The Act can be a game-changer in dispute resolution, promising a more harmonious and just future, regardless of financial means

Introduction

Mediation has long been recognised as an effective and less adversarial method of resolving disputes, both in legal and non-legal contexts. A significant development in the field of mediation emerged on September 15, 2023, with the enactment of the Mediation Act, 2023. The legislation aims to promote and regulate mediation as a primary means of resolving disputes in various sectors, including civil, commercial, family, and community disputes. The Act consists of 11 chapters, 65 sections and 10 schedules. In this article, we will delve into the details of the Act, exploring its key provisions, objectives, and potential impacts on dispute resolution in the modern era.

Background

The Mediation Act 2023 represents a major step forward in the promotion of alternative dispute resolution mechanisms. It builds upon earlier legal frameworks and international best practices to create a comprehensive and standardised system for mediation in many jurisdictions. The Act seeks to streamline the mediation process, ensuring its accessibility, effectiveness, and the protection of parties’ rights.

Key Provisions of the Mediation Act 2023

• Definition and Scope of Mediation: The Act provides a clear definition of mediation under Section 3 (h) and distinguishes it from other forms of dispute resolution, such as arbitration and litigation. It emphasises the consensual nature of mediation and its role in facilitating communication and understanding between parties. The Act also defines who a mediator is and makes it mandatory for the mediator to be registered with the Mediation Council of India, under, Section 3 (I).
• Pre-litigation Mediation: The Act introduces the concept of Pre-litigation Mediation under Section 5, enabling parties to engage in voluntary mediation for the settlement of civil or commercial disputes before initiating formal legal proceedings. This mediation process, governed by the Act, extends to commercial disputes of a specified value and includes tribunals designated by the Central or State Governments. Qualified mediators, registered with the Council, court-annexed mediation centres, Legal Services Authorities, or recognised mediation service providers conduct the mediation. Additionally, in cases involving compensation claims under the Motor Vehicles Act, 1988, parties failing to reach a settlement are referred to mediation by the Claims Tribunal. The 9th Schedule of the Act specifically addresses Pre-litigation Mediation under Chapter IIIA of the Commercial Courts Act, 2015, mandating that plaintiffs cannot initiate suits without first undergoing pre-litigation mediation, except when urgent interim relief is needed. The Central government designates authorised entities for this mediation, which must be completed within 120 days, extendable for 60 days with parties’ consent, without affecting limitation periods. Settlement agreements reached during mediation are formalised and governed by the Mediation Act, 2023, while amendments to section 21A incorporate provisions for pre-litigation mediation procedures as specified in section 12A.
• Mediation Council: The Act establishes a Mediation Council under Section 31 responsible for overseeing and regulating mediation services. This council is tasked with setting standards for mediator accreditation, maintaining a register of accredited mediators, and promoting mediation awareness. The Council will consist of seven designated people appointed by the Central Government of India.
• Online Mediation: The Act also comes with the provision of an online mediation under Section 30 of the Act. Online mediation, including pre-litigation mediation, can occur at any point during the mediation process under this Act, provided that all parties consent in writing. This online mediation process can utilise various electronic means such as encrypted email, secure chat rooms, or video/audio conferencing. The specific procedures for online mediation will be determined as specified. However, it is crucial to maintain the integrity and confidentiality of the proceedings throughout online mediation, and the mediator has the authority to take necessary measures to uphold these essential elements. Additionally, in online mediation, the Act ensures the confidentiality of mediation communications, subject to other provisions.
• Confidentiality: One of the cornerstones of mediation is confidentiality. The Act reinforces this principle by legally protecting the confidentiality of mediation communications under Section 22 of the Act. Information disclosed during mediation cannot be used as evidence in court, thus encouraging open and honest discussions.
• Enforceability of Mediated Agreements: The Act emphasises the enforceability of mediation agreements in legal proceedings, providing parties with remedies for non-compliance. Section 4 of the Act outlines the concept of mediation agreements, requiring them to be in writing and involving the parties and their successors. These agreements serve to facilitate the submission of disputes to mediation, either as clauses within existing contracts or as separate agreements. The Act defines written mediation agreements to encompass documents signed by the parties, electronic communications compliant with the Information Technology Act, 2000, or assertions of agreement’s existence in unchallenged legal pleadings. Notably, references to mediation clauses within written agreements are considered mediation agreements. Parties have the flexibility to agree to mediate disputes arising from agreements, whether predating or postdating the dispute’s emergence. In international mediation, such agreements must specifically pertain to the resolution of commercial disputes as defined in clause (a) of section 3 of the Act. 7. Court-Annexed Mediation: The Act introduces the concept of court-annexed mediation, where courts may refer disputes to mediation before proceeding with litigation. This provision aims to reduce court backlog and promote amicable resolutions.
• Cost Efficiency: By promoting mediation as a primary means of dispute resolution, the Act aims to reduce the overall cost and time associated with litigation. Parties are encouraged to resolve their disputes quickly and efficiently through mediation.

Objectives of the Mediation Act 2023

1. Promoting Access to Justice: The Act seeks to make mediation more accessible to individuals and businesses, thus reducing the burden on the traditional court system. This not only speeds up the resolution process but also ensures that justice is accessible to all, regardless of financial means.

2. Fostering Amicable Relationships: Mediation encourages parties to work together to find mutually acceptable solutions. This can help preserve relationships, which is especially crucial in family and community disputes.
3. Reducing Legal Backlog: By diverting cases to mediation, courts can focus on more complex matters, leading to a reduction in the backlog of cases and swifter justice delivery.
4. Enhancing Privacy and Confidentiality: The Act safeguards the confidentiality of mediation proceedings, providing a secure environment for parties to discuss their issues openly.
5. Supporting Businesses: Commercial disputes can be particularly time-consuming and costly. The Act aims to support businesses by providing a faster and more cost-effective means of resolving disputes, thus promoting economic growth and stability.

The Mediation Act of 2023 is expected to bring about significant changes to the legal landscape and dispute resolution process. These changes will have a far-reaching impact on individuals, businesses, and the legal system as a whole. These implications are as follows –

1. Pre-litigation Mediation:

• The Act introduces a significant concept known as Pre-litigation Mediation under Section 5, aimed at facilitating the resolution of disputes before the formal initiation of civil or commercial lawsuits in courts or tribunals. This provision grants parties involved in such disputes the option to voluntarily engage in pre-litigation mediation, even in the absence of an existing mediation agreement. This process is regulated by the Act and is particularly relevant for commercial disputes of a specified value, which must adhere to the rules set out in Section 12A of the Commercial Courts Act, 2015. Additionally, these provisions extend to tribunals designated by either the Central or State Governments.

• Under the framework of Pre-litigation Mediation, the mediation process is typically conducted by a qualified mediator who is registered with the Council, empanelled by a court-annexed mediation center, an authority under the Legal Services Authorities Act, 1987, or a recognised mediation service provider. Parties also have the flexibility to request designated mediators in specific cases. Both court-annexed mediation centers and legal services authorities maintain panels of mediators dedicated to pre-litigation mediation.

• Furthermore, the Act addresses situations involving compensation claims arising from accidents under the Motor Vehicles Act, 1988. When parties fail to reach a settlement as specified in Section 149 of the Motor Vehicles Act, the Claims Tribunal is obligated to refer the parties to mediation under the Act. In the event that a settlement is reached during this mediation, it must be presented to the Claims Tribunal for consideration. However, if no settlement is achieved, a non-settlement report prepared by the mediator is then submitted to the referring Claims Tribunal for adjudication.
• Moreover, the Act’s 9th Schedule specifically incorporates provisions related to Pre-litigation Mediation and settlement under Chapter IIIA of the Commercial Courts Act, 2015. This inclusion aims to facilitate commercial transactions by mandating that plaintiffs cannot initiate lawsuits without first undergoing pre-litigation mediation, except in cases where urgent interim relief is needed under the Act. The Central Government holds the authority to designate either the Authority established under the Legal Services Authorities Act, 1987, or a mediation service provider under the Mediation Act, 2023, to facilitate this mediation process. Notably, this authorised entity must conclude the mediation within 120 days from the plaintiff’s application, with the possibility of a 60-day extension upon mutual agreement. Crucially, the time spent in pre-litigation mediation does not contribute to the limitation period defined by the Limitation Act, 1963. (A sentence on what the Limitation Act says about limitation period)
• In instances where parties in a commercial dispute reach a settlement during mediation, it is imperative that this agreement is meticulously documented and signed by all parties involved, including the mediator. Such mediated settlement agreements are governed by the provisions outlined in sections 27 and 28 of the Mediation Act, 2023. Furthermore, the Act’s amendments to section 21A encompass provisions concerning the manner and procedure for pre-litigation mediation, as specified in sub-section (1) of section 12A, ensuring a comprehensive framework for the resolution of disputes through this innovative and effective mediation process.

2. Cultural Shift towards Mediation:

• Encouraging Mediation as the First Choice: One of the primary impacts of the Mediation Act is expected to be a cultural shift towards mediation as the preferred method of resolving disputes. Traditionally, litigation has been the default option for many parties involved in conflicts. However, the Act is likely to promote mediation as the first choice. This shift in mindset can lead to more amicable and efficient dispute resolution processes.
• Reducing Stigma Around Mediation: Historically, there has been a certain stigma associated with mediation, with some perceiving it as a sign of weakness or an admission of guilt. The Act can help reduce this stigma by emphasising the benefits of mediation, such as confidentiality, control over the outcome, and quicker resolutions.
• Educational Initiatives: To support this cultural shift, there may be educational initiatives and awareness campaigns aimed at informing individuals and businesses about the benefits of mediation. This could include public outreach programmes and workshops.
• Legal Professionals Encouraging Mediation: Lawyers and legal professionals may increasingly recommend mediation to their clients as a cost-effective and efficient means of resolving disputes.

3. Reduced Legal Costs:

• Cost Savings: Mediation can substantially reduce legal costs for all parties involved. Litigation involves extensive legal fees, court expenses, and the potential for protracted legal battles. By opting for mediation, parties can save a significant amount of money, making it a financially attractive option.
• Access to Justice: The reduced cost of mediation can enhance access to justice, ensuring that individuals and businesses with limited financial resources can still pursue dispute resolution effectively. This is particularly important for cases where parties might otherwise forego legal action due to high litigation costs.

4. Faster Resolutions:

• Timely Resolutions: Mediation is known for its efficiency in resolving disputes. The Act’s emphasis on mediation can lead to faster resolutions, which can be crucial in cases where time is of the essence, such as commercial disputes or family matters involving child custody or visitation rights.
• Reduced Court Backlog: With more cases being resolved through mediation, courts may experience reduced caseloads, allowing them to focus on more complex matters. This can lead to a more efficient judicial system overall.

5. Improved Relationships:

• Maintaining Relationships: In family and community disputes, mediation’s focus on open communication and mutual understanding can help maintain or restore relationships that might be irreparably damaged through litigation. This can lead to more harmonious environments and better long-term outcomes.

• Business Continuity: In commercial disputes, mediation can help preserve business relationships and partnerships. This is crucial for companies that wish to continue working together after resolving their differences.

6. Boost to Mediation Industry:

• Standardised Accreditation: The Act’s provisions for standardised accreditation processes for mediators can help ensure that mediators meet certain professional standards. This can enhance the credibility and reliability of mediation services.
• Career Opportunities: The increased demand for mediation services driven by the Act may lead to the growth of the mediation industry. This, in turn, can create new career opportunities for individuals interested in becoming mediators or working in related fields.

Conclusion

In conclusion, the enactment of the Mediation Act 2023 marks a significant milestone in the realm of dispute resolution, ushering in a new era of conflict resolution that is more accessible, efficient, and attuned to the needs of modern society. This comprehensive legislation not only defines and distinguishes mediation but also introduces innovative concepts like pre-litigation mediation and online mediation. It establishes the Mediation Council to regulate and oversee the mediation ecosystem, ensuring that mediators adhere to high professional standards. Moreover, by emphasising the enforceability of mediated agreements and promoting court-annexed mediation, the Act aims to reduce legal backlog and expedite the delivery of justice.

The objectives of the Mediation Act 2023 are far-reaching, with a focus on promoting access to justice, fostering amicable relationships, reducing legal backlog, enhancing privacy and confidentiality, and supporting businesses. These objectives are not only ambitious but also highly relevant to the evolving needs of individuals, businesses, and communities in today’s fast-paced world.

The impact of this legislation is expected to be profound. It will foster a cultural shift towards mediation as the primary choice for dispute resolution, reducing the stigma associated with it. By significantly lowering legal costs and expediting resolutions, it ensures greater access to justice for all, regardless of financial means. Improved relationships and business continuity will be the byproducts of mediation, contributing to healthier societies and more prosperous economies.

The Mediation Act 2023 also holds the potential to boost the mediation industry, creating opportunities for aspiring mediators and related professions. Its emphasis on standardised accreditation and professional development ensures the credibility and reliability of mediation services.

In summary, the Mediation Act 2023 is a game-changer in the field of dispute resolution. It not only modernises the approach to resolving conflicts but also aligns with the evolving expectations of individuals and businesses. With its multifaceted impact on culture, economics, and society as a whole, this legislation paves the way for a more harmonious and just future. As the legal landscape continues to adapt to the needs of the modern era, the Mediation Act 2023 stands as a beacon of progress in the pursuit of fair and efficient dispute resolution.

Nandini Gore – Senior Partner	Rohit Kumar – Associate