Mediation Act 2023: A Panacea for Dispute Resolution?

In the realm of conflict resolution, is mediation truly essential for bridging divides between warring parties? What role should lawyers play in this process? These questions have sparked fresh debate, particularly in light of insights from Sanjeev Sanyal, a member of the Prime Minister’s Economic Advisory Council.

Sanyal has candidly argued that 98 to 99% of pre-litigation mediation actually fails, underscoring the urgent need to overhaul the judicial system. Sanyal described the judiciary as the single biggest hurdle to Viksit Bharat @ 2047. Against this backdrop, it’s worth examining the potential impact of India’s Mediation Act 2023, enacted by the Central Government on September 15, 2023.

This landmark legislation stems from India’s endorsement of the Singapore Convention 2019, raising expectations for progressive reforms. Parliamentary committees offered valuable recommendations, many of which were incorporated. Yet, the Act staunchly upholds mediation as a purely voluntary exercise — no individual or entity can mandate it. Previously, mediation was compulsory for civil disputes and commercial ones exceeding a specified value threshold, aimed at expediting resolutions under the Commercial Courts Act. However, this hasn’t translated into timely outcomes for commercial conflicts, which continue to drag on despite the intent.

To enforce efficiency, the new Act imposes a 120-day timeline for mediation, extendable by another 60 days with mutual consent. The first Schedule of the Mediation Act outlines disputes or matters that are explicitly deemed unfit for mediation. The Schedule contains thirteen entries. Disputes relating to claims against minors, deities, persons with intellectual disabilities, disputes involving prosecution for Criminal Offences and complaints or proceeding initiated before any statutory authorities or body in relation to registration, disciplines, misconduct of any practitioner or other registered professionals will not be taken up for mediation.

That apart, dispute relating to levy, collecting penalties or offences in relation to direct or indirect taxes and proceeding falling within any enactment over which National Green Tribunal has jurisdiction would also not be fit for mediation. Proceedings under Electricity Act, SEBI Act, TRAI Act and Land Acquisition will also come within the purview of this new law.

Courts or tribunals can refer cases to mediation at any stage of the proceedings, though parties aren’t compelled to accept the outcome. The Court or Tribunal while referring the parties to undertake mediation may pass suitable interim order to protect the interest of the party. The Act envisions a National Mediation Council of India, alongside state-level bodies. Any qualified individual at the national level can serve as a mediator, but foreign mediators must meet prescribed educational standards. It introduces mediation service providers to facilitate resolutions for those opting in voluntarily.

A mediated settlement carries the weight of a court decree or judgment. Challenges are restricted to grounds like fraud, corruption, or violations of law, and must be filed in a higher court within 180 days. Parties bear their own costs for mediations. Mediators must disclose any conflicts of interest in writing beforehand, ensuring impartiality — no personal, financial, or professional ties to the disputants or the matter at hand. If objected to, the service provider can replace the mediator.

For cases not initially covered, mutual consent allows application of the Act, though proceedings must be documented in writing. A standout feature is community mediation: disputes affecting community harmony, families, or local residents can be referred with agreement from all sides. Authorities like legal services bodies, district magistrates, or sub-divisional magistrates may appoint respected, neutral community figures or skilled individuals as mediators based on their integrity.

Though assented to by the President and gazetted on September 15, 2023, the Act’s full implementation hinges on establishing the Mediation Council — beyond that, little attention has been paid to its operational rollout. India abounds with well-intentioned laws that falter in execution, as legislatures and executives often neglect necessary follow-up. This leaves citizens deprived of benefits, even in constitutionally mandated institutions like the judiciary, which grapples with vacancies in judges and infrastructure.

Our nation lacks dedicated bodies to assess law implementation, unlike in the US, Canada or the European Union, where universities and independent institutions scrutinise efficacy. Lawyers and judiciary cannot be blamed for all hurdles, but executives and legislators have to fulfil the promises made under this new legislation. But to realise the mediation first justice delivery, we need to lay the foundation for a mediation culture. To evolve a mediation culture by 2030, the Government must prioritise by notifying all provisions of the Act, public education and amendment to broaden the scope of the Act.