Mediation Act, 2023 Receives Assent Of President Of India

                              It is really most refreshing, most reassuring and most rejuvenating to learn that we finally see that the Mediation Act, 2023 has finally received the assent of the President of India on September 14, 2023 and was then notified in the Gazette of India on September 15, 2023 by the Ministry of Law and Justice which notified this Act. It must be  mentioned here that this Act was primarily enacted to ensure that the individuals before directly rushing to the courts as happens usually which then ostensibly culminates in wastage of huge time of not just the parties but also of the the courts and adds to the huge burden of the pending cases in courts most significantly  first try and resolve most amicably the civil or commercial disputes through mediation. It must be borne in mind that this Act has been evolved especially to promote the institutional mediation for the resolution of disputes, enforce mediated settlement agreements, provide for a body for registration of mediators, to encourage community mediation and so also to make online mediation as acceptable and cost-effective process and for matters connected therewith or incidental thereto.    

                              To recapitulate, it must be laid bare here that it was on December 20, 2021 we saw that the Mediation Bill was first introduced before being ultimately referred to a Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice headed by Mr Sushil Kumar Modi. It was finally on July 13, 2022 that we then witnessed after a lot of homework and brainstorming sessions of deliberations and discussions done by those assigned for it headed by Mr Sushil that the Committee finally then submitted its meticulously drafted Report to the Rajya Sabha Chairperson on July 13, 2022. It was then finally passed by the Rajya Sabha on August 1 and by the Lok Sabha on August 7 respectively.   

                 By all accounts, India has definitely risen up to the occasion and most remarkably has taken the right step in the right direction by deciding to keep pace with the changing times as was the compelling need of the hour also. We also cannot lose sight of the irrefutable fact that we see that several prominent countries like Italy, Australia and Singapore among others have already separate laws on mediation. It would be germane to mention that even in India, we saw how there were multiple suggestions submitted including by the High-Level Committee in 2017 and so also by the Supreme Court itself in 2019 to enact separate legislation for mediation. In addition, we witnessed how in 2020, a Committee that had been appointed by the Supreme Court recommended and drafted an umbrella legislation to finally give proper legitimacy that was needed also to dispute settlement through mediation.     

                  Do note, it is clearly stated in Section 2 of the Mediation Act, 2023 about its application that, “This Act shall apply where mediation is conducted in India, and—

(i) all or both parties habitually reside in or are incorporated in or have their place of business in India; or

(ii) the mediation agreement provides that any dispute shall be resolved in accordance with the provisions of this Act; or

(iii)  there is an international mediation; or

(iv) wherein one of the parties to the dispute is the Central Government or a State Government or agencies, public bodies, corporations and local bodies, including entities controlled or owned by such Government and where the matter pertains to a commercial dispute; or

(v)    to any other kind of dispute if deemed appropriate and notified by the Central Government or a State Government from time to time, for resolution through mediation under this Act, wherein such Governments, or agencies, public bodies, corporations and local bodies including entities controlled or owned by them, is a party.”

           We must note here that mediation is explicitly defined and elaborated upon in Section 3(h) as “‘mediation’ includes a process, whether referred to by the expression mediation, pre-litigation mediation, online mediation, community mediation, conciliation or an expression of similar import, whereby parties attempt to reach an amicable settlement of their dispute with the assistance of a third person referred to as mediator, who does not have the authority to impose a settlement upon the parties to the dispute.”

           Be it noted, while elaborating on mediation agreement, it is stated in Section 4 of the Act that, “(1) A mediation agreement shall be in writing, by or between parties and anyone claiming through them, to submit to mediation all or certain disputes which have arisen or which may arise between the parties.

(2) A mediation agreement may be in the form of a mediation clause in a contract or in the form of a separate agreement.

(3) A mediation agreement is in writing, if it is contained in or recorded as—

(a) any document signed by the parties;

(b) an exchange of communications or letters including through electronic form as provided under the Information Technology Act, 2000;

(c) any pleadings in a suit or any other proceedings in which existence of mediation agreement is alleged by one party and not denied by the other.

(4) A reference in any agreement containing a mediation clause shall constitute a mediation agreement if the agreement is in writing and the reference is such as to make the mediation clause as part of the agreement.

(5) The parties may agree to submit to mediation any dispute arising between them under an agreement, whether entered prior to arising of the dispute or subsequent thereto.

(6) A mediation agreement in case of international mediation shall refer to an agreement for resolution in matters of commercial disputes referred to in clause (a) of section 3.”

     It is worth noting that pertaining to pre-litigation mediation, it is specifically enunciated in para 5 that, “(1) Subject to other provisions of this Act, whether any mediation agreement exists or not, the parties before filing any suit or proceedings of civil or commercial nature in any court, may voluntarily and with mutual consent take steps to settle the disputes by pre-litigation mediation in accordance with the provisions of this Act: Provided that pre-litigation mediation in matters of commercial disputes of Specified Value shall be undertaken in accordance with the provisions of section 12A of the Commercial Courts Act, 2015, and the rules made thereunder.

(2) The provisions of sub-section (1) shall be applicable to the tribunals notified by the Central Government or a State Government, as the case may be.

(3) For the purposes of sub-sections (1) and (2), unless otherwise agreed upon by the parties, a mediator,—

(i) registered with the Council; or

(ii) empanelled by a court-annexed mediation centre; or

(iii) empanelled by an Authority constituted under the Legal Services Authorities Act, 1987; or

(iv) empanelled by a mediation service provider recognised under this Act, shall conduct pre-litigation mediation.

(4) For conducting pre-litigation mediation under clauses (ii) and (iii) of sub-section (3), a party may request any person designated for this purpose by the High Courts, or an Authority constituted under the Legal Services Authorities Act, 1987, as the case may be.

(5) The court-annexed mediation centre and an Authority constituted under the Legal Services Authorities Act, 1987, shall maintain a panel of mediators for the purposes of pre-litigation mediation.

(6) Notwithstanding anything contained in sub-sections (1) and (2) and the Motor Vehicles Act, 1988, when an application for compensation arising out of an accident is made before the Claims Tribunal, if the settlement as provided for in section 149 of that Act is not arrived at between the parties, the Claims Tribunal shall refer the parties for mediation to a mediator or mediation service provider under this Act.

(7) Where the parties arrive at a settlement agreement under sub-section (6), it shall be placed before the Claims Tribunal for its consideration.

(8) If the parties do not reach to settlement agreement under sub-section (6), a non-settlement report prepared by the mediator shall be forwarded to the Claims Tribunal, which has referred the matter for mediation, for adjudication.”

                                             While shedding light on dispute matters fit for mediation, it is laid bare in para 6 that, “(1) A mediation under this Act shall not be conducted for resolution of any dispute or matter contained in the indicative list under the First Schedule:

                          Provided that nothing contained herein shall prevent any court, if deemed appropriate, from referring any dispute relating to compoundable offences including the matrimonial offences which are compoundable and pending between the parties, to mediation:

                  Provided further that the outcome of such mediation shall not be deemed to be a judgment or decree of court referred to in sub-section (2) of section 27, and shall be further considered by the court in accordance with the law for the time being in force.

(2) If the Central Government is satisfied that it is necessary or expedient so to do, it may, by notification, amend the First Schedule.”

                                In sum, it is well nigh impossible due to paucity of space to elaborate on each and every Section that is encapsulated in this Act. I have dwelt and touched only very few of them. After two mediation sessions, a party will be allowed to withdraw from the process.

              Further, it is stipulated that the mediation process itself should be completed within 180 days, with the possibility of extending it by another 180 days if the parties agree. It is certainly good to see that the Mediation Council of India will be established to oversee and monitor the mediation process. Its responsibilities encompasses from registering mediators and so also recognizing the mediation service providers and so also the mediation institutes which play the most pivotal role in being involved in the training and certifying mediators.

     It is worth mentioning that certain disputes are deemed inappropriate for mediation such as those involving criminal prosecution or impacting the rights of third parties. What’s more, the Central government has the authority to amend this list if needed. In cases where the parties agree, they can appoint any individual as a mediator.

                                                                                  Furthermore, if an agreement cannot be reached on the mediator, they can seek the assistance of a mediation service provider which will appoint a mediator from its panel of qualified mediators. The agreements resulting from successful mediation will be legally binding and enforceable in the same manner as court judgments. It must be noted that the community mediation and its procedure is elaborated in Sections 43 and 44. The grounds on which mediated settlement agreement can be challenged are fraud, corruption, impersonation and where the mediation was conducted in disputes or matters not fit for mediation.

                             Frankly speaking, one has to honestly concede that the Act has received some fair criticism for making participation in pre-litigation mediation mandatory which goes against the traditional voluntary nature of mediation. Another major area of grave concern which must be noted is that the Mediation Council, tasked with regulating mediators’ profession, lacks adequate representation of experienced practitioners unlike other professional regulators like the Bar Council of India (BCI). But this can be certainly addressed and one fervently hopes so that the needful will be done in this direction to plug the gray areas in this direction. Additionally, the Council requires prior approval from the Central government for its regulations, raising questions about the government’s potential involvement as a party to mediations. Moreover, the principal drawback that one notices is that the Act doesn’t cater to the dire need for the enforcement of the settlement agreements from international mediations conducted outside India.  

                  All told, one still fervently hopes that these shortcomings too will be redressed among others and one has to candidly concede that a very good beginning has been made by ushering in the Mediation Act, 2023 which was long overdue and which has to be definitely applauded as a good beginning in the right direction has been initiated with this Act coming into force! There are so many advantages of this Act and I have touched on most elementary aspects while also reflecting on the shortcomings and have not dwelt on each and every aspect of it!

Sanjeev Sirohi,

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