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  • Writer's pictureRoyzz & Co

Mediation Bill 2021

The Mediation Bill which aims at institutionalising and promoting the process of mediation, was passed by the Rajya Sabha.

The Bill reduces the maximum time for completion of mediation proceedings to 180 days, which can be extended to further 180 days, at the application of the parties. It mandates the parties to attempt to settle a civil or commercial dispute through mediation before approaching a court or tribunal. The Parties have to attend at least 2 sessions with the mediator, failing which costs can be imposed. Either of the Parties are free to withdraw from the process after 2 sessions, however they are at liberty to apply to the court or tribunal for mediation, even if they had failed to reach a settlement earlier.

The disputes which are deemed not fit for mediation include:

(i) relating to claims against minors or persons of unsound mind,

(ii) involving criminal prosecution, and

(iii) affecting the rights of third parties.

(iv) Disputes involving allegations of serious and specific fraud, fabrication of documents, forgery, impersonation, coercion

(v) Proceedings before the Securities and Exchange Board of India, and the Securities Appellate Tribunal, under the Securities and Exchange Board of India Act, 1992 (15 of1992).

(vi) Land acquisition and determination of compensation under land acquisition laws, or any provision of law providing for land acquisition.

This list can be amended by the Central Government.

This Act shall apply where mediation is conducted in India, and—

(i) involving only domestic parties

(ii) involving at least one foreign party and relating to a commercial dispute (i.e., international mediation), and

(iii) if the mediation agreement states that mediation will be asper this Bill.

In the event, the Central or State Government is a party, the Bill will apply to:

(a) commercial disputes, and

(b) other disputes as notified.

The Bill proposes to establish a Mediation Council of India, whose functions will include registering mediators and recognising mediation service providers and mediation institutes, which will inter alia, accredit mediators and maintain panel of mediators.

The Parties can appoint Mediators of their choice, by mutual consent. In the event, the parties are unable to appoint by mutual consent, they can approach Mediation Service providers, who will recommend a Mediator from their Panel of qualified mediators.

The Mediator is not bound by the Code of Civil Procedure, 1908, or the Indian Evidence Act, 1872, however any settlement reached through mediation, will be enforceable in the same manner as judgement passed by any Court or through Arbitration.

A mediated settlement agreement may be challenged only on all or any of the following grounds, namely:—

(i) fraud;

(ii) corruption;

(iii) impersonation;

(iv) where the mediation was conducted in disputes or matters not fit for mediation

In every case where a settlement agreement is arrived at through mediation under this Act, the same may be reduced into writing with the signature of the parties and authenticated by the mediator, a copy of which he provided to the parties and in cases where no settlement agreement is arrived at, a failure report may be submitted by the mediator to the Authority or the District Magistrate or the Sub-Divisional Magistrate, as the case may be, and to the parties.


Increasingly, Alternate dispute resolution (ADR) are becoming popular means by which disputes could be settled outside the traditional court system. Arbitration, Mediation, and Lok Adalats are the various forums in India for ADR. Mediation has always been a voluntary process in which parties try to settle disputes with the assistance of an independent third person (the mediator). The benefits of mediation as ADR is that by nature it is flexible and non-confrontational and provides a neutral ground where the parties can try to reach an amicable settlement of their disputes. However, this Act has made it mandatory for civil and commercial disputes to be submitted for mediation prior to approaching the Courts of Tribunals.

One of the shortfalls of the Act is that the Mediation Council requires prior approval from the Central Government before issuing regulations related to its essential functions, which will be of conflict of interest when the Central Government isa party to the mediation.

Also, the Bill applies to international mediations of commercial disputes, whereat least one party is a foreign party, and the mediation is conducted in India, which makes it likely that problems for enforcement of the settlement agreements, can arise where the mediation is conducted abroad for an Indian party.

Though India is a signatory to the Singapore Convention on Mediation, which provides a framework for cross-border enforcement of settlement agreements resulting from international mediation, it is yet to be ratified.

While, the intention of the legislature may be to reduce the burden on the judiciary, it may delay the process of justice and increase the cost of litigation, the Act will need further fine-tuning .

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