6 OCTOBER 2023

Mediation Act 2023: A Boon for Non-Profits


The Mediation Act 2023 (the Act), received the assent of the President of India on September 15, 2023. It is a comprehensive law that promotes mediation as a viable alternative to traditional litigation. The Act is expected to have a significant impact on non-profit organizations, as it provides them with a more efficient and cost-effective way

to resolve disputes.

Mediation in India – Background

Mediation has a long-standing history in India. Panchayats utilise mediation for community conflict resolution. Further, Indian courts have the power to recommend certain disputes for conciliation (Section 89(1) of the Code of Civil Procedure, 1908). In response, mediation centres – government run and private have been established throughout the country. But until the Mediation Act of 2023 there was no unified legal framework for mediation, causing a deterrence in using mediation as a modus for dispute settlement. 

In this article, we will understand the utility of mediation for non-profits. 

 What is Mediation? 

The Act in section 2(h) defines Mediation as a process in which a neutral third party (mediator) helps disputing parties to reach a mutually agreeable settlement. It is a voluntary process, and both parties must agree to participate. Typically, the disputing parties agree to request a mediator to assist them in reaching an amicable settlement. Types of mediation are:

·        Pre-litigation mediation: Mediation that takes place before a lawsuit is filed -parties may choose to resolve the dispute through mediation before filing a lawsuit (section 5).  

·        Online mediation: Mediation that takes place electronically, through video conferencing or other online communication tools.

·        Community mediation: Mediation that is provided by community-based organizations, at the community level.

What Kind of Disputes Can Be Mediated (For NGOs)? 

The Act applies to all disputes arising in India, including commercial disputes where the government or its agencies are a party, as well as international mediations for resolving commercial disputes where one of the parties is a

foreign national/entity. Schedule 1 of the Act carves out a list of exceptions – circumstances under which mediations cannot be conducted. This includes criminal offenses, claims affecting the rights of third parties where such third parties are not party to the mediation. 

Thus, disputes pertaining to disputes arising from service agreements, grant agreements, employment agreements can easily be referred to mediation and settled expediently. NGOs can use mediation to resolve disputes within communities, such as land rights,  water disputes, and conflicts between different groups within the community. NGOs can use mediation to help marginalized groups resolve disputes with the government and stakeholders. This can help to protect the rights of marginalized groups and to promote social justice, without pursuing complex litigious processes.

Conducting the Mediation Process

The Act allows parties to determine the mediation procedure and select their preferred mediator. Parties also have the flexibility to choose to conduct it online or at another location for convenience. The parties can also choose the language of mediation. 

The mediation process is expected to be conducted, with the mediator assisting the parties in an independent, neutral, and impartial manner to reach an amicable settlement. The mediator is not bound by the Code of Civil Procedure, 1908, or the Indian Evidence Act, 1872 but shall be guided by the principles of fairness and justice. The mediation process may involve various measures deemed appropriate by the mediator, considering the case's circumstances. This may include meetings with parties or participants, either jointly or separately, as often as necessary to convene and effectively conduct the mediation process while preserving its integrity. 

In mediation, recording via audio or video is forbidden to maintain confidentiality. Information discussed in mediation cannot be used as evidence in legal proceedings, similar to the "without prejudice privilege,"encouraging open discussions for amicable settlements.

These features make mediation more accessible, affordable, flexible, and efficient. 

How long does it take to complete Mediation? 

Mediation proceedings begin when the parties receive a notice to start mediation, when the mediator agrees to mediate their dispute, or when the mediation service provider appoints a mediator. Mediation ends when the parties sign a settlement agreement, the mediator signs a non-settlement report, either party opts out of mediation, or the prescribed time limit expires.

The prescribed time limit for mediation is 120 days from the date of the first meeting with the mediator. The parties can agree to extend this time limit by another 60 days. 

Mediation settlement agreements can be challenged on the limited grounds of fraud, corruption, impersonation, or the mediation conducted on the matters exempted under the Act. 

How can NGOs Respond? 

The Act is yet to be notified for implementation. In the interim, NGOs can take the following steps to take advantage of mediation as a pragmatic dispute resolution mechanism:

1.    Amend the dispute resolution clauses of the existing contracts, agreements, and MOUs with their stakeholders to include mediation possible method of resolving disputes.

2.    Incorporating mediation as a method of dispute resolution for all prospective contracts, agreements, and MOUs with their stakeholders.

3.    Organizations involved in ongoing litigation can request the court with the consent of the opposite party to

refer the matter to mediation. 

4.    Where there is no mediation agreement and the organization is anticipating possible litigation, the organization may opt to resolve the dispute through pre-litigation mediation.

5.    Sensitize their stakeholders in the field on the benefits of mediation.


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