Mediation Bill 2023 - An Analysis

In a move inspired by historical wisdom and modern necessity, India has enacted the Mediation Bill 2023 to reshape its legal landscape. The Mediation Bill as passed by the Rajya Sabha in 2023, seeks to codify and institutionalise the process of mediation. It is pending President’s assent. 

Following the suit of International Centre for Settlement of Investment Disputes (2018), Uniform Mediation Act of USA, Model Law on International Commercial Conciliation (2002), among others; the Bill requires persons to try to settle civil or commercial disputes through mediation before approaching any court or tribunal. 

The legislation confers confidentiality to mediation proceedings in addition to providing for online and community mediation. It also provides for creation of a ‘Mediation Service Provider’ whose primary function would be to outline conduct of mediation procedures, accreditation, maintenance of panels and all operations ancillary thereof. A neutral third party mediation council will also be constituted to keep the process time bound. 

The legislation includes under its ambit family disputes, community conflicts, civil and commercial disputes. Moreover, the mediation bill will have an overriding effect for conducting mediation over other laws and to proceedings conducted by Lok Adalat. Therefore, in cases of jurisdictional dispute, mediation shall be given primacy over other proceedings. 

The legislation makes pre-litigation mediation voluntary in nature for certain matters, allowing parties to choose whether or not to participate in the process. This provision was intended to remain dormant because the mediation process necessitates a mental shift. 

Pre-litigation mediation

The 2021 version of the legislation entailed compulsory pre-litigation mediation for all disputes. However, the 2023 version makes pre-litigation mediation voluntary instead of mandatory for a chunk of disputes under Section 12-A. This allows the parties unwilling to mediate to avoid the rigmarole of mandatory mediation process if they have no faith in the process. 

Voluntary mediation may be sought by parties in agreement to the process. On the other hand, mandatory mediation is legally incumbent upon the parties to mediate prior to approaching the court or the tribunal. 

Criminal matters, allegations of fraud, environmental issues, matters relating to antitrust law, securities laws, telecom, electricity laws and land acquisition are excluded from the ambit of mediation. It is also interesting to note that the state cannot be forced to mediate unless the dispute is of commercial nature. 

Moreover, the bill provides for a trial run of two mediation sessions in the anticipation that it offers adequate time to the parties to foresee the outcome and decide whether or not to continue the proceedings. This prevents the parties from abruptly leaving the proceedings halfway. 

In the spirit of steady implementation, the bill recognises, legitimises and enforces the settlements reached via mediation. This is a notable feature of the legislation but it triggers the question of enforceability of settlement agreements. 

Enforceability of settlement agreements

The Bill seeks to enforce mediated settlement agreements (MSA) in the same manner as a court’s decree under the Civil Procedure Code. A MSA has to be duly signed by the parties and the mediator in addition to it being final and binding. It is imperative to maintain that settlement agreements are essentially contracts between the parties. 

This is a commendable move to ensure that the parties to the settlement do not renege from their agreement. Earlier, the enforcement of the settlement in cases would prove to be an uphill task in case one of the parties would retracted from the agreement. However, allowing such a wide array of grounds for challenge brings us back to where we started if the courts are going to look at whether the settlement is bonafide.

The MSA may be challenged on grounds as per Section 28 are limited to fraud, impersonation or disputes not fit for mediation under Schedule-I. Further, such challenge may be made only within the period of 180 days from the date of receipt of the copy. 

While it is intended to allow quicker access to resolution in addition to reduced burden on the courts but it offers a long window in terms of mediation. The law of limitation provides for a three-year window from the date of cause of action, to initiate proceedings against fraud and impersonation as grounds of challenge against a contract. This brings us back to square one and the parties remediless by way of delay alone. 

From scriptures mentioning mediation in Lord Rama’s age when Angad was sent to Ravana’s camp for mediation to the recent mediation of Ukraine – Russia armed conflict, amicable settlement of conflicts has been the hallmark of a mature civilization. Mediation was also preferred in one of the biggest political disputes of Indian history – the Ram Janmabhoomi matter. 

Yet until now, there was no umbrella legislation governing mediation. The Bill comes as a breakthrough in ADR. It addresses critical issues of binding confidentiality, party empowerment, procedural clarity, infrastructural bias and institutional neutrality. However, the loopholes require immediate attention so as to instill confidence in the process. The implementation remains to be seen in the coming days.