Mediation is a form of alternative dispute resolution (ADR) in which a neutral third party, the mediator, helps disputing parties communicate and negotiate a settlement both sides can accept. Unlike a judge or an arbitrator, the mediator does not impose a decision. The parties themselves stay in control of the outcome. In India, mediation has moved from an informal practice to a codified process under the Mediation Act, 2023, making it a mainstream route for resolving commercial, civil and family disputes.
The legal framework in India
Mediation is now governed principally by the Mediation Act, 2023, which received Presidential assent on 14 September 2023. It provides for institutional, community and online mediation and creates a Mediation Council of India to register and regulate mediators and service providers. Alongside it, Section 89 of the Code of Civil Procedure, 1908 allows courts to refer pending disputes to mediation, and Section 12A of the Commercial Courts Act, 2015 requires pre-institution mediation in commercial suits that do not seek urgent interim relief. In Patil Automation Pvt. Ltd. v. Rakheja Engineers, the Supreme Court held this pre-institution step to be mandatory, so a commercial plaint filed without it can be rejected.
Key characteristics
- Voluntary — a party may withdraw from the process at any stage
- Non-binding during the process — no decision is forced on anyone
- Confidential — discussions are protected by statute and cannot be used as evidence in court
- Collaborative — parties work together towards a workable solution
- Flexible — the parties, not a third party, decide the terms
How mediation works
- Opening statement and ground rules explained by the mediator
- Each party presents its perspective and interests
- Private, confidential sessions (caucuses) with each side
- Joint negotiation and generation of settlement options
- Drafting and signing of a settlement agreement, if one is reached
Under the Mediation Act, 2023, the process is time-bound: mediation should ordinarily be completed within 120 days of the first appearance, extendable by a further 60 days with the parties' consent.
Is a mediated settlement binding?
Mediation stays non-binding while it is ongoing, but the position changes once a deal is reached. A Mediated Settlement Agreement (MSA) that is signed by the parties and authenticated by the mediator is final and binding, and is enforceable in the same manner as a judgment or decree of a court under the Code of Civil Procedure, 1908. Where the settlement arises from pre-litigation mediation conducted through a Legal Services Authority, it should be registered with the competent authority under the Legal Services Authorities Act, 1987, within 180 days of receiving the authenticated copy.
Mediation, arbitration and litigation compared
| Aspect | Mediation | Arbitration | Litigation |
|---|---|---|---|
| Who decides | The parties themselves | The arbitrator | The judge |
| Outcome | Binding only if settlement is signed | Award is binding | Judgment is binding |
| Confidentiality | Protected by law | Usually private | Public record |
| Relative cost and time | Lowest, fastest | Moderate | Highest, slowest |
When to use mediation
- Commercial disputes between businesses, especially ongoing supplier or partner relationships
- Family and matrimonial matters
- Employment and workplace disputes
- Property and real estate conflicts
- Any situation where preserving the relationship matters as much as the money