INTRODUCTION

India boasts a rich history of mediation, evident within Hindu Epics through Lord Krishna’s pivotal role as an intermediary between the conflicting Pandavas and Kauravas. Additionally, the tradition of community conflict resolution via Panchayats has long been revered and favored. However, the ascendancy of an adversarial legal system and a surge in disputes can be traced back to the decline of mediation during British rule. At its essence, mediation serves as a conflict resolution method employing a neutral third party to facilitate negotiations, aiming for a mutually acceptable settlement among involved parties. A Mediator does not sit in judgment, instead guides the disputing parties toward common ground by fostering agreement discovery.

The concept of mediation isn’t unfamiliar; it has long served as an alternative dispute resolution (ADR) mechanism. While arbitration and conciliation found formal codification under the Arbitration and Conciliation Act, 1996, mediation remained an informal process. Recommendations for embracing alternative dispute resolution were embedded in Section 89 of the Code of Civil Procedure, 1908. Indian courts widely adopted this provision by establishing mediation centers across the nation. Despite the proliferation of these centers, the absence of a formal structure led to ambiguity and limited legal recognition.

To address these gaps, the Mediation Bill of 2021 was proposed as a solution to establish a concrete legal framework. Subsequently, on September 15, 2023, the President signed the Mediation Bill into law, now recognized as the Mediation Act, 2023 (“The Act”).

SCHEME OF THE ACT

The main objective of the Act is to promote and facilitate mediation with special emphasis on 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 Act encompasses 65 sections divided into 11 chapters and 10 schedules, outlining the legal framework governing mediation.

According to the Act, parties have the option to include a mediation clause in their agreements, stipulating the resolution of disputes through mediation should they arise, or to engage in a separate mediation agreement. Further, Section 5 of the Act provides that in case of commercial disputes of specified value, pre-litigation mediation will be undertaken in accordance with Section 12-A of the Commercial Courts Act, 2015 as modified by the Ninth Schedule to the Act. In other cases, in case disputes arise, then the Parties may (whether there is any agreement to that effect or not) before filing any suit or proceeding voluntarily and with mutual consent take steps to settle disputes by pre-litigation mediation under the Act (this provision is subject to bar on mediation provided under Section 6 of the Act).

Apart from this, under Section 7 of the Act, even the court or tribunal are empowered to refer parties to undertake mediation at any stage of proceedings. In case of such reference, the courts may pass such suitable interim orders to protect interest of any party. This is further substantiated/ supplemented by the amended Section 89² of the Code of Civil Procedure, 1908 (“CPC”)</strong > which provides that where it appears to the Court that the dispute between the parties may be settled and there exists elements of settlement which may be acceptable to the parties, the court may refer the parties to mediation, to the court annexed mediation centre or any other mediation service provider or any mediator, as per the option of the parties, and thereafter the provisions of the Act shall apply as if the proceedings for mediation were referred for settlement under the provisions of the Act.

Once the Parties undertake mediation, after undergoing the mediation process as specified under the Act, if the mediation fails i.e. no settlement is arrived at within the time period provided under Section 18 of the Act^{3</sup > or mediator is of view that no settlement is possible then the mediator (i) in case of institutional mediation, submit a non-settlement report to the mediation service provider in writing and (ii) in all other cases, prepare a non-settlement report and provide signed copy to all parties. However, if the parties succeed in settling some or all of the disputes through mediation, then a mediated settlement agreement will have to be prepared.}

MEANING OF MEDIATED SETTLEMENT AGREEMENT (“MSA”)

Section 3(n) provides that the term “mediated settlement agreement means mediated settlement agreement referred to in sub-section

(1) of Section 19.” Section 19(1) of the Act provides as under:

“A mediated settlement agreement includes an agreement in writing between some or all of the parties resulting from mediation, settling some or all of the disputes between such parties, and authenticated by the mediator:</em >

Provided that the terms of the mediated settlement agreement may extend beyond the disputes referred to mediation.”</em >

This sub-section further states that an MSA which is void under the Indian Contract Act, 1872, shall not be deemed to be a lawful settlement agreement within the meaning of mediated settlement agreement.

Thus, the Act necessitates that the mediated settlement agreement

• must be in writing,
• signed by the parties and
• authenticated by the mediator.

In case of institutional mediation, MSA shall be submitted to the mediator, who shall, after authenticating the same, deliver it with a covering letter signed by him, to the mediation service provider and also provide a copy to the parties.

At any time during the mediation process, the parties may make an agreement with respect to any of the disputes which is the subject matter of mediation.

MSA play a crucial role in transforming uncertainties and delays into decisive actions by the involved parties. A well-crafted settlement agreement holds the power to dispel misunderstandings and conflicts, fostering clarity and resolution. Not only does it alleviate the strain on courts, but it also significantly mitigates legal expenses for all parties involved. MSA ought to be comprehensive, fair-minded, and unconditional, employing transparent and familiar language that emphasizes actionable steps. Additionally, it should encompass addressing any ongoing or potential proceedings for the future, ensuring a holistic resolution.

REGISTRATION OF MSA (SECTION 20)

For the purpose of maintaining a record, any settlement agreement reached between parties, excluding those reached in a court or tribunal referred mediation or awarded by Lok Adalat or Permanent Lok Adalat, can be registered with an Authority established under the said Act, or any other body notified by the Central Government, in such manner as may be specified and such Authority or body shall issue a unique registration number to such settlement agreement.

It is provided that the MSA may be registered with such Authority or body situated within the territorial jurisdiction of the court or tribunal of competent jurisdiction to decide the subject matter of the dispute.

It is clarified that nothing contained in Section 20 shall affect the rights of parties to enforce the MSA under Section 27 or challenge the same under Section 28 of the Act.

The MSA must be registered by the parties or mediation service provider with an authority constituted under the Legal Services Authorities Act, 1987 within 180 days of the authenticated copy from the mediator. This period may be extended on payment of such fee as may be specified by the concerned Authority.

It is pertinent to note that this Section 20 of the Act dealing with registration of MSA is optional and not mandatory. Further, the Act does not specify any adverse implication of non- registration of the same.

ENFORCEMENT OF MEDIATED SETTLEMENT AGREEMENT

As per provisions of Section 27 of the Act, the MSA shall be final and binding on the parties. It is also pertinent to note that the agreement shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908 in the same manner as if it were a judgement or decree passed by a Court. Additionally, it can be used as a defence, set off, or in any other legal action by any party or person claiming through them.

The execution proceedings are covered by Part II of the CPC read with Order XXI thereof. A judgement or a decree under the Code of Civil Procedure is enforced by compelling the judgement-debtor to carry out the mandate of the decree or order. The execution procedure might differ based on the jurisdiction and the characteristics of the judgment or court order being executed. Execution, in certain instances, might include the process of appropriating and auctioning a debtor’s assets in accordance with a legal decision, but in other instances it may entail carrying out specified measures to adhere to a court directive. The objective of execution is to safeguard the interests of the parties concerned and to uphold justice.

It is not out of place to mention that the Act fails to provide for enforcement of mediated settlement agreements from international mediations conducted outside India.

GROUNDS TO CHALLENGE THE MSA (SECTION 28)

The Act provides for certain grounds on which a mediated settlement agreement can be challenged. These grounds are:

1. Fraud
2. Corruption
3. Impersonation
4. Mediation conducted in disputes or matters not fit for mediation as entailed under Section 6 read with Schedule I.

Such application for challenge must be made before the court4 or tribunal of competent jurisdiction within ninety days from the date of receipt of the agreement. However, if the Court or Tribunal is satisfied that the applicant was prevented by sufficient cause they may entertain the application within a further period of ninety days. However, in case of delay, even if sufficient cause is shown, such court or tribunal of competent jurisdiction are not bound to exercise their discretionary power. The phrase “Sufficient Cause” has been widely interpreted. In the case of Sabarmati Gas Limited v. Shah Alloys Limited⁵, reported in (2023) 3 SCC 229, the Supreme Court in context of Section 5 of the Limitation Act, has interpreted the term “sufficient cause” as “the cause for which a party could not be blamed.” In the author ’s opinion, the court or tribunal of competent jurisdiction does not have the power to entertain such application challenging the MSA if filed beyond 180 days, even if sufficient cause is shown. However, it’s concerning that challenges are limited and exclude duress, coercion, or discovery of fraud post-limitation. Additionally, non-signatories can’t challenge, posing an issue in the framework.⁶

MEDIATED SETTLEMENT AGREEMENT WHERE GOVERNMENT OR ITS, AGENCY, ETC., IS A PARTY.</strong >

Section 49 of the Act entails the provision in case where Government or its agency, etc. is a party to the mediated settlement agreement. It states that any dispute, including a commercial dispute, involving the Central Government, State Government, or any of their agencies, public bodies, corporations, or local bodies (including entities controlled or owned by them), requires the prior written consent of the competent authority of the respective government or entity before the settlement agreement can be signed.

CONCLUSION

The Mediation Act, 2023 is a landmark in India’s legal landscape, affirming mediation’s role in dispute resolution. It formalizes the process, emphasizing institutional mediation, pre-litigation mediation, and court referrals. Key to this Act is the MSA, stressing its written, authenticated nature. While enforceable like court judgments, challenges to MSAs have limited grounds and timeframes, lacking provisions for international mediations. Government involvement in MSAs lacks clarity on the competent authority. While a significant step, the Act needs refinement for broader inclusivity and clarity in certain aspects. Overall, it lays a strong foundation for expedited and efficient dispute resolution.

1. Ms. Anaya Chokhani, Student of 3rd Year of NMIMS, Mumbai is also co-author of this Article
2. As Amended by The Fourth Schedule to the Mediation Act, 2023
3. i.e. within a period of 120 days from the date fixed for first appearance before the mediator. This time period can be further extended as agreed by the Parties, but not beyond 60 days.
4. Section 3(d) of the Act defines “court”. It provides as under: “Court” means the competent court in India having pecuniary and territorial jurisdiction and having jurisdiction to decide the disputes forming the subject matter of mediation, if the same had been the subject matter of a suit or proceeding;”
5. CA 1669 of 2020
6. https://www.mondaq.com/india/arbitration–dispute-resolution/1370990/exploring-the-transformative-mediation-landscape-in-india-reviewing-the-mediation-act-2023</a >