Mediation Bill 2021 & Key Changes

Mediation Bill, 2021(Prior to Amendment)

• Objective of Mediation Bill: To promote and facilitate mediation, especially institutional mediation, for the resolution of disputes, commercial or otherwise, enforce mediated settlement agreements, provide a body for the 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

• Applicability – Mediations conducted in India. a) involves only domestic parties b) International mediation if one foreign party and commercial dispute. If the Central or State government is a party, Bill will apply to commercial disputes or other disputes as may be notified

• Mediation process – To be completed within 180 days. May withdraw after two sessions

• Mediators – To be appointed by a) the parties to the agreement b) a mediation service provider

• Mediation Council of India – Central govt. to establish. Will Include a Chairperson, two full-time members, three ex-officio members, and a part-time member. Function: a) registration of mediators and b) recognizing mediation service providers and institutes

• Mandatory Pre-Litigation Mediation -  Civil or commercial dispute to be sent for mediation before approaching any court or tribunal. Min two mediation sessions are to be conducted. (Section 6)

• Disputes not fit for mediation – List of disputes not fit for mediation enunciated. Includes - (i) relating to claims against minors or persons of unsound mind, (ii) involving criminal prosecution, and (iii) affecting the rights of third parties.  The central government may amend this list. (Section 7).

• Binding nature of mediation agreement – Mediation agreements other than community mediation are to be final and binding. Can be challenged only on grounds of (i) fraud, (ii) corruption, (iii) impersonation, or (iv) relating to disputes not fit for mediation. (Clause 28)

• Conciliation – Conciliation under Part III of the Arbitration and Conciliation Act 1996 has been subsumed in Mediation as per the international practice of using the terms ‘Conciliation’ and ‘Mediation’ interchangeably

• Interim Relief – Under exceptional circumstances may file for interim measures before a court or tribunal (Section 8)

• Time Limit – Mediation to be completed within 180 days from the date of first appearance and this period is extendable by further 180 days. (Section 21)

• Challenge period – 90 days from the receipt of the copy of mediated settlement agreement by the parties

• Online Mediation – Online mediation including prelitigation mediation may be conducted at any stage with the written consent of the parties and to be conducted in the manner specified by the council

• Community Mediation – For disputes affecting peace and harmony amongst the residents of a locality. Panel to consist of three members. (Section 44)

• Provisions of Act to have an overriding effect on mediation or conciliation contained in other laws – Provisions of this Act to have overriding effect except in cases of those mentioned in the Second Schedule

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Key Changes to the Mediation Bill, 2021

The Mediation Bill, 2021, was introduced in the Rajya Sabha in December 2021. The bill has since been amended by the Union Cabinet, and was passed by the Rajya Sabha on August 1, 2023, and the key amendments to the same are as follows:

1.Pre-litigation mediation is now voluntary. The original bill had made pre-litigation mediation mandatory, but the amendment makes it voluntary. This means that parties to a dispute will no longer be required to attempt mediation before they can file a case in court 2.Maximum time for completing mediation proceedings has been reduced from 360 (180+180) days to 180 days (90+ 90). This is to ensure that mediation is a quick and efficient process 3.The Mediation Council of India has been given more powers. The Mediation Council of India is the body that will be responsible for regulating mediation in India. The amendment gives the Council more powers, such as the power to register mediators, conduct training programs for mediators, and develop mediation guidelines 4.The confidentiality of mediation proceedings has been protected. The amendment provides that mediation proceedings will be confidential, and that any information that is disclosed during mediation cannot be used in court

Our Perspective

• Although amendments are a welcome change, and a step in the positive direction, but we believe that the amendment to make mediation a voluntary process is perhaps against the legislative intent of the bill, which was to encourage parties to try mediation before filing a lawsuit, if the process is once again made discretionary, the same could be counterproductive

• Certain glaring gaps in the Mediation Bill have been plugged through this amendment, like confidentiality and timelines, but there are still a few points of concerns, which may need to be attended to :

  • No provision for enforcement of certain internationally mediated settlements

  • Lack of detailed guidelines and modalities on Online Mediation

  • Re-look at the definition of International Mediation

• Overall, the Mediation Bill, 2021 is a step in the right direction, and could play a key role in encouraging ADR as an option to reduce court litigation