Mediation has emerged as an effective tool for dispute resolution, particularly in relation to commercial disputes. It is fast, efficient, and extremely cost effective. However, the problem faced by the parties has been that there was no act to regulate and govern the field thus far, even though the process was recognised by Indian Courts in its judgements and legislations.

Against this background, the Mediation Bill (the Bill) was introduced in the Rajya Sabha and Lok Sabha and was passed by both the houses on 1 August 2023 and 7 August 2023 respectively. Prior to its passing, the Bill was referred to the Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice (Standing Committee), which presented its report on the Bill (Report) to both the houses for their scrutiny. The Bill is currently awaiting Presidential assent.

The Bill is a welcome initiative in line with Section 89 of the Code of Civil Procedure 1908 (CPC) which notes that courts may refer parties to arbitration, conciliation, judicial settlement, or mediation, when it appears that there exist elements of a settlement which may be acceptable to the parties.

The object of the Bill to "promote and facilitate mediation, especially institutional mediation, for resolution of disputes, commercial or otherwise, enforce mediated settlement agreements, provide for a body for registration of mediators, to encourage community mediation and to make online mediation as acceptable and cost-effective process and for matters connected therewith or incidental thereto".

The Bill defines mediation as a process whereby parties request a third person (referred to as the mediator) to assist them in their attempt to reach an amicable settlement of a dispute.

Some of the key highlights of the Bill are enumerated below:


Pre-litigation Mediation: The Bill, as introduced in 2021, contemplated compulsory pre-litigation mediation for parties desirous of filing any suit or proceeding, regardless of the existence of any agreement to mediate between parties. However, upon considering the suggestions put forth by the Standing Committee in its Report, it was decided to make pre-litigation mediation voluntary in nature.


Subject matter of disputes: An indicative list of subject matters that are not fit for mediation has been laid down in the Bill. This includes disputes involving allegations of serious and specific fraud, fabrication of documents, forgery, disputes relating to claims against minors, deities, persons with intellectual disabilities, persons with mental illness, disputes involving prosecution for criminal offences, disputes which have the effect on rights of a third party who are not party to the mediation proceedings, disputes relating to the levy, collection, penalties in relation to direct or indirect tax, investigation, enquiry or proceeding under the Competition Act 2002, etc. While it is beneficial to have a list of subject matters that are excluded from the realm of mediation, subject matters such as "settlement of matters which are prohibited being in conflict with public policy or is opposed to basic notions of morality or justice or under any law for the time being in force" are broadly worded, thereby increasing the possibility of being given a liberal interpretation, which may lead to disputes.


Interim Reliefs: The Bill includes a provision for parties to approach the court/tribunal having competent jurisdiction if exceptional circumstances exist, and a party requires urgent interim relief before the commencement, or during the mediation proceedings. However, the Bill does not elucidate on the contours of "exceptional circumstances", thereby leaving it to judicial interpretation. It is likely that the threshold would be similar to that for interim reliefs sought under Section 9 of the Arbitration and Conciliation Act 1996 (Arbitration Act).


Period of Mediation: The Bill initially contemplated a time limit of 180 days, extendable by a further period of 180 days from the date fixed for the first appearance before the mediator within which the mediation should be completed. However, based on the suggestions in the Report, the period has been reduced to 120 days, extendable by 60 days. The Bill also notes that parties may withdraw from mediation at any time after the first two mediation sessions. However, if a party fails to attend the first two meetings without any reasonable cause, which then leads to its failure, such conduct can be taken into consideration by the court/tribunal to impose costs upon such party in the subsequent litigation on the same subject matter.


Mediation and Conciliation: The Bill contemplates subsuming the concept of conciliation, as laid down in Part III of the Arbitration Act, making mediation identical to conciliation. By omitting Part III of the Arbitration Act, the Bill attempts to ensure that the terms 'mediation' and 'conciliation' are used interchangeably; a practice which is already prevalent across several other jurisdictions.


Enforceability of Mediated Settlement Agreements (MSA): Once parties arrive at their terms of settlement, the Bill contemplates that the same would be reduced to writing, signed by the parties, and authenticated by the mediator. Once authenticated, the MSA would be enforceable as per the provisions of the CPC as if it were a judgement or decree passed by the court. Whereas a settlement agreement arrived at after conciliation under the Arbitration Act (which is proposed to be omitted) has the effect and status of an arbitral award.


Procedure to challenge the MSA: An MSA can only be challenged on the grounds of fraud, corruption, impersonation, or where the subject matter of dispute was not fit for mediation. This shows that the MSA has a very narrow scope of challenge. Such an application for challenge must be filed before the court/tribunal of competent jurisdiction within 90 days from the date on which the party making the application had received the copy of the authenticated MSA. The court, upon being satisfied that the applicant was prevented by sufficient cause from making the application within the said 90 days, may extend this period by a further 90 days.


Online Mediation: In an attempt to bridge the geographical gap between parties, as well as avoid heavy costs of booking venues for conducting the mediation, the Bill provides an opportunity for parties to conduct the mediation virtually. However, to ensure that such mediation is secure, it is imperative that rules governing the conduct of parties during such online mediation and strict processes to be followed during the proceedings are implemented.


Confidentiality: As with other forms of alternative dispute resolution, the Bill also gives utmost importance to confidentiality. It states that all acknowledgements, opinions, suggestions, proposals, admissions, acceptance/willingness to accept proposals, documents prepared solely for the conduct of mediation, etc. shall be kept confidential.


Institutional mediation: The Bill contemplates the creation of a 'Mediation Service Provider', i.e., an organisation that provides for the conduct of mediation under the Bill, and performs functions such as accredit mediations and maintains a panel of mediators, provides all facilities and secretarial assistance for conducting the mediation, etc. The Bill also states that the Mediation Service Provider would be graded by the Mediation Council of India. However, rules governing the Mediation Council of India and Mediation Service Providers will ultimately decide the efficacy of these organisations.


Overall, the Bill is a welcome step and would help the business community in particular, and litigants in general. However, in order to achieve its full potential, it will be imperative that the bodies and institutions provided for in the Bill are properly constituted and function smoothly.

The content of this document do not necessarily reflect the views/position of Khaitan & Co but remain solely those of the author(s). For any further queries or follow up please contact Khaitan & Co at