Background:
The Mediation Act, 2023 was enacted to provide a unified legal framework for mediation in India, replacing the earlier fragmented system governed by Section 89 CPC and Arbitration and Conciliation Act, 1996 (Part III) – contained provisions for conciliation, but not mediation and various High Court Mediation Rules – Different High Courts had their own mediation rules and centres.

It was introduced following recommendations from the Supreme court, Law Commission, and expert committees – Justice B.N. Srikrishna committee report 2017, and influenced by global ADR trends and India's commitment to the Singapore Convention on Mediation 2019. The Act aims to promote institutional and pre-litigation mediation, reduce court burden, and ensure enforceability of mediated settlements.

Passed in 2023 after detailed review of the 2021 Bill, it establishes the Mediation Council of India (separate authority) and standardizes mediation procedures across the country.

Component and Features:

• Pre-litigation Mediation (Section 6):
  • Parties must attempt pre-litigation mediation before filing any civil or commercial suit, unless urgent interim relief is required.
  • This applies even if there's no mediation clause in a contract.
• Institutional Mediation (Chapter III):
  • The Act encourages the establishment and registration of Mediation Service Providers (MSPs), such as mediation centres or recognized institutions.
  • These institutions must maintain a panel of trained mediators.
• Mediated Settlement Agreement (MSA) – Enforceability (Section 18):
  • An MSA is binding and enforceable as a court decree.
  • However, it can be challenged on limited grounds like fraud, corruption, or impersonation.
• Time Limit (Section 19):
  • Mediation proceedings should be completed within 120 days, extendable by 60 days with consent.
• Confidentiality (Section 22):
  • All mediation communications are confidential and not admissible as evidence in other proceedings.
• Community Mediation (Chapter VI):
  • Disputes affecting the peace or harmony of a locality may be resolved through community mediation by a panel of three mediators.
• Online Mediation:
  • Recognizes and facilitates online mediation, giving it the same legal status as physical mediation.
• Applicability:
  • Applies to civil and commercial disputes, including contractual, consumer, family, and property disputes (unless specifically excluded).
  • It does not apply to criminal matters and certain non-compoundable offenses.
• Mediation Council of India (Chapter VII):
  • A statutory regulatory body to oversee and promote mediation, accredit institutions and mediators, and set standards.

Status of Conciliation in Mediation Act, 2023:

The Mediation Act, 2023 does not directly deal with "conciliation" as a separate or parallel process. Instead, it focuses entirely on mediation—especially institutional and pre-litigation mediation—and establishes a comprehensive and independent legal framework for it. Conciliation under the Arbitration and Conciliation Act, 1996 is a non-adjudicatory, consensual process, somewhat like mediation. Mediation under the 2023 Act now plays a similar role, but with a clearer statutory structure, institutional support, and enforceability provisions. Section 3(2) of the Mediation Act, 2023 states that if there is any conflict between this Act and any other law (including the Arbitration and Conciliation Act), the Mediation Act will prevail in respect of mediation matters. This means conciliation under the 1996 Act may become redundant for most purposes unless parties specifically choose it.

Distinction Between Mediation Act, 2023 and Arbitration and Conciliation Act, 1996

• The Mediation Act, 2023
  • Focuses exclusively on mediation, which is a voluntary, non-adjudicatory process where a neutral third party (mediator) facilitates communication between disputing parties to help them reach a mutually acceptable settlement.
  • The Act mandates pre-litigation mediation, provides for community mediation, and ensures that mediated settlement agreements are enforceable as court decrees.
  • It also establishes the Mediation Council of India to regulate mediators and institutions, promoting a structured and formalized mediation ecosystem.
• The Arbitration and Conciliation Act, 1996
  • Covers arbitration (a quasi-judicial process where a neutral arbitrator delivers a binding decision) and conciliation, which is similar to mediation but allows the neutral to suggest settlement terms.
  • Conciliation under this Act lacks a strong regulatory framework and its settlement agreement is enforceable as a contract, not a court decree.

Thus, while both Acts promote out-of-court dispute resolution, the Mediation Act, 2023 offers a more facilitative, party-controlled, and institutionalized process, whereas the 1996 Act governs more adjudicatory or evaluative forms of ADR.

Does This Act Override Conciliation?

The Mediation Act, 2023 does not abolish conciliation under the Arbitration & Conciliation Act, 1996, but it takes precedence whenever there is a conflict on mediation-related matters. Specifically:

• Section 3(2) of the Mediation Act provides that, "in respect of matters governed by this Act, if any provision of any other law is inconsistent therewith, the provisions of this Act shall prevail."
• Conciliation (Part III of the 1996 Act) continues to exist as an ADR mechanism; its settlement terms remain binding as contracts under Section 73 of the 1996 Act.
• However, if a dispute is referred to "mediation" (as defined in the 2023 Act), or if a party invokes mandatory pre-litigation mediation, the Mediation Act's scheme—including confidentiality, enforceability as a court decree and regulatory framework—will override any conciliation process that conflicts with it.
• In practice, parties seeking consensual settlement can still choose conciliation under the 1996 Act, but once they opt for "mediation" the 2023 Act's provisions will control.

B.N. Srikrishna Committee Report – Key Aspects

• The committee's 2017 report recommended measures to improve institutional arbitration and strengthen India's standing as a preferred arbitration hub, which laid the groundwork for the later enactment of the Mediation Act.
• The Mediation Act promoted and facilitated mediation, especially institutional mediation, for resolving disputes.
• There have been suggestions by the High-Level Committee, chaired by Justice B.N. Srikrishna, to review the institutionalization of arbitration mechanisms so as to incorporate 'Med-Arb' or 'Arb-Med' clauses in the procedure of arbitral institutions in India.
• The Srikrishna Committee recommended that each arbitral institution must mandatorily maintain a mediation cell (e.g., MCIA, Nani Palkhivala Centre), with a panel of trained mediators available to help parties settle disputes amicably.
• Parties must be prompted to resort to mediation within a limited time frame.
• As to the stage at which parties should resort to mediation, the Committee recommended:
  • "The possibility of parties seeking mediation, before or during the course of the arbitral proceedings, may be through a limited stay of arbitral proceedings (barring hearings on interim measures) for a specified time, when the parties should make intensive efforts to arrive at a mutually acceptable settlement."

Encourage Mediation Early

• Parties involved in a dispute should be promptly encouraged to try mediation, even if they have started or are about to start arbitration.
• This can save time, cost, and preserve business relationships.

When to Go for Mediation?

• The Committee says: either before starting arbitration or during arbitration.
• Even if arbitration has begun, parties should get a short break (a "limited stay") in the process to try settling the matter through mediation.
• This stay won't affect urgent hearings like interim relief.

Why This Suggestion?

• It ensures that parties make a serious effort to settle peacefully, without rushing into full arbitration.
• If mediation works, there's no need to continue the arbitration—saving time and legal costs.
• The Committee wants arbitration centres to offer mediation seriously, and parties to try it early—before or during arbitration—by pausing proceedings briefly for settlement talks.

Need for This Act:

1. No single law on mediation; governed by a mix of rules and practices (Section 89).
2. Settlement agreements earlier had weak or uncertain enforceability.
3. It is governed by a standalone Act; hence, legally recognised.
4. Mandatory pre-litigation mediation in civil/commercial matters (Section 6).
5. It has a regulated Mediation Council.
6. Settlement can be done through mutual consent, with or without a mediator.
7. It provides for community mediation for local disputes.
8. Commitment to international standards – India signed the Singapore Convention on Mediation (2019), which promotes cross-border enforcement of mediated settlements. A domestic law was needed to align with this global commitment.
    

Latest Notification on Mediation Act, 2023

Ministry of Law and Justice (Department of Legal Affairs)
Notification
New Delhi, the 9th October, 2023 S.O. 4384(E).— In the exercise of the powers conferred by sub-section (3) of Section 1 of the Mediation Act, 2023 (32 of 2023), the Central Government hereby appoints the 9th day of October, 2023 as the date on which the provision of the following sections of the said Act shall come into force, namely:

• Section 1
• Section 3
• Section 26
• Sections 31 to 38 (both inclusive)
• Sections 45 to 47 (both inclusive)
• Sections 50 to 54 (both inclusive)
• Sections 56 to 57 (both inclusive)