How to Initiate Mediation Proceedings Under the Mediation Act 2023 in India

Kaustav Chowdhury
14 hours ago
6 min read

Introduction

The Mediation Act 2023 (Act No. 32 of 2023), which received presidential assent on 14 September 2023, represents India’s first standalone legislation dedicated to mediation as a dispute resolution mechanism. With certain provisions notified on 9 October 2023, the Act creates a structured framework for pre-litigation and court-referred mediation, establishes the Mediation Council of India, and gives mediated settlement agreements the force of a court decree.

For businesses, individuals, and legal practitioners, understanding how to properly initiate mediation proceedings is essential. Mediation offers a cost-effective, confidential, and time-bound alternative to prolonged litigation. This guide walks you through the step-by-step process, from drafting a valid mediation agreement to enforcing the final settlement.

Step 1: Determine Whether Your Dispute Is Fit for Mediation

Before initiating mediation, verify that your dispute is not excluded under Section 6 of the Mediation Act 2023, which bars mediation for disputes listed in the First Schedule. The excluded categories include:

Prosecution of criminal offences (non-compoundable)
Disputes involving allegations of serious fraud or fabrication of documents
Disputes against minors, deities, and persons with intellectual disabilities
Tax levy, collection, penalties, or offences (direct and indirect taxes)
Proceedings under the Competition Act 2002, before SEBI, or the National Green Tribunal
Land acquisition and determination of compensation under land acquisition laws

If your dispute is a civil or commercial matter and does not fall within the First Schedule, it is eligible for mediation. Courts may also refer compoundable offences, including compoundable matrimonial offences, to mediation.

Step 2: Draft or Identify a Valid Mediation Agreement

Under Section 4 of the Act, a mediation agreement must be in writing and may take any of the following forms:

A standalone mediation agreement between the parties
A mediation clause embedded within a commercial contract
An exchange of communications, letters, or electronic correspondence under the Information Technology Act 2000
Pleadings in a suit where the existence of a mediation agreement is alleged by one party and not denied by the other

Notably, under Section 5, a pre-existing mediation agreement is not mandatory for pre-litigation mediation. Parties may voluntarily and with mutual consent opt to mediate before filing any civil or commercial suit. This is a significant departure from older frameworks that required a prior contractual commitment.

Step 3: Select a Qualified Mediator

Under Section 8, parties have the freedom to appoint a mediator by mutual agreement. Unless otherwise agreed, the mediator must be registered with the Mediation Council of India or empanelled with:

A court-annexed mediation centre
An authority constituted under the Legal Services Authorities Act 1987
A recognised mediation service provider (Section 42)

Section 10 requires the mediator to disclose in writing, prior to conducting mediation, any circumstance (personal, professional, or financial) that may constitute a conflict of interest or raise justifiable doubts about their independence or impartiality. Foreign mediators may be appointed but must possess the prescribed qualifications and authorisations.

Step 4: Commence the Mediation Process

Once a mediator is appointed, the mediation proceedings begin on the date fixed for the first appearance before the mediator. Key procedural points include:

Time limit: Mediation must be completed within 180 days from the date of the first appearance. This period may be extended by a further 180 days with the mutual consent of the parties.
Confidentiality: Under Section 22, all matters relating to the mediation proceedings are confidential. No audio or video recording of proceedings is permitted, whether conducted in person or online.
Online mediation: Under Section 30, mediation may be conducted online through video conferencing, audio conferencing, secure chat rooms, or encrypted electronic mail, provided the parties give written consent.
Voluntary participation: The parties are not obligated to reach a settlement. A party may withdraw from mediation after the first two sessions.

Step 5: Understand Court-Referred Mediation Under Section 7

Even if you have already filed litigation, the court or tribunal retains the power under Section 7 to refer the parties to mediation at any stage of the proceedings, regardless of whether pre-litigation mediation was attempted or failed. The court may also pass suitable interim orders to protect the interests of any party during the mediation period. Importantly, similar to how arbitral awards are enforced as court decrees under Indian law, mediated settlement agreements enjoy a comparable degree of enforceability.

Step 6: Execute and Enforce the Mediated Settlement Agreement

If the parties reach a settlement, the resulting agreement must be signed by the parties and authenticated by the mediator. Under Section 27, the mediated settlement agreement is final and binding on the parties and enforceable under the Code of Civil Procedure 1908, as if it were a judgment or decree of a court. This is a significant legal benefit: the settlement can be relied upon by way of defence, set-off, or otherwise in any subsequent legal proceeding.

However, Section 28 permits a party to challenge the mediated settlement agreement before a court or tribunal of competent jurisdiction. Grounds for challenge include fraud, corruption, impersonation, and situations where the mediation was conducted on disputes not fit for mediation under Section 6. The limitation period for such a challenge is 90 days from the date the challenging party received the agreement, extendable by a further 90 days if the court is satisfied that sufficient cause existed for the delay.

Common Pitfalls and Mistakes to Avoid

Attempting mediation on excluded disputes: Initiating mediation on a matter listed in the First Schedule (for example, tax disputes or proceedings under the Competition Act 2002) will render the process void and waste time and costs.
Failing to verify mediator credentials: Using an unregistered or unaccredited mediator can jeopardise the enforceability of the settlement agreement. Always confirm that the mediator is registered with the Mediation Council of India or empanelled with a recognised body.
Skipping the first two sessions: A party that fails to attend even the first two mediation sessions may face costs imposed by the court in subsequent litigation on the same subject matter. Participation in the initial sessions is practically mandatory.
Breaching confidentiality: Section 22 imposes strict confidentiality obligations on all participants, including the mediator and mediation service provider. Disclosing proposals, admissions, or apologies made during mediation can expose parties to legal consequences.
Missing the 180-day deadline: If mediation is not completed within 180 days (or the extended period of 360 days with consent), the process lapses and the parties may need to pursue litigation or arbitration. Businesses dealing with cross-border compliance obligations under FEMA should factor this timeline into their dispute resolution strategy.
Not getting the settlement agreement properly authenticated: The mediated settlement agreement must be signed by the parties and authenticated by the mediator to be enforceable as a decree. An informal or unsigned agreement will lack legal force.

Key Takeaways

The Mediation Act 2023 allows pre-litigation mediation without a prior mediation agreement (Section 5), making it accessible to all civil and commercial disputants.
A mediated settlement agreement signed and authenticated by the mediator is enforceable as a court decree under Section 27.
Courts and tribunals can refer parties to mediation at any stage of litigation under Section 7, with interim protection available.
The process must be completed within 180 days (extendable to 360 days with consent), and parties may withdraw after the first two sessions.
All mediation proceedings are subject to strict confidentiality under Section 22, with no audio or video recording permitted.
A mediated settlement can be challenged under Section 28 only on limited grounds (fraud, corruption, impersonation) within 90 days, extendable by 90 days.
Online mediation is expressly recognised under Section 30, supporting remote dispute resolution through secure digital channels.

Conclusion

The Mediation Act 2023 represents a transformative shift in India’s dispute resolution landscape. By providing a clear statutory framework, enforceable settlement agreements, and robust confidentiality protections, the Act encourages parties to explore mediation as a first resort rather than a last option. Whether you are a business navigating commercial disagreements, or an individual seeking to resolve a civil dispute, understanding the procedural steps under this legislation is critical to leveraging its benefits effectively.

For organisations with operations in India, particularly foreign entities managing regulatory compliance across areas such as FEMA regulations and forex frameworks, incorporating mediation clauses in contracts and being prepared to initiate mediation proceedings can significantly reduce dispute resolution timelines and costs. Engaging qualified legal counsel to structure your mediation strategy under the Act is strongly recommended.