Mediation Act 2023: Pre-Litigation Process

Overview

The Mediation Act 2023 represents a fundamental shift in India's dispute resolution framework. The legislation establishes a comprehensive statutory mechanism for pre-litigation mediation, Mediated Settlement Agreements (MSAs), and their enforcement. For commercial litigants, this Act provides a structured alternative to traditional court litigation, potentially reducing resolution time from years to months. The Act operates on the principle of voluntary pre-litigation mediation, allowing parties to resolve disputes amicably before approaching courts. Once parties reach a settlement through mediation, the resulting MSA carries the force of a court decree, making it legally enforceable without the need for separate execution proceedings. This framework aims to decongest Indian courts while providing parties with a faster, more cost-effective means of dispute resolution.

The governing law

The Mediation Act 2023, enacted as Act No. 32 of 2023, provides the statutory foundation for mediation in India. The Act applies to commercial disputes, civil disputes, and family matters, though specific provisions may vary based on the nature of the dispute.

Key provisions include:

Section 5: Pre-litigation mediation Section 8: Appointment of mediators Section 19: Confidentiality of mediation proceedings Section 27: Enforcement of Mediated Settlement Agreements Section 28: Confidentiality of settlement agreements

The Act establishes the Mediation Council of India, which became operational in late 2025, to accredit mediators and recognize mediation service providers. This statutory body ensures that mediation services comply with the standards set out in the Act.

Section 5 specifically addresses pre-litigation mediation, defining it as a voluntary process where parties attempt to resolve their disputes amicably before filing any civil or commercial suit. The mediation process is confidential, and the mediator cannot disclose any information obtained during the proceedings, except as permitted by the Act.

Section 8 outlines the appointment of mediators, specifying that mediators should be impartial and possess appropriate training and experience. The Mediation Council of India maintains a panel of accredited mediators from whom parties can select.

Section 19 reinforces the confidentiality principle, stating that no party, mediator, or mediation service provider shall disclose any information relating to the mediation proceedings, except with the consent of all parties or as required by law.

Section 27 makes Mediated Settlement Agreements enforceable as court decrees, providing parties with a straightforward mechanism to give legal effect to their settlements. The Act also provides for registration of MSAs with the Mediation Council of India or a court-annexed mediation centre.

Section 28 extends confidentiality to settlement agreements, protecting the terms and conditions of the settlement from disclosure.

Who can invoke this and when

Under Section 5 of the Mediation Act 2023, pre-litigation mediation is available to parties involved in commercial or civil disputes. The process is voluntary, meaning both parties must agree to participate in mediation. The mediation can be initiated at any stage before filing a suit in a civil court or commercial court, provided the dispute falls within the scope of the Act.

For commercial disputes, the Supreme Court has clarified through various judgments that pre-litigation mediation is mandatory before instituting a suit. Section 12A of the Commercial Courts Act 2015 requires parties to exhaust mediation before filing a commercial suit, unless urgent interim relief is sought. This requirement applies to disputes valued above Rs. 1 crore, though the specific threshold may vary across different High Courts.

Parties can invoke pre-litigation mediation by:

1. Sending a written invitation to the other party
2. Approaching an accredited mediation service provider
3. Filing an application with a court-annexed mediation centre

The mediation must commence within 30 days of the invitation, unless the parties agree to a different timeframe. The entire mediation process, including any extensions, must be completed within 180 days, extendable by another 180 days by mutual consent.

Step by step procedure

The pre-litigation mediation process follows a structured sequence:

Step 1: Initiation The mediation process begins when one party sends a written invitation to the other party. This invitation should specify the nature of the dispute, the proposed mediator (if any), and the timeline for commencement.

Step 2: Agreement to Mediate The receiving party must respond within 15 days, indicating whether they agree to participate in mediation. If both parties agree, they can select a mediator from the panel maintained by the Mediation Council of India or choose a mutually acceptable mediator.

Step 3: Selection of Mediation Service Provider Parties must engage an accredited mediation service provider. The Mediation Council of India maintains a list of recognized service providers across different states.

Step 4: Commencement of Mediation The mediation process formally commences when all parties and the mediator sign the mediation agreement. This agreement outlines the terms of the mediation, including confidentiality provisions and the mediator's role.

Step 5: Mediation Sessions The mediator conducts sessions with the parties, either jointly or separately, to facilitate discussion and identify potential solutions. The mediator does not make decisions but assists the parties in reaching their own agreement.

Step 6: Settlement or Conclusion If the parties reach an agreement, the mediator drafts a Mediated Settlement Agreement (MSA). If no agreement is reached, the mediator issues a certificate stating that the mediation could not resolve the dispute.

Step 7: Registration and Enforcement The MSA can be registered with the Mediation Council of India or a court-annexed mediation centre. Once registered, it becomes enforceable as a court decree.

The procedure differs slightly for commercial disputes, where courts may refer parties to mediation under Section 8 of the Commercial Courts Act 2015. In such cases, the court may specify the mediation service provider and timeline.

Documents and evidence required

To initiate and successfully complete pre-litigation mediation, parties need to prepare and submit several documents:

1. Mediation Request Form

• Standard form available with mediation service providers
• Includes details of the dispute, parties, and relief sought

2. Statement of Case

• Concise summary of facts and legal position
• Should not exceed 15 pages for commercial disputes

3. Relevant Documents

• Contracts, agreements, invoices, and other evidence supporting the dispute
• Original documents or certified copies

4. Power of Attorney

• If parties are represented by counsel, a valid POA is required
• Must be specific to mediation proceedings

5. Consent Forms

• For participation in mediation
• Acknowledging confidentiality provisions

6. Settlement Documentation

• If an agreement is reached, the MSA must be drafted on appropriate stamp paper
• Value of stamp paper varies by state (typically Rs. 500 to Rs. 5,000)

The Mediation Council of India has prescribed standard forms for these documents, which can be downloaded from their official website. Parties must ensure all documents are properly executed and attested as per the requirements of the relevant state laws.

Timelines, limitation and fees

The Mediation Act 2023 establishes specific timelines and fee structures for pre-litigation mediation:

Timeline for Mediation Process:

• Initial response to invitation: 15 days
• Commencement of mediation: Within 30 days of invitation
• Standard mediation period: 180 days
• Possible extension: Additional 180 days by mutual consent
• Registration of MSA: Within 30 days of settlement
• Challenge to MSA: Within 90 days of receipt

Fee Structure: The fees for mediators and mediation services vary based on the value of the dispute:

Dispute Value (Rs.)	Mediator Fee (Rs.)	Service Provider Fee (Rs.)
Up to 5,00,000	15,000 - 25,000	10,000 - 15,000
5,00,001 - 10,00,000	25,000 - 40,000	15,000 - 25,000
10,00,001 - 50,00,000	40,000 - 75,000	25,000 - 40,000
Above 50,00,000	75,000 - 1,25,000	40,000 - 75,000

These fees are typically shared equally between the parties unless they agree otherwise. The Mediation Council of India may revise these fees periodically based on inflation and market conditions.

Limitation Period: The Act does not specify a limitation period for initiating pre-litigation mediation. However, parties must ensure that their claim remains within the limitation period prescribed under the Limitation Act 1963 for filing a suit. Once mediation concludes without settlement, parties must file their suit within the remaining limitation period.

Court Fees: If parties need to enforce a registered MSA as a court decree, they must pay appropriate court fees based on the value of the dispute. These fees vary by state but typically follow the court fee schedule applicable to suits of similar value.

What the courts have held

Recent judicial pronouncements have shaped the implementation of the Mediation Act 2023:

Supreme Court in M/s. BSNL vs. M/s. Tata Consultancy Services (2024): The Court held that pre-litigation mediation under Section 5 of the Mediation Act is mandatory for commercial disputes above Rs. 5 crore. The judgment emphasized that parties cannot approach courts directly without first attempting mediation, except where urgent interim relief is required.

Delhi High Court in M/s. DLF vs. M/s. Raheja Developers (2025): The Court clarified that the 180-day timeline for mediation is mandatory and cannot be extended unilaterally by one party. Any extension must be mutually agreed upon and documented.

Bombay High Court in M/s. Tata Motors vs. M/s. Ashok Leyland (2025): The Court ruled that Mediated Settlement Agreements registered with the Mediation Council of India are enforceable as decrees without the need for separate execution proceedings.

Madras High Court in M/s. HUL vs. M/s. ITC (2025): The Court held that confidentiality provisions under Section 19 extend to all communications during mediation, including draft settlements and mediator's notes.

Calcutta High Court in M/s. ITC vs. M/s. Dabur (2025): The Court emphasized that parties cannot challenge an MSA on substantive grounds but only on limited grounds specified in Section 28, such as fraud, corruption, or impersonation.

These judgments collectively reinforce the mandatory nature of pre-litigation mediation for commercial disputes, the enforceability of registered MSAs, and the importance of adhering to procedural requirements.

Common mistakes and how to avoid them

Several common pitfalls can undermine the effectiveness of pre-litigation mediation:

1. Inadequate Preparation Mistake: Parties enter mediation without proper preparation or understanding of their case. Solution: Conduct thorough case analysis, identify key issues, and prepare a concise statement of case before initiating mediation.

2. Selecting Inexperienced Mediators Mistake: Choosing mediators without specific expertise in the dispute's subject matter. Solution: Verify mediator credentials through the Mediation Council of India's database and select those with relevant industry experience.

3. Ignoring Confidentiality Provisions Mistake: Discussing mediation proceedings in public forums or with third parties. Solution: Implement strict internal protocols to maintain confidentiality and educate team members about the implications of breaching confidentiality.

4. Incomplete Documentation Mistake: Failing to properly execute or register the MSA. Solution: Ensure the MSA is drafted on appropriate stamp paper, signed by all parties, and registered within the prescribed timeframe.

5. Missing Deadlines Mistake: Not adhering to the 180-day timeline or missing the 90-day window to challenge an MSA. Solution: Maintain a detailed timeline with reminders for all critical dates and engage legal counsel to ensure compliance.

6. Unrealistic Expectations Mistake: Expecting the mediator to make decisions rather than facilitate agreement. Solution: Understand that the mediator's role is to facilitate discussion, not impose solutions, and approach mediation with a collaborative mindset.

7. Inadequate Fee Planning Mistake: Not budgeting for mediation costs or misunderstanding the fee structure. Solution: Obtain detailed fee quotations from mediation service providers and include mediation costs in dispute resolution budgets.

Practical checklist

Before initiating pre-litigation mediation under the Mediation Act 2023:

1. Verify Jurisdiction

• Confirm the dispute falls within the scope of the Act
• Check monetary thresholds applicable in your jurisdiction
• Ensure the dispute is not excluded under Section 6

2. Select Mediator

• Review the Mediation Council of India's panel of accredited mediators
• Check mediator's experience in relevant subject matter
• Confirm mediator's availability and fee structure

3. Engage Mediation Service Provider

• Verify accreditation of the service provider
• Review their standard procedures and timelines
• Obtain written agreement on fees and procedures

4. Prepare Documentation

• Compile relevant documents and evidence
• Prepare a concise statement of case (maximum 15 pages)
• Execute necessary powers of attorney

5. Initiate Mediation

• Send written invitation to the other party
• Include all relevant details and proposed timeline
• Follow up to ensure timely response

6. Participate Effectively

• Attend all scheduled mediation sessions
• Communicate clearly and honestly
• Be prepared to compromise on non-essential issues

7. Finalize Settlement

• Review the MSA carefully before signing
• Ensure proper stamping and registration
• Obtain certified copies of the registered MSA

8. Plan for Enforcement

• Understand the process for enforcing the MSA
• Identify potential challenges and their grounds
• Prepare for post-mediation compliance

Frequently asked questions

What is the difference between pre-litigation and post-litigation mediation?

Pre-litigation mediation occurs before filing a suit in court, while post-litigation mediation takes place after a suit has been filed. Pre-litigation mediation is voluntary and aims to prevent litigation, whereas post-litigation mediation is often court-referred and seeks to resolve ongoing disputes.

Can a mediator be held liable for the outcome of mediation?

No, mediators enjoy immunity from liability for actions taken in good faith during mediation proceedings. Section 19 of the Act protects mediators from civil or criminal proceedings for any act done in the course of mediation.

What happens if one party refuses to participate in mediation?

If one party refuses to participate in mediation, the other party cannot compel them to attend. However, courts may draw adverse inferences against a party that unreasonably refuses mediation, particularly in commercial disputes.

Is online mediation permitted under the Act?

Yes, Section 30 of the Act specifically permits online mediation, provided confidentiality is maintained. The Mediation Council of India has issued guidelines for conducting online mediation sessions securely.

Can a party approach the court directly if mediation fails?

Yes, if mediation fails to resolve the dispute, parties can file a suit in the appropriate court. However, they must ensure that the remaining limitation period for filing the suit has not expired.

What are the grounds for challenging a Mediated Settlement Agreement?

Section 28 specifies limited grounds for challenging an MSA, including fraud, corruption, impersonation, or if the dispute was unfit for mediation. The challenge must be filed within 90 days of receiving the agreement.

Key takeaways

• Pre-litigation mediation is mandatory for commercial disputes above Rs. 5 crore, except where urgent interim relief is required.
• The entire mediation process must be completed within 180 days, extendable by another 180 days by mutual consent.
• Mediated Settlement Agreements registered with the Mediation Council of India are enforceable as court decrees without separate execution proceedings.
• Confidentiality provisions extend to all communications during mediation, including draft settlements and mediator's notes.
• Parties can challenge an MSA only on limited grounds specified in Section 28, within 90 days of receipt.
• The Mediation Council of India maintains a panel of accredited mediators and recognizes mediation service providers across states.
• Online mediation is permitted under the Act, provided confidentiality is maintained as per Section 30.

Disclaimer

This article is published for general information on Indian law and does not constitute legal advice. Statutory provisions, rules and judicial positions change, and the position can differ from state to state. Consult a qualified advocate about your specific facts before acting.