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Key Provisions of the Mediation Act, 2023

On September 15, 2023, the Indian Government notified the Mediation Act, 2023 ("Act"). Several provisions of the Act have, thereafter, been brought into force from 09 October 2023. 

The Act aims to foster and facilitate mediation as a preferred method for resolving disputes, whether commercial or otherwise, and to encourage community mediation and to make online mediation as acceptable and cost-effective process. To this end, it provides a legal framework to enforce mediated settlement agreements, for registration of mediators.  


Key Provisions of the Mediation Act 2023 

  1. Scope of the Mediation Act  The Mediation Act is applicable to mediation and conciliation proceedings within India in various scenarios, including when all parties reside, are incorporated, or operate their businesses within the country. It also covers cases of international mediation involving at least one foreign party. The Act integrates conciliation under Part III of the Arbitration and Conciliation Act, 1996, using "mediation" and "conciliation" interchangeably. 

  2. Initiating Mediation  Parties can initiate mediation by incorporating a dedicated clause in the contract, entering into a separate agreement, or opting for mediation through mutual agreement. The Act also mandates pre-litigation mediation for civil or commercial disputes, highlighting the importance of attempting settlement before resorting to legal proceedings. 

  3. Prohibited Disputes  Certain disputes outlined in the First Schedule, including criminal offenses, direct and indirect tax disputes, and conflicts entailing third-party rights (except in child welfare cases), are ineligible for mediation referral. 

  4. Interim Reliefs  In cases requiring urgent relief, parties can seek recourse to the court or tribunal during the mediation process. 

  5. Period of Mediation  The Act sets a time limit of 120 days for mediation, extendable by an additional 60 days. Parties have the right to withdraw after the initial two sessions, but failure to attend these sessions without valid justification may be considered in subsequent legal proceedings. 

  6. Enforceability of Mediated Settlement Agreements (MSA)  The Act stipulates that a settlement reached through mediation, documented and validated by the mediator, becomes enforceable akin to a court-issued judgment or decree. 

  7. Procedure to Challenge MSA  Challenges to MSA are limited to specific grounds such as fraud, corruption, or if the dispute's subject matter was unsuitable for mediation. Parties must file challenges within 90 days, with the potential for a 90-day extension under valid circumstances. 

  8. Online Mediation  Recognizing the importance of online mediation, the Act provides for virtual proceedings, ensuring accessibility and cost-effectiveness. Clear regulations governing online mediation conduct are essential for its secure and effective implementation. 

  9. Confidentiality  Confidentiality is a fundamental aspect of the mediation process. The Act explicitly mandates the confidentiality of proposals, admissions, and documents created exclusively for mediation. 

  10. Mediation Council of India  The Act establishes a Mediation Council of India, comprising seven members with diverse expertise. The Council's role includes fostering mediation practices, accrediting mediators, and recognizing mediation service providers and institutes. 

  11. Institutional Mediation  Chapter 9 of the Act envisions the establishment of Mediation Service Providers and Mediation Institutes, tasked with accrediting mediators, providing facilities, and overseeing the grading process. 


Our Perspective 

The introduction of the Mediation Act represents a significant step forward in India's dispute resolution landscape. It has great potential to streamline existing practices and establish a unified approach that aligns with the demands of contemporary times. Most importantly, it provides legal sanctity and clarity regarding enforceability of a mediated settlement agreement, which will serve to buttress parties’ faith in mediation as a mechanism for dispute resolution. There are, however, aspects of the Act which require some detailed consideration – issues which we hope to address in the coming days.  

Ultimately, and as always, the Act's actual impact will unfold during implementation, revealing any shortcomings or deficiencies that may require refinement. 

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