Mediation Act 2023: Section-Wise Bare Act
Table of Contents
The Mediation Act 2023 received Presidential assent on September 4, 2023, and most of its provisions became effective on October 9, 2023. Section 1, which defines the Act’s title, its application, “to the whole of India”, and its commencement date, was among the provisions that came into force in 2023. It aims to promote and facilitate Mediation Act 2023 as an effective method for resolving disputes, particularly commercial and civil matters, in India. It establishes a structured legal framework for mediation, with the goal of reducing the burden on the judicial system. The Act also provides for the establishment of the Mediation Council of India, which ensures the enforceability of mediated settlement agreements, and emphasises principles like confidentiality and adherence to timelines.
Applicability & Definitions
- Section 2: This section outlines the Act’s applicability to various mediation sources. It applies to both domestic and cross-border commercial disputes where meditation is conducted in India, involving Indian parties, government entities, or when parties expressly agree to be governed by the Act. It covers situations where:
(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.
- Section 3: This section focuses on definition relevant to the Act, and clarifies the meaning of key terms used throughout the legislation, such as “mediation”, “mediator”, “mediation agreement”, and “mediation communication”:
(i) Mediation under section 3(h) encompasses various approaches like pre-litigation, online mediation, and community mediation, all aimed at reaching a settlement with the assistance of a mediator.
(ii) As per section 3(i), a mediator is a neutral third party who does not have the authority to impose a settlement upon the parties to the dispute. This person is appointed by y the parties or by a mediation service provider, to undertake mediation, and includes a person registered as mediator with the Council.
(iii) Mediation agreement is a written agreement between parties to submit their disputes to Mediation Act 2023either existing or future ones.
(iv) According to section 3(k), mediation communication is any communication made, whether electronic form or otherwise, through anything said or done, any document; or any information provided reached by the parties during or after mediation, settling all or some of their disputes.
Mediation Agreements & Pre-Litigation Mediation Act 2023
- Section 4: This section mandates that a mediation agreement must be in writing. This agreement can either be a separate, standalone document or a clause within a larger contract. This requirement ensures clarity and provides a clear record of the parties’ commitment to mediate their disputes.
- Section 5: Section 5 allows for voluntary pre-litigation Mediation Act 2023 in civil and commercial disputes, meaning parties can choose to mediate before filing a lawsuit. However, for commercial disputes exceeding Rs. 1 crore, pre-litigation mediation is mandatory under section 12A of the Commercial Courts Act, 2015, and the rules established under it.
Exclusions: Disputes Not Suitable for Mediation
Section 6 of the Act outlines disputes that are not suitable for Mediation Act 2023. It states that mediation under the Act should not be conducted for resolving disputes or matters listed in the First Schedule. However, courts can refer compoundable offences, including some matrimonial offenses to mediation. The outcome of such mediation is not considered a court judgement and requires further consideration by the court.
Court-Directed Mediation
Section 7 empowers courts and tribunals to refer parties to mediation at any stage of a proceeding, even if a dispute has not been settled under a previous section, such as section 5. This section also allows for the court or tribunal to issue interim orders to protect the interests of any party during the mediation process.
Mediator Appointment & Conduct
- Sections 8–9: These sections explains the appointment process for mediations. Parties can appoint a mediation of any nationality, provided foreign mediators meet specified qualifications. If parties cannot agree on a mediator, a Mediation Service Provider (MSP) will appoint one from its panel within seven days.
- Section 10: Section 10 mandates that mediators must disclose any potential conflicts of interest to the parties involved in the mediation process. This disclosure must be in writing, both before the mediation begins and during the process if new conflicts arise. The parties then have the option to waive any objections to the mediator’s involvement if they agree in writing.
- Section 11: Section 11 lists the circumstances under which a mediator’s appointment can be terminated by the MSP, such as if they receive an application under section 10(4), ) the receipt of information about the mediator being involved in a matter of conflict of interest from participants or any other person, or his withdrawal from mediation for any reason.
- Section 12: This section addresses the replacement of a mediator if the appointment is terminated, including, in case of mediation other than institutional mediation under clause (ii) of section 10(4), the parties may, appoint another mediator within a period of seven days from such termination, and under section 11, the MSP shall appoint another mediator from the panel maintained by it within a period of seven days from such termination.
Territorial Jurisdiction & Commencement
- Section 13: This section outlines the rules for where mediation can take place. It states that mediation must generally occur within the territorial jurisdiction of the relevant court or tribunal. However, with the mutual consent of all parties involved, mediation can also be conducted outside of that specific jurisdiction or even online. Importantly, for the purposes of enforcement and registration of the mediated settlement agreement, the mediation will be deemed to have occurred within the court’s jurisdiction.
- Section 14: As per this section, Mediation Act 2023 proceedings begin either when a party receives a notice to refer a dispute to mediation, under an existing mediation agreement, or when a chosen mediator consents to their appointment, or when a mediator is appointed by a MSP. Therefore, the process starts with a formal request to mediate or the acceptance of a mediator’s role.
Mediator’s Role & Duration
- Section 15: Section 15 mandates that mediators must conduct the mediation process in an independent, neutral and impartial manner in their attempt to reach an amicable settlement of their dispute. Meditators have to abide by the principles of objectivity and fairness and protect the voluntariness, confidentiality and self-determination of the parties, and the standards for professional and ethical conduct. Thus, mediators must not favor any party, must be unbiased, and all information shared during the mediation must be kept private.
- Section 16–17: These sections defines a mediator’s role as one of facilitation, not adjudication. Its primary function is to help parties resolve their dispute, including assisting them in understanding each other’s perspectives, identifying key issues, and exploring potential solutions. Furthermore, section 17 explicitly bars the mediator from acting as an arbitrator, representative, or counsel in any related arbitral or judicial proceedings, or from being presented as a witness in such proceedings.
- Section 18: The mediation process, under this Act, must be completed within 120 days from the date of the first appearance before the mediator. This timeframe can be extended by a further 60 days, but only with the mutual consent of all parties involved.
Mediated Settlement & Enforceability
- Section 19: This section mandates that mediated settlement agreements must be in writing, signed by the parties involved, and authenticated by the mediator. It outlines the requirements for a legally valid mediated settlement agreement.
- Section 20: This allows parties to voluntarily register their mediated settlement agreements with designated authorities. While this registration is optional, it enhances the enforceability of the agreement, effectively treating it like a court decree. Essentially, registration provides an additional layer of legal security and facilitates easier enforcement if needed.
- Section 27: Section 27 stipulates that a mediated settlement agreement, once signed by the parties and authenticated by the mediator, is legally binding and enforceable as a civil court decree. This means that the agreement can be enforced under the Code of Civil Procedure, 1908, similar to how a court’s judgement or decree would be enforced.
- Section 28: This section outlines the process for challenging a mediates settlement agreement. It states that such challenges can only be made on limited grounds such as fraud, corruption, impersonation, or if the dispute was not fit for mediation. Furthermore, any challenge must be initiated within 90 days of receiving the settlement agreement, with a possible 90-day extension if sufficient cause is shown.
Confidentiality & Evidence
- Section 22: As per this section, confidentiality is mediated proceedings is mandatory. This means that mediators, parties, and participants in mediation must keep all mediation-related communications confidential, including acknowledgement, opinions, proposals, and documents created for the mediation process.
- Section 23: This section establishes made during mediation are generally inadmissible in court or other adjudicatory proceedings. It aims to protect the confidentiality of mediation and encourage open communication between parties, but it has exceptions related to settlements, breaches of agreement, and mandated disclosures.
Termination, Reporting & Costs
- Section 24: This section lists when the termination of mediation proceedings, such as on the date of signing and authentication of the mediated settlement agreement, on the date of the written declaration of the mediator, after consultation with the parties or otherwise, to the effect that further efforts at mediation are no longer justified, or on the date of the communication by a party or parties in writing, addressed to the mediator and the other parties to the effect that the party wishes to opt out of mediation.
- Section 21:This provisions if a settlement is not reached within the stipulated time or if the mediator believes a settlement is impossible, a “non-settlement report” must be generated. In institutional mediation, this report is submitted to the MSP, and for other cases, a signed copy is provided to all parties. Critically, the report cannot disclose the reasons for the lack of settlement or any conduct during the mediation process.
- Section 25: According to section 25, the costs of mediation, including the mediator’s fees and MSPs charges, are to be shared equally by the parties, unless they have agreed otherwise. This provision ensures that the financial burden of mediation is distributed fairly and does not deter parties from utilizing this dispute resolution method.
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Institution Regulation & Governance
Sections 30: This provision permits online mediation, including pre-litigation mediation, with the written consent of all parties involved. It mandates that the process be conducted in a manner that ensures confidentiality and the integrity of the proceedings, with the mediator taking necessary steps to uphold these principles.
Sections 31–39: As stated above, this Act establishes the Mediation Council of India, which accredit mediators and MSPs, and to set standards for mediation practices. This Council, under section 31, will be a body corporate with perpetual succession, managing its own property and contracts. Sections 32-35 detail its composition, procedures for handling vacancies, resignations, and removal of members. Further, sections 36-39 outline the appointment of experts and committees, the secretariat and CEO, the duties and functions of the MCI, and its monitoring and reporting responsibilities.
Sections 40–44: These sections outline provisions for MSPs, mediation institutes, and community mediation
- Section 40 defines “MSP” as a a body or an organisation that provides for the conduct of mediation under this Act and the rules and regulations made thereunder and is recognised by the Council, an Authority constituted under the Legal Services Authorities Act, 1987,a court-annexed Mediation Act 2023 centre, any other body as may be notified by the Central Government.
- Section 41 lists the functions of MSPs, including accredited mediators and maintain panel of mediators, provide the services of mediator for conduct of mediation, provide all facilities, secretarial assistance and infrastructure for the efficient conduct of mediation, promote professional and ethical conduct amongst mediators, facilitate registration of mediated settlement agreements in accordance with the provisions of section 20, and other functions.
- Section 42 states that the Council shall recognise mediation institutes to perform such duties and exercise such functions.
- Section 43 introduces the concept of community mediation, a process for resolving disputes that may disrupt peace and harmony within a community, and allows for the application to the relevant authority for Mediation Act 2023 of such disputes.
- Section 44 outlines the procedure for community Mediation Act 2023, where a panel of three community mediators is responsible for devising a suitable process for resolving disputes. It emphasises that agreements reached through community mediation are not enforceable as court judgments but are intended to maintain peace and harmony within the community.
Section 45: This section creates a Mediation Fund to promote and facilitate mediation. Managed by the Mediation Council, it is used to cover expenses related to the Act’s implementation, including salaries, allowances, and operational costs.
Section 50: This provision provides legal immunity to the Central Government or State Government or any of its agencies, public bodies, corporations and local bodies including entities controlled or owned by them is a party, the settlement agreement arrived at shall be signed only after obtaining the prior written consent of the competent authority of such Government or any of its entity or agencies, public bodies, corporations and local bodies.
Conclusion
The Act aims to formalize and strengthen Mediation Act 2023 as a dispute resolution mechanism focusing clarity, enforceable outcomes, confidentiality, and governance. By encouraging pre-litigation Mediation Act 2023, it aims to reduce the number of cases going to court, thus easing the burden of the judiciary and reducing the backlog of cases. It offers a faster and more cost-effective alternative to litigation and encourages open and candid discussions between parties.
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