior mediation agreements.[9] However, following recommendations from the Standing Committee, it was made voluntary.  

   

Excluded Disputes: The Act lists subject matters that are unsuitable for mediation, including allegations of serious fraud, document forgery, claims against minors or individuals with disabilities, criminal offense cases, and certain tax-related disputes. The wording regarding matters conflicting with public policy or morality is broad, leaving room for interpretation. Mediation will not be pursued for disputes listed in the First Schedule of this Act. If a settlement agreement isn’t reached, the mediator will submit a non-settlement report to the Claims Tribunal, which initiated the mediation, for further adjudication.  

   

Mediation Duration: Originally set at 180 days, extendable by 180 days, the mediation period has been reduced to 120 days[10], with a 60-day extension[11]. Parties can withdraw from mediation after the first two sessions, but unexcused non-attendance can lead to cost implications in subsequent litigation.  

     

Enforcement of Mediated Settlement Agreements (MSA): Once the parties agree on settlement terms, the Act requires the agreement to be documented, signed by all parties, and authenticated by the mediator. Authenticated MSAs can be enforced as if they were court judgments.[12]  

   

Challenging MSAs: The Act permits challenges to MSAs based on fraud, corruption, impersonation, or if the subject matter was unfit for mediation.[13] Challenges must be filed within 90 days of receiving the authenticated MSA, extendable by another 90 days under specific circumstances. [14] 

   

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.[15]  

   

Confidentiality: The Act emphasizes confidentiality, protecting all mediation-related information from disclosure.[16]  

   

Mediation Agreement/Clause: Mediation agreements must be in writing and signed by the parties.[17] They can also be in the form of a mediation clause within an agreement, provided the reference clearly integrates the mediation clause into the agreement.  

   

Mediators: Mediators can be individuals of any nationality.[18] Parties have the freedom to select their mediator and follow a defined procedure for appointment.[19] The appointed mediator must confirm their willingness within seven days and disclose any newly arisen conflicts of interest in writing during the mediation. Mediators are prohibited from acting as arbitrators or representatives in related legal proceedings.  

    

Termination of Mediation: Mediation proceedings can terminate on various grounds, including the signing and authentication of a mediated settlement agreement[20], a written declaration by the mediator that further mediation efforts are unjustified[21], a party’s written request to opt out of mediation, or upon the expiry of the 120-day time limit.  

   

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. These institutions are required to maintain a panel of mediators, and professional fees are charged. Parties have the freedom to select a mediator best suited for their case. Much like how government and private hospitals both cater to public healthcare needs, institutional mediation and court-annexed mediation are both essential in ensuring equitable access to mediation services. The Act paves the way for the growth of a robust private mediation sector.  

   

The fundamental tenets of mediation, including confidentiality, self-determination, and voluntariness, are well safeguarded. Section 23 of the Act provides protection against admissibility and privilege against disclosure. All mediation communications remain confidential. Section 21 of the Act ensures that non-settlement reports by mediators do not divulge the reasons for non-settlement. The Act defines ‘mediation’ under Section 2(h) to require that a mediated settlement results from self-determination.  

     

A Mediation Council of India (MCI) will be established[22] to oversee and uphold standards and ethical codes of conduct for mediators, service providers, and training institutions.  

   

The Act applies to commercial disputes involving the government, with the possibility of extending to other government-related disputes through the formulation of mediation schemes or guidelines. Protection is offered to actions taken in good faith by the authority with the written consent of the competent authority, which is a positive step, although further actions are expected, given the government’s significant involvement in litigation.  

   

Challenges and Concerns 

1. Section 2(h) of the Act defines ‘mediator’ in a way that distinguishes between registered and unregistered mediators, increasing the mediator pool. This provision could be susceptible to misuse, as random agreements might be converted into mediated settlement agreements (MSAs) to expedite enforcement under the Act. Weaker parties could be at risk of exploitation due to power imbalances. To mitigate this threat, enforcing MSAs as judgments or decrees of the court could be limited to mediations conducted by registered mediators. 

   

Challenges to an MSA cannot be raised beyond a maximum of 180 days from the date the challenging party receives a copy of the authenticated MSA. If fraud, corruption, or impersonation is the basis for the challenge, it might be more appropriate to calculate the challenge period from the date of knowledge, as stipulated under the Limitation Act.  

   

2. The First Schedule of the Act designates disputes related to minors, deities, individuals with intellectual disabilities, persons of unsound mind, and individuals with disabilities requiring high support as ‘not fit for mediation.’ However, these individuals are already covered by separate legislation that provides for guardianship when they cannot make legally binding decisions. Excluding them from mediation could deny them easy access to justice and be discriminatory. 

   

Similarly, disputes involving professionals like lawyers, doctors, and chartered accountants in matters related to registration, discipline, or misconduct are excluded. Disputes involving tortious liability, such as negligence, are recognized in many jurisdictions as suitable for mediation. It’s crucial to clarify that such complaints can indeed undergo mediation, as there is educational value in resolving these matters through mediation.  

   

3. The Second Schedule of the Act lists laws where the Mediation Act does not have overriding authority. This includes the Family Courts Act, 1984, The Maintenance and Welfare of Parents and Senior Citizens Act, 2007, and the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. In these cases, conciliation is carried out by conciliation officers/Internal Complaints Committees, who also make findings in the adversarial inquiries they conduct. These disputes often involve sensitive relationships, and frivolous cases are common. The misuse of the adversarial process can have severe consequences, and having the option of mediation would be beneficial. 

   

4. The initial drafts of this legislation included a provision for mandatory pre-litigation mediation, which has now been made voluntary. The intention behind the mandatory provision was to remain dormant until mediator capacity improved, at which point it could be activated through notifications. Mandatory pre-litigation mediation has the potential to expedite a change in litigants’ mindsets, as experiencing effective mediation can convince them of its benefits. 

   

5. The level of mediation competence within the Mediation Council appears inadequate. Only one member of the entire Council is required to possess knowledge of mediation law, which may not necessarily translate into a deep understanding of mediation nuances. Additionally, several provisions grant the government control over the Council, posing a risk to the dilution of mediation principles. Mediation is a skill-based craft, and leadership should be entrusted to those with training, experience, and autonomy. 

   

6. While international mediation is mentioned in the Act, it lacks comprehensive coverage. It is imperative to address this omission promptly, especially given India’s status as a signatory to the Singapore Convention on Mediation. 

   

7. The Tenth Schedule of the Act does not empower the Consumer Protection Forum to initiate cases for mediation on its own motion. This appears to be an oversight, as this provision is available in the Eighth Schedule for tribunals under the Companies Act. 

   

8. Community Mediation is a progressive step, but the definition remains ambiguous. The process mandates the presence of three mediators on the panel. While MSAs must be registered, their enforcement is restricted, and the provisions appear cumbersome.

 

Conclusion 

In conclusion, the Act is a positive step that stands to benefit both the business community and litigants in general. However, the success of the Act will depend on its effective implementation, the availability of qualified mediators, and ongoing efforts to educate the public about the benefits of mediation. As the legal landscape continues to evolve, the Mediation Act 2023 stands as a testament to the importance of alternative dispute resolution methods in achieving fair and just outcomes for all parties involved in legal disputes. 

 

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Written by – Ananya Chaudhary