Mediation Act, 2023: An Overview

Overview

• On September 14, 2023, the President approved the Mediation Act, 2023, later published for general knowledge

Mediation Act, 2023

• Designed to promote and facilitate mediation, especially institutional mediation, for dispute resolution
• Concerns commercial disputes
• Intended to enforce mediated settlement agreements
• Offers a body for mediator registration
• Encourages community mediation
• Aims to make online mediation acceptable and cost-effective
• Covers matters connected or incidental to these goals
• Enacted by Parliament in the Seventy-fourth Year of the Republic of India

Chapter I: Preliminary

• Known as the Mediation Act, 2023
• Extends to the entirety of India
• Becomes effective on a date set by Central Government notification
• Central Government can set different dates for different sections

Reference to Commencement

• Any reference to the Act's commencement refers to its coming into force

Chapter II: Application

• Applies where mediation occurs in India if:
• All or some parties reside or are incorporated or have business in India
• The mediation agreement mandates disputes be resolved under this Act
• There is international mediation
• A dispute party is the Central or State Government, or related entities, and it involves a commercial dispute
• May apply to other disputes deemed appropriate by Central or State Governments for resolution via mediation under this Act, particularly when government bodies are involved

Definitions

• "Commercial dispute" aligns with the Commercial Courts Act, 2015, sub-section 2(1)(c)
• "Community mediator" facilitates community mediation under Chapter X
• "Council" refers to the Mediation Council of India, established under section 31
• "Court" is the competent Indian court with jurisdiction to decide the disputes forming the subject matter of mediation
• "Court-annexed mediation" includes pre-litigation mediation at court or tribunal-established mediation centers
• "Institutional mediation" is mediation under a mediation service provider's guidance
• "International mediation" under this Act relates to commercial disputes from legal relationships under Indian law, involving at least one party who is:
• An individual who is a national/resident of a country other than India
• A body corporate with a business based outside India
• An association/body with a business based outside India
• A foreign government
• "Mediation" includes processes like pre-litigation, online, community mediation, or conciliation
• The parties try to amicably settle with a neutral third-party mediator who cannot impose a settlement
• "Mediator" is appointed by parties/service provider to mediate, including registered mediators
• If multiple mediators are appointed, references to "mediator" apply to all of them
• "Mediation agreement" is defined in sub-section 4(1)
• "Mediation communication" is communication, electronic or otherwise, including:
• Anything said/done
• Documents
• Information provided during mediation
• Also includes agreements made during mediation
• "Mediation institute" is a body providing mediator training/certification and other related functions
• "Mediation service provider" is defined in sub-section 40(1)
• "Mediated settlement agreement" is defined in sub-section 19(1)
• "Member" includes full/part-time members of the Council and the Chairperson
• "Notification" means publication in the Official Gazette and its related meanings are construed accordingly
• "Online mediation" is detailed in section 30
• "Participants" are those involved in mediation besides the parties, including advisers, advocates, consultants, experts, and observers
• "Party" is a party whose agreement/consent is necessary to resolve a dispute and includes successors
• "Place of business" includes:
• A regular business location, including warehouses or storage
• A place where accounts are maintained
• A place where business is conducted through an agent
• "Pre-litigation mediation" is conducted before a lawsuit, under section 5, for civil or commercial disputes, before a court/notified tribunal
• "Prescribed" refers to rules set by the Central Government under this Act
• "Schedule" is the Schedule attached to the Act
• "Secure electronic signature" aligns with the Information Technology Act, 2000, section 15, for online mediation
• "Specified" means specified by Council regulations

Chapter III: Mediation

• A mediation agreement must be written, involving parties and anyone claiming through them, to mediate current or future disputes
• A mediation agreement can be a clause with a contract or a separate agreement
• A mediation agreement is in writing if it's within or recorded as:
• A document signed by the parties
• An exchange of letters, including electronic means under the Information Technology Act, 2000
• Pleadings in a suit where one party alleges a mediation agreement that the other doesn't deny
• A reference in an agreement containing a mediation clause constitutes a mediation agreement if the agreement is written and the reference makes the mediation clause a part of it
• Parties can agree to mediate any dispute under an agreement, regardless of when the agreement was made
• International mediation agreements must refer to resolution in commercial disputes mentioned in section 3(a)

Pre-Litigation Mediation

• Parties can voluntarily attempt dispute settlement through pre-litigation mediation before any lawsuit, under the Act
• Pre-litigation mediation for specific commercial disputes follows the Commercial Courts Act, 2015, section 12A
• Sub-section (1) applies to tribunals notified by the Central/State Government
• Unless parties agree otherwise, a mediator for sub-sections (1) and (2) must be:
• Registered with the Council
• Empaneled by a court-annexed mediation center
• Empaneled by an Authority under the Legal Services Authorities Act, 1987
• Empaneled by a recognized mediation service provider
• For pre-litigation mediation under clauses (ii) and (iii) of sub-section (3), a party can request someone designated by the High Courts or an Authority under the Legal Services Authorities Act, 1987
• Court-annexed centers and Authorities under the Legal Services Authorities Act, 1987, must keep a list of mediators for pre-litigation mediation
• Under the Motor Vehicles Act, 1988, if a compensation application from an accident is with the Claims Tribunal, the Tribunal refers mediation to a mediator/service provider if settlement under section 149 isn't reached
• Settlement agreements under sub-section (6) are placed before the Claims Tribunal for consideration
• If no settlement is reached, a mediator's non-settlement report is sent to the referring Claims Tribunal for adjudication

Disputes Unfit for Mediation

• Mediation is prohibited for disputes on the First Schedule's indicative list
• Courts can still refer compoundable offenses, including matrimonial ones, for mediation if appropriate
• Outcomes of compoundable offenses aren't judgments/decrees under section 27(2) and are considered by the court
• The Central Government can amend the First Schedule via notification

Power to Refer Parties to Mediation

• Even without dispute settlement under section 5(1), courts/tribunals can refer parties to mediation at any point
• When referred, courts/tribunals can issue interim orders to protect interests
• Parties aren't obligated to settle in mediation after a reference

Chapter IV: Mediators

• Any nationality can be a mediator unless parties agree otherwise

Foreign National Mediator

• Must have specified qualifications, experience, and accreditation

Mediator Appointment

• Parties are free to agree on a mediator's name and appointment
• If no agreement is reached, the party seeking mediation applies to a service provider for a mediator
• Within seven days of receiving an application, the provider appoints:
• A mutually agreed mediator
• Or, from its panel, a mediator with consent if parties can't agree or the initial mediator refuses
• Appointees have seven days to communicate their willingness

Preference in Mediator Selection

• Mediation service providers consider suitability and parties' preferences when appointing mediators from their panel

Duty to Disclose Conflicts of Interest

• Before mediation, appointed mediators must disclose any potential or existing personal, professional, or financial conflicts of interest in writing
• Mediators must promptly disclose newly arisen conflicts of interest during mediation
• Parties have the option to waive objections if they all consent in writing
• If a party wants to replace the mediator after a disclosure:
• In institutional mediation, they apply to the service provider
• In non-institutional mediation, they terminate the mandate

Termination of a Mediator's Mandate

• A service provider may end a mediator's mandate upon:
• An application from a party under section 10(4)(i)
• Information about the mediator's conflict of interest
• The mediator's withdrawal
• Termination for conflict of interest requires a hearing for the mediator if the mediation service provider confirms valid doubts about independence/impartiality and a party wants a replacement

Mediator Replacement after Mandate Termination

• Parties may appoint a new mediator within seven days after non-institutional mediation termination
• Mediation service providers appoint a new mediator within seven days in other cases

Chapter V: Mediation Proceedings

• Mediation must occur within the territorial authority of the court/tribunal overseeing the dispute
• Mediation can take place outside this jurisdiction or online if mutually agreed upon
• Mediated settlement agreements, for enforcement, challenges, or registration, are considered within the court/tribunal's competent jurisdiction

Mediation Start Date

• Determined as follows:
• With existing agreements, it's when a party gets notice to refer the dispute to mediation
• Without existing agreements:
• If parties agree on a mediator, it's the day the mediator provides consent
• If a party applies to a mediation service provider, it's the date a mediator is appointed

Mediation Process

• Conducted as specified
• Mediators assist parties independently, neutrally, and impartially to reach settlement
• Mediators uphold objectivity, fairness, voluntariness, confidentiality, self-determination, and professional/ethical standards
• Actions include meetings with parties/participants, as the mediator deems fit, to convene and maintain integrity
• Mediators aren't bound by the Code of Civil Procedure, 1908, or the Indian Evidence Act, 1872
• Mediators determine the language(s) of mediation with the parties' consent

Facilitation of Resolution

• Mediators facilitate the voluntary resolution by communicating views, helping define issues, improve understanding, clarifying priorities, exploring settlement areas, and generating options while stressing party responsibility for claims
• Parties are informed mediators facilitate decisions, don't impose settlements, or guarantee results

Mediator Prohibitions

• Mediator shouldn't act as arbitrator/counsel
• Shouldn't be a witness regarding the subject matter of the mediation

Time Limit

• Mediation should finish within 120 days from the mediator's first appearance date
• Can be extended by agreement, but not beyond 60 days

Mediated Settlement Agreement

• Includes a written agreement from mediation, settling disputes, authenticated by the mediator
• Terms can extend beyond the referred disputes
• Is unenforceable if void under the Indian Contract Act, 1872
• Must be written and signed by parties regarding all/some resolution of disputes
• If signed, the mediated settlement agreement:
• Is submitted to the mediator in institutional mediation, who forwards it to the service provider with a cover letter, after authenticating it
• Is submitted directly to the mediator, who authenticates it and provides copies to all parties in other cases
• Parties can agree on anything related to the disputes in mediation
• Includes settlement agreements resulting from online mediation

Mediated Settlement Agreement Registry

• Parties can register their mediated settlement agreement with an Authority under the Legal Services Authorities Act, 1987, or any other body notified by the Central Government
• The Authority/body issues a unique registration number to the agreement

Mediated Settlement Agreement Registration Requirements

• Registration shouldn't affect parties' rights to enforce/challenge
• The parties/mediation service provider must register within 180 days with possible fee after
• Agreements may still be registered after 180 days upon paying a specified fee, in consultation with a relevant authority

Report Submission after Failed Agreement

• If parties don't reach resolution in time or the mediator views settlement as impossible:
• A non-settlement report is submitted to the mediation service provider in writing for institutional mediation
• All parties get a signed non-settlement report in other cases
• The report shouldn't disclose causes or conduct during mediation

Mandatory Confidentiality

• Mediators, service providers, involved parties, and participants must keep these matters confidential:
• Acknowledgements, opinions, suggestions, promises, proposals, apologies, and admissions made during mediation
• Acceptance or willingness for proposals
• Documents prepared for/related to mediation
• Any mediation communication
• All audio/video recording are disallowed to ensure confidentiality

Restrictions on Reliance or Introduction as Evidence

• No party must rely or introduce any information from clauses (i) to (iv) of sub-section (1)
• Includes any written, electronic or verbal forms
• No court must take cognizance by all related parties

Exceptions to Disclosure Prevention

• Mediators can still disclose matters for research or training, provided it doesn't identify any party
• There are clarified exceptions in Section (4)

Admissibility Provisions

• Sections 20-22 won't protect information proving professional misconduct complaint or claim

No Privilege or Confidentiality Will Attach to

• A threat or statement of a plan to commit an offence punishable
• Information relating to domestic violence or child abuse
• Statements made in mediation that suggest a public health or safety threat

Termination of Mediation

• Can occur:
• On signing/authenticating the mediated settlement agreement
• On the mediator's written declaration stating further efforts are unjustified
• On a party's written communication wishing to end mediation
• On expiry of the time limit

Mediation Costs

• Costs will be laid out, except for community mediation
• Parties equally must bear all expenses
• Includes the mediator's fees and provider's charges, unless agreed otherwise

Proceedings of Lok Adalat

• Conducted proceedings won't affect other involved instances

Chapter VI: Enforcement of Mediated Settlement Agreement

• A mediated settlement agreement must be enforced by parties
• Agreement must be signed between the parties involved
• Must be authenticated by mediator
• Agreements will be final and binding for all involved
• Settlement agreement will be enforced through the same code of processes