Mediation Act 2023

Topic: Justice Delivery: Subordinate Courts, Tribunals, Legal Aid and Judicial Reforms · NCERT: Beyond NCERT

Meaning

The Mediation Act 2023 is a law that sets out how disputes are settled through mediation. In mediation, a neutral person (the mediator) helps the two sides reach their own agreement. The Act covers voluntary pre-litigation mediation (trying mediation before filing a case in court), online mediation and community mediation. It makes a signed settlement final, binding and enforceable like a court decree. It also sets up the Mediation Council of India [1][2].

It matters because crores of cases are waiting in Indian courts. The Act moves simple disputes out of court in a cheaper, faster and private way. This supports equal justice under Article 39A and speedy justice under Article 21.

Explanation

How mediation works under the Act

• Mediator's role: the mediator does not decide the dispute and does not propose terms. They only help the parties talk and agree. This makes mediation facilitative: a third person helps, but the parties decide.
• Pre-litigation mediation is voluntary:
• The Mediation Bill 2021 made it compulsory. A person had to try mediation before going to court or to notified tribunals [2].

• After the Parliamentary Standing Committee examined the Bill, the Act made it voluntary.

• Confidentiality: mediation proceedings are confidential [2]. Business secrets and family matters stay out of public records.

The steps, in order, with time limits

1. Parties choose mediation. This can happen before a case is filed (pre-litigation) or later.
2. Mediation runs for up to 120 days [2].

3. Extension of up to 60 more days, only if the parties agree [2]. - The Bill had proposed 180 days plus a 180-day extension. - The Standing Committee wanted 90 days plus a 60-day extension. - The Act settled on 120 + 60 days [2].

4. A mediated settlement agreement (MSA) is signed if the parties agree. An MSA is the written deal the parties reach.

5. The MSA becomes final and binding. It is enforceable like a court decree (a court's formal order that the state can enforce, for example by seizing property).
6. Challenge window: an MSA can be challenged within 90 days, and only on four grounds: - Fraud - Corruption - Impersonation (someone pretending to be a party) - The subject matter could not be mediated

Types and parts

• Online mediation: mediation can be held fully or partly online.
• Community mediation: this is for disputes that may disturb peace and harmony among the residents of an area. A panel of three community mediators handles these disputes.
• Mediation Council of India (MCI):
• It is set up under Section 31 as a national body to promote mediation as a preferred way of settling disputes [1].
• It registers mediators and recognises mediation service providers (bodies that run mediations) [1][2].

Limits: matters not fit for mediation

• A Schedule to the Act lists matters that cannot be mediated. Examples [2]:
• Claims against minors or persons of unsound mind
• Criminal prosecution
• Tax disputes

• Matters affecting third-party rights (the rights of people who are not part of the dispute)

• The Central Government can amend this list [2].

• Rollout: the Act's provisions are being notified (brought into force) in phases. Check which sections are now in force.

In the Constitution and practice

• Constitutional basis:
• Article 39A (equal justice and free legal aid) was added by the 42nd Amendment, 1976. Mediation makes justice cheaper and easier to reach.

• Courts have read the right to a speedy trial into Article 21. Mediation reduces delay.

• Passage: the Mediation Bill 2021 was sent to the Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice. Parliament passed it in August 2023 [2].

• What came before the Act:
• CPC Section 89 was added in 1999 and came into force in 2002. It lets a civil court send a case to arbitration, conciliation, judicial settlement (including Lok Adalat) or mediation.
• Salem Advocate Bar Association v. Union of India (2005): the Supreme Court upheld Section 89 and approved model rules for mediation.
• Afcons Infrastructure v. Cherian Varkey Construction (2010): the Court listed which cases suit ADR (alternative dispute resolution, meaning settling a dispute outside a court trial).
  • Suitable: trade, family, landlord–tenant and consumer disputes.
  • Not suitable: non-compoundable crimes (crimes that cannot be settled privately), fraud, and claims against minors.

• Mediation and Conciliation Project Committee (2005): this Supreme Court committee set up court-annexed mediation centres (mediation centres inside court premises) and trains mediators.

• Mandatory mediation in commercial cases: Section 12A of the Commercial Courts Act 2015 was added in 2018 [3]. It makes pre-institution mediation (mediation before filing a suit) compulsory when no urgent interim relief is sought [3][4]. In Patil Automation v. Rakheja Engineers (2022), the Supreme Court held that Section 12A is mandatory.

• International angle: India signed the Singapore Convention on Mediation in 2019 but has not ratified it (check current status). This convention lets international mediated settlements be enforced across countries.

Don't confuse with

• Conciliation (Part III, Arbitration and Conciliation Act 1996): a conciliator may propose terms of settlement, but a mediator only helps the parties. A conciliation settlement has the status of an arbitral award (s.74). A mediated settlement is enforced like a court decree under the 2023 Act.
• Arbitration: an arbitrator decides the dispute like a private judge and gives a binding award (s.36, 1996 Act). In mediation, the parties make their own deal.
• Section 12A mediation (Commercial Courts Act 2015): this is mandatory before filing a commercial suit when no urgent relief is sought. It must finish in 3 months, extendable by 2 months, and is run by legal services authorities [4]. Pre-litigation mediation under the Mediation Act 2023 is voluntary and takes 120 + 60 days [2].
• Lok Adalat (Legal Services Authorities Act 1987): a bench settles disputes by compromise, and its award is final with no appeal. An MSA can be challenged within 90 days on four narrow grounds.

Prelims Hooks

• Time limit: mediation must finish in 120 days, extendable by 60 days with the parties' consent [2]. The Bill had proposed 180 + 180 days, and the Standing Committee had suggested 90 + 60 days [2].
• Challenge to an MSA: within 90 days, only for fraud, corruption, impersonation, or a subject that could not be mediated.
• Mediation Council of India: set up under Section 31 of the Act. It registers mediators and recognises mediation service providers [1][2].
• Community mediation uses a panel of three mediators for disputes that may disturb peace among residents of an area.
• Not fit for mediation (Schedule): claims against minors or persons of unsound mind, criminal prosecution, tax disputes, and matters affecting third-party rights. The Central Government can amend the list [2].
• Trap: pre-litigation mediation is voluntary under the Mediation Act 2023 but mandatory under s.12A of the Commercial Courts Act (Patil Automation, 2022).

Mains Points

• Mediation as a fix for pendency:
• Section 89 CPC, court-annexed centres and the Mediation Act 2023 move simple disputes out of courts. This frees judges for cases that need a decision.
• It supports Article 39A and speedy justice under Article 21.

• Limit: take-up is low because lawyers resist, the public trusts courts more, and there are too few trained mediators.

• Voluntary vs mandatory mediation:

• Section 12A shows that mandatory mediation can reduce the number of cases filed [3].
• The 2023 Act kept pre-litigation mediation voluntary to protect the right to approach a court [2].

• A good answer weighs access to courts against the need to reduce their burden.

• Next steps for a mediation culture:

• Bring all provisions of the Act into force, since rollout is in phases.
• Make the Mediation Council of India work fully, so it can register mediators and set standards.
• Ratify the Singapore Convention (signed 2019) so that international settlements can be enforced. This would build investor confidence and help with ease of doing business.

Related concepts

• Alternative dispute resolution
• Arbitration
• Conciliation
• Mediation
• India International Arbitration Centre
• Commercial courts

Read more

• Alternative dispute resolution: arbitration, conciliation, mediation and commercial courts