In this 'Leading Questions' piece, Jyoti Dastidar and Animesh Dubey discuss how the Mediation Act, 2023 formalizes mediation in India, making mediated settlements final and enforceable, establishing a Mediation Council, enhancing confidentiality, promoting pre-litigation mediation, and limiting judicial challenges.

Question: What are the most significant changes introduced by the Mediation Act, 2023?

Answer: The most significant change is the statutory recognition given to mediation and mediated settlement agreements. A mediated settlement agreement is final and binding and is enforceable in the same manner as a judgment or decree of a court.

The Act also establishes a statutory framework for mediators, mediation service providers and mediation institutions, including through the Mediation Council of India. It gives greater prominence to pre-litigation mediation and recognises mediation as an independent dispute-resolution mechanism rather than merely a process ancillary to court proceedings.

Question: Which categories of disputes are particularly suited for mediation in India, and where should the limits of mediation lie?

Answer: Mediation is particularly useful in commercial, contractual, shareholder, partnership, property and family disputes, as it allows parties to arrive at practical and flexible solutions that a court may not always be able to offer.

Disputes concerning rights between specific parties are generally more amenable to settlement, whereas matters affecting third parties or the public at large may require adjudication.  

The Act also places certain limits on mediation. Section 6 read with the First Schedule excludes specified categories, including proceedings before the NGT, Competition Act proceedings, certain proceedings before TRAI and TDSAT, electricity regulatory proceedings, certain SEBI proceedings, taxation matters, and land acquisition and compensation disputes. Thus, the Act recognises that mediation cannot substitute adjudication in every category of dispute.

Question: How does mediation differ from arbitration and conciliation, and which is the ‘ideal’ process?

Answer: Mediation is a voluntary and non-adversarial process in which a neutral mediator facilitates settlement but cannot impose a decision. Conciliation is similar, although the conciliator may adopt a more active role and suggest settlement terms. With the introduction of the Mediation Act, 2023, conciliation is now brought within the broader definition of “Mediation”. Arbitration is adjudicatory in nature as the arbitrator hears both sides and renders a binding award.

There is, however, no single ‘best’ dispute resolution process. Mediation may be more suitable where parties wish to preserve their relationship and are willing to compromise, while arbitration may be preferable where they require a final and binding determination, particularly in construction, infrastructure or cross-broader disputes. Ultimately, the choice depends on the nature of the dispute and the parties’ willingness to resolve it collaboratively.

Parties can also adopt hybrid mechanisms such as Arb-Med-Arb, under which an arbitration is commenced and the dispute is subsequently referred to mediation. If settlement is reached, it can be recorded in accordance with the applicable institutional rules; if mediation fails, the arbitration continues. Such mechanisms allow parties to combine the flexibility of mediation with the adjudicatory framework of arbitration.

Question: What makes for an ideal mediation agreement or mediation clause?

Answer: A well-drafted mediation clause should clearly identify the disputes covered, specify whether mediation is mandatory before litigation or arbitration, and, where possible, identify the mediation institution or service provider and the applicable procedure.

The clause should also specify what happens if mediation does not result in a settlement. Parties may provide for mediation followed by arbitration or litigation, or adopt a hybrid mechanism such as Arb-Med-Arb.

The government’s approach to dispute resolution also reflects the growing emphasis on mediation. In its Office Memorandum dated June 3, 2024 concerning domestic public procurement contracts, the Department of Expenditure advised that arbitration should not be routinely or automatically included in government procurement contracts, particularly large contracts. As a norm, arbitration was to be restricted to disputes below ₹10 crore, while arbitration above that threshold requires specific approval. The OM also contemplates amicable settlement and mediation as alternative mechanisms.

Question: How does the Mediation Act protect confidentiality, and why is confidentiality important to the mediation process?

Answer: Confidentiality is one of the key features of mediation because parties are more likely to communicate openly and explore settlement options when they know that their statements cannot subsequently be used against them.

Section 22 requires the mediator, mediation service provider, parties and participants to maintain confidentiality of mediation communications, including proposals, admissions and documents prepared for mediation. It also prohibits audio or video recording and generally prevents such communications from being introduced as evidence in subsequent proceedings. Section 23 provides further protection against disclosure, subject to specified statutory exceptions, including matters involving threats of criminal activity, domestic violence, child abuse and significant imminent threats to public health or safety.

Question: How does the Mediation Act make mediated settlements enforceable, and what safeguards exist against their challenge?

Answer: Under Section 27, a mediated settlement agreement, once signed by the parties and authenticated by the mediator, is final and binding on the parties and persons claiming under them. It is enforceable in accordance with the CPC in the same manner as if it were a judgment or decree of a court.

The settlement must be reduced to writing, signed by the parties and authenticated by the mediator. Registration under Section 20 is optional and is not a precondition to enforcement. If a party fails to comply, the settlement can therefore be enforced by invoking execution proceedings under CPC, without requiring a fresh suit to establish the settlement.

Section 28 permits a limited challenge before a competent court or tribunal on specified grounds, including fraud, corruption, impersonation and mediation of a dispute or matter not fit for mediation. This preserves finality while providing safeguards against abuse.

Question: Which institutions currently offer mediation services in Delhi?

Answer: Delhi has a multi-level mediation ecosystem. At the Supreme Court level, the Supreme Court Mediation Centre, functioning under the aegis of the Supreme Court Legal Services Committee, facilitates mediation in matters referred by the Supreme Court.

Further, the Delhi High Court Mediation and Conciliation Centre, known as “Samadhan,” and the Delhi Mediation Centre at the district court level provide court-annexed mediation.

In addition, the Delhi Dispute Resolution Society, established by the Delhi government, also provides mediation and other ADR services. Even, the at the institutional level, the India International Arbitration Centre (“IIAC”) administers arbitration, mediation and conciliation services.

Jyoti Dastidar is a Partner and Animesh Dubey is an Associate at AQUILAW.

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