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Decoding Key Features of The Mediation Act 2023

CA Gyati Gupta , Last updated: 12 January 2024  
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The Mediation Act, 2023 was officially announced by the Central Government in India on September 15, 2023. This legislation is designed to foster and streamline the use of mediation for resolving disputes, whether commercial or otherwise. It includes the provisions for enforcing mediated settlement agreements and establishes a body for the registration of mediators. Additionally, the Act seeks to promote community mediation and legitimize online mediation as an acceptable and cost-effective method.

The Mediation Act 2023 contains 11 Chapters, 57 Sections and 10 Schedules.

Decoding Key Features of The Mediation Act 2023

Structure of the Act

Chapter No

Particulars

Sections

Chapter I

Preliminary

Section 1

Chapter II

Application

Section 2 to 3

Chapter III

Mediation

Section 4 to 7

Chapter IV

Mediators

Section 8 to 12

Chapter V

Mediation Proceedings

Section 13 to 26

Chapter VI

Enforcement of Mediated Settlement Agreement

Section 27 to 29

Chapter VII

Online Mediation

Section 30

Chapter VIII

Mediation Council of India

Section 31 to 39

Chapter IX

Mediation Service Providers & Mediation Institutes

Section 40 to 42

Chapter X

Community Mediation

Section 43 to 44

Chapter XI

Miscellaneous

Section 45 to 57

Schedule

Particulars

Schedule I

Disputes or Matters not fit for Mediation

Schedule II

Non Over-Riding of the Act of certain current legislations

Schedule III

Amendment to the Indian Contract Act, 1872

Schedule IV

Amendment to the Civil Procedure Code, 1908

Schedule V

Amendment to the Legal Services Authority Act, 1987

Schedule VI

Amendment to the Arbitration and Conciliation Act, 1996

Schedule VII

Amendment to the  MSMED Act, 2006

Schedule VIII

Amendment to the  Companies Act, 2013

Schedule IX

Amendment to the Commercial Courts Act, 2015

Schedule X

Amendment to the Consumer Protection Act, 2019

What is Mediation?

  • Mediation is a consensual and legally binding procedure where an impartial and neutral mediator assists conflicting parties in achieving a resolution.
  • The mediator refrains from imposing a solution but instead fosters an environment that enables disputing parties to independently settle all their conflicts.
  • Mediation has established itself as a reliable alternative for resolving disputes, demonstrating notable success in cities like Delhi, Ranchi, Jamshedpur, Nagpur, Chandigarh, and Aurangabad.
  • In the structured process of mediation, a neutral individual employs specialized communication and negotiation techniques. Participants involved in the mediation process have wholeheartedly supported its efficacy.
  • Beyond mediation, various other methods of dispute resolution exist, including Arbitration, Negotiation, and Conciliation.

What are the Key Features of the Act?

Pre-Litigation Mediation

  • Before seeking recourse in any court or specific tribunals, parties are obligated to explore mediation as an initial step in resolving civil or commercial disputes.
  • Should pre-litigation mediation prove unsuccessful, the court or tribunal retains the authority to, at any point, recommend or refer the parties to engage in mediation.

Process of Mediation

  • The mediation proceedings are to be kept confidential and must be concluded within a span of 180 days, with the option of extension by an additional 180 days as agreed upon by the parties.
  • A party reserves the right to withdraw from mediation after participating in two sessions.

Applicability

The Act is applicable to mediations carried out in India under the following circumstances:

  • Involving solely domestic parties,
  • Involving at least one foreign party and pertaining to a commercial dispute,
  • When the mediation agreement explicitly specifies adherence to this Act.

Disputes Inappropriate for Mediation

The Act enumerates a set of disputes deemed unsuitable for mediation, encompassing those:

  • Associated with claims against minors or individuals of unsound mind,
  • Involving criminal prosecution, and
  • Impacting the rights of third parties.

The central government retains the authority to revise this list.

Mediation Council of India

The Mediation Council of India will be instituted by the central government.

The Council's composition will include:

  • A chairperson,
  • Two full-time members with expertise in mediation or alternative dispute resolution (ADR),
  • Three ex-officio members, including the Law Secretary and the Expenditure Secretary, and
  • A part-time member representing an industry body.

The Council's responsibilities encompass: (i) the registration of mediators, and (ii) the acknowledgment of mediation service providers and mediation institutes.

Mediators

Mediators may be appointed by:

  • the parties by agreement, or
  • a mediation service provider.

Mediators must disclose any conflict of interest that may raise doubts on their independence.

 

Settlements through Mediation

Agreements arising from mediation (excluding community mediation) shall carry the conclusive, binding, and enforceable status akin to court judgments.

These agreements may face challenges based on allegations of:

  • Fraud
  • Corruption
  • Impersonation
  • Issues related to disputes deemed unsuitable for mediation.
 

Community Mediation

  • An endeavor in community mediation can be made to address conflicts that have the potential to disrupt peace and harmony among residents of a locality.
  • This mediation process will be overseen by a panel consisting of three mediators.

The Mediation Act 2023 has come up with lot of new concepts that are very much needed in today's environment. 

In case of any queries, readers can reach out to the author at cagyatigupta@gmail.com


Published by

CA Gyati Gupta
(In Practice)
Category LAW   Report

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