The Role of Mediation in Resolving Commercial Disputes in India: Challenges

Paper Details 

Paper Code: RP-VBCL-16-2025

Category: Research Paper

Date of Publication: April 20, 2025

Citation: Dr. Mahesh R. Sharanappa, Mr. V. Shudarshana & Ms. Tilaka N.S, “The Role of Mediation in Resolving Commercial Disputes in India: Challenges", 2, AIJVBCL, 216, 216-244 (2025).

Author Details: Dr. Mahesh R. Sharanappa, Assistant Professor, KLE Law College, A Constituent College under KLE Technological University, Bengaluru

Mr. V. Shudarshana, Student, KLE Law College, Bengaluru

Ms. Tilaka N.S, Assistant Professor, KLE Law College, Bengaluru

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ABSTRACT

Mediation has emerged as a pivotal alternative dispute resolution mechanism, especially in the context of India's burgeoning commercial sector. This process, which fosters amicable settlements outside traditional courts, is gaining traction as an efficient, cost-effective, and less adversarial method of resolving commercial disputes. With the enactment of the Mediation Act, 2023, India has taken a significant step toward institutionalizing mediation and aligning with global best practices. However, despite these advancements, several challenges hinder its widespread adoption. Key obstacles include inadequate awareness of mediation’s benefits among businesses and the public, societal scepticism toward mediated settlements, and cultural resistance to non-litigious dispute resolution. Institutional barriers, such as insufficient training of mediators, lack of standardized frameworks, and limited infrastructure, further compound the problem. Additionally, gaps in legislative support, such as ambiguities in existing laws and slow implementation of reforms, pose significant hurdles. This research delves into the comparative analysis of mediation frameworks in India and globally, exploring how other jurisdictions have overcome similar challenges. It also examines the role of Indian businesses, courts, and the judiciary in adopting mediation, supported by data on its success rates and stakeholder perspectives. The study underscores the importance of judicial orders, court-annexed mediation centers, and recent legislative amendments in promoting mediation as a viable dispute resolution method.

Keywords: Commercial Dispute Resolution, Court-Annexed Mediation, Mediation Revolution, Justice Beyond Courts, Institutional Barriers to Mediation.

PROLOGUE

The Indian legal system has long grappled with the challenge of delayed justice caused by an overwhelming backlog of cases. This issue is particularly critical in commercial disputes, where time and efficiency are paramount. Mediation, a form of Alternative Dispute Resolution (ADR), has gained traction in recent years as a practical solution to these challenges. Mediation focuses on fostering dialogue and mutual agreement between parties, emphasizing collaboration over confrontation.

The enactment of the Mediation Act, 2023, along with existing frameworks like the Commercial Courts Act, 2015, and the Arbitration and Conciliation Act, 1996, reflects a paradigm shift in India’s approach to resolving commercial disputes. This legislative framework underscores the importance of mediation as a preferred method for achieving timely, cost-effective, and amicable outcomes.

Historical Evolution of Mediation in India

Mediation has deep roots in India’s cultural and social traditions. In ancient times, community leaders and village councils (panchayats) often acted as mediators, resolving disputes through consensus and dialogue. These informal practices prioritized restoring harmony and preserving relationships.

However, the colonial introduction of a formal judicial system sidelined indigenous methods, leading to a litigation-oriented culture. It was only in the late 20th century that mediation began to re-emerge within the Indian legal framework. The Arbitration and Conciliation Act, 1996, provided statutory recognition to conciliationa process closely aligned with mediation. Subsequently, the Civil Procedure Code (Amendment) Act, 2002, introduced Section 89, enabling courts to refer disputes to ADR mechanisms, including mediation[1].

Contemporary Significance of Mediation

In the modern era, mediation has evolved into a critical tool for resolving commercial disputes. Its advantages are well-documented:

• Time and Cost Savings: Mediation is faster and more economical compared to lengthy litigation processes.

• Confidentiality: Dispute details remain private, which is particularly important in commercial matters.

• Preservation of Relationships: By focusing on mutual agreement, mediation often helps preserve business relationships.

• Flexibility and Autonomy: Parties have greater control over the process and outcome, making resolutions more adaptable to their needs.

Despite these benefits, the adoption of mediation in India has faced barriers, including limited awareness, resistance from traditional stakeholders, and inadequate infrastructure.

The Mediation Act, 2023: Key Features

The Mediation Act, 2023, marks a transformative step in embedding mediation within India’s legal framework. The Act aims to streamline mediation practices, ensuring their consistency and effectiveness in resolving disputes[2]. Notable provisions of the Act include:

1. Mandatory Pre-Litigation Mediation (Section 4)

The Act mandates that disputing parties must attempt mediation before initiating litigation, particularly in commercial disputes. Exceptions apply to cases involving fraud, criminal offenses, or public policy issues.[3]

2. Confidentiality (Section 10)

All communications, documents, and discussions during mediation are deemed confidential, fostering trust in the process.[4]

3.      Legal Enforceability of Settlements (Section 12)

Mediated settlement agreements are recognized as binding, enforceable as a court decree.[5]

4. Online Mediation (Section 17)

Acknowledging the role of technology, the Act validates online mediation, enhancing accessibility and inclusivity.[6]

5. Institutional Mediation (Section 22)

The Act establishes mediation service providers and national/state mediation councils to standardize and professionalize mediation services.[7]

Commercial Courts and Arbitration Acts

The Commercial Courts Act, 2015, and the Arbitration and Conciliation Act, 1996, have played a crucial role in fostering ADR mechanisms in India. Key provisions include:

1. Pre-Institution Mediation (Section 12A of the Commercial Courts Act)

   
   

   This section mandates pre-litigation mediation for commercial disputes, encouraging parties to seek amicable resolutions before filing a suit. It has proven effective in reducing court congestion and expediting dispute resolution.[8]

2. Arbitral Mediation (Section 30 of the Arbitration Act)

   
   

   Arbitral tribunals are empowered to facilitate mediation during proceedings, offering parties the flexibility to mediate even after arbitration has commenced.[9]

These laws, in conjunction with the Mediation Act, create a comprehensive ecosystem that integrates mediation with arbitration and litigation.

Challenges and the Road Ahead

While the legislative framework is robust, several challenges persist:

1. Lack of Awareness: Many businesses and individuals remain unaware of mediation’s benefits and procedural nuances.

2. Infrastructure Deficits: Effective implementation of online mediation and institutional mediation requires significant investment in technology and facilities.

3. Cultural Shift: A litigation-oriented mindset among parties and legal professionals needs to shift toward embracing mediation as a preferred alternative.

To overcome these barriers, a concerted effort involving judicial advocacy, professional training, and public awareness campaigns is essential. Initiatives like mandatory mediator accreditation and technology-driven platforms can further strengthen mediation’s role in India’s dispute resolution landscape.

Kinds of Commercial Disputes

Commercial disputes in India can arise in various forms, often depending on the nature of business transactions, contractual obligations, and regulatory frameworks. Below are some common types of commercial disputes seen in India:

1.    Contractual Disputes

Arise from disagreements over the terms, performance, or breach of business contracts, such as supply agreements, service contracts, or joint ventures.

2.    Partnership Disputes

Involve conflicts between business partners regarding profit sharing, decision-making, or breach of partnership agreements.

3.    Intellectual Property Disputes

Concern infringement or unauthorized use of intellectual property rights, including trademarks, copyrights, and patents.

4.    Real Estate Disputes

Include conflicts over commercial property transactions, leases, development agreements, or breach of property-related contracts.

5.    Shareholder Disputes

Arise between shareholders or directors in companies, often related to voting rights, dividend distribution, or corporate governance.

6.    Employment Disputes

Involve disagreements between employers and employees over contracts, wrongful termination, workplace policies, or benefits.

7.    Supply Chain and Procurement Disputes

Result from issues such as delayed deliveries, non-conformance to agreed standards, or breach of procurement terms.

8.    Franchise Disputes

Occur when franchisors and franchisees have disagreements about franchise terms, territory rights, or quality standards.

9.    Banking and Finance Disputes

Include conflicts over loan agreements, guarantees, payment defaults, or banking practices.

10.    Consumer Disputes in Commercial Contexts

       Arise from conflicts between businesses and consumers over product or service quality, warranty issues, or contractual misrepresentation.

11.    Mergers and Acquisitions (M&A) Disputes

       Concern breaches of terms or disputes over valuations, representations, and warranties during mergers or acquisitions.

12.    Construction Disputes

       Stem from issues such as project delays, cost overruns, defective work, or contract breaches in commercial construction projects.

13.    Energy and Infrastructure Disputes

       Involve conflicts in sectors like oil, gas, renewable energy, and large-scale infrastructure development projects.

14.    Cross-Border Trade Disputes

       Arise from international trade agreements, customs violations, or non-compliance with international trade regulations.

15.    Technology and Data Disputes

       Include conflicts related to software licensing, technology development contracts, or data privacy breaches in commercial transactions.

CONCEPTUAL ANALYSIS

Mediation is a voluntary and confidential process where a neutral third party, known as the mediator, assists disputing parties in reaching a mutually acceptable resolution. The primary types of mediation include:

• Facilitative Mediation: The mediator structures a process to assist the parties in reaching a mutually agreeable resolution without providing opinions or suggestions.

• Evaluative Mediation: The mediator provides assessments of the merits of the issues and may suggest possible settlement options.

• Transformative Mediation: Focuses on empowering the parties and fostering mutual recognition, aiming to transform their relationship and interaction[10].

Comparative Analysis of Mediation Frameworks in India and Globally

Globally, countries have developed diverse mediation frameworks to suit their legal and cultural contexts. For instance, the United States has integrated mediation into its legal system, with courts often mandating mediation before litigation. The United Kingdom emphasizes mediation through the Civil Mediation Council, promoting it as a cost-effective alternative to court proceedings. Singapore has established itself as a global mediation hub, with institutions like the Singapore International Mediation Centre offering services for international disputes[11].

In contrast, India's mediation framework is still evolving. The Arbitration and Conciliation Act, 1996 includes provisions for conciliation, akin to mediation, but lacks a comprehensive legislative framework dedicated solely to mediation. The Commercial Courts Act, 2015 introduced mandatory pre-institution mediation for certain commercial disputes, reflecting a shift towards embracing mediation. However, challenges such as limited awareness, lack of trained mediators, and concerns over enforceability persist.

Mediation and Commercial Dispute Resolution

In commercial contexts, mediation offers several advantages:

• Cost-Effectiveness: Mediation is generally less expensive than litigation, reducing legal fees and associated costs.

• Time Efficiency: It provides a quicker resolution compared to the often-lengthy court processes.

• Confidentiality: Mediation proceedings are private, protecting business reputations and sensitive information.

• Preservation of Business Relationships: The collaborative nature of mediation helps maintain and even strengthen business relationships[12].

CHALLENGES TO MEDIATION IN INDIA

Mediation, as an alternative dispute resolution (ADR) mechanism, faces several challenges in India, both institutional and cultural.

A.    Institutional and Legislative Challenges

One significant hurdle is the absence of a comprehensive legislative framework dedicated solely to mediation. While the Arbitration and Conciliation Act, 1996 includes provisions for conciliation, it does not comprehensively address mediation, leading to inconsistencies in practice and enforcement.

Additionally, the lack of a regulatory body to oversee mediation practices results in varied standards and procedures, undermining the credibility and effectiveness of mediation as a dispute resolution method[13].

Furthermore, there is a scarcity of trained mediators and inadequate infrastructure to support mediation services, particularly in non-metropolitan areas, limiting access to quality mediation.

Societal and Cultural Resistance to ADR Mechanisms

Culturally, there is a deep-rooted preference for litigation over mediation. Many individuals and businesses perceive court judgments as more authoritative and final, leading to a reluctance to engage in mediation. This preference is compounded by a lack of awareness about the benefits of mediation, such as cost-effectiveness, time efficiency, and confidentiality. Moreover, societal norms often equate seeking mediation with a compromise on justice, further deterring parties from opting for this ADR mechanism[14].

Addressing these challenges requires concerted efforts to develop a robust legislative framework, establish regulatory bodies, enhance infrastructure, and promote awareness about the advantages of mediation. Such measures are essential to foster a culture that embraces mediation as a viable and effective means of dispute resolution in India.

Existing Reforms and International Best Practices

In recent years, several countries have implemented successful mediation frameworks to enhance the resolution of commercial disputes. The United Kingdom, for instance, signed the United Nations Convention on International Settlement Agreements Resulting from Mediation, known as the Singapore Convention, on May 3, 2023, with plans for ratification in 2024. This convention establishes a uniform framework for the effective recognition and enforcement of mediated settlement agreements across borders, thereby promoting mediation as a viable alternative to litigation[15].

Similarly, Singapore has been at the forefront of promoting mediation, evident from its hosting of the Singapore Convention's signing ceremony in 2019. The convention aims to facilitate international trade by ensuring that mediated settlement agreements are enforceable, thus encouraging parties to opt for mediation in resolving cross-border commercial disputes[16].

In India, the government has undertaken significant reforms to strengthen its arbitration and mediation landscape. The Arbitration and Conciliation (Amendment) Act of 2015 introduced provisions for expeditious, fast-track, and time-bound arbitral proceedings, emphasizing the neutrality of arbitrators and cost-effective delivery mechanisms. This was followed by the Arbitration and Conciliation (Amendment) Act of 2019, which aimed to boost institutional arbitration and reduce the prevalence of ad-hoc arbitration in the country. These amendments reflect India's commitment to creating a robust alternative dispute resolution framework, aligning with international best practices to make the country a hub for arbitration and mediation.

By adopting such reforms and participating in international conventions, countries like the UK, Singapore, and India are enhancing the effectiveness of mediation in commercial dispute resolution, providing businesses with efficient and reliable alternatives to traditional litigation.

THE ROLE OF MEDIATION IN COMMERCIAL DISPUTES IN INDIA

Adoption of Mediation by Indian Businesses and Courts

The adoption of mediation as a dispute resolution mechanism is steadily increasing in India, driven by the growing need to address inefficiencies in the traditional litigation process. Indian businesses, particularly those involved in commercial transactions, are beginning to recognize mediation's benefits, such as cost savings, time efficiency, and the preservation of business relationships. This shift has been facilitated by legislative interventions, notably the Commercial Courts Act, 2015, which mandates pre-institution mediation for certain commercial disputes. This requirement has played a pivotal role in institutionalizing mediation as a preferred method for dispute resolution before parties proceed to litigation

The Indian judiciary has been instrumental in promoting mediation through the establishment of dedicated mediation centers. High courts, such as the Delhi High Court, have established robust mediation and conciliation centers to encourage its use. For instance, the Delhi High Court Mediation and Conciliation Centre has successfully resolved numerous cases, providing a structured and neutral platform for disputing parties. Such initiatives underscore the judiciary’s commitment to reducing the burden on courts while fostering amicable resolutions[17].

Analysis of Data on Mediation Success Rates in Commercial Disputes

Empirical studies on the effectiveness of mediation in India remain sparse, but available data reflects promising trends. For instance, the Bangalore Mediation Centre has reported a success rate of approximately 64% for disputes referred to mediation. This success rate highlights mediation’s potential to resolve disputes efficiently without prolonged litigation. The ability of mediation to achieve mutually beneficial outcomes makes it particularly appealing for commercial disputes, where the preservation of business relationships is often paramount[18].

However, challenges persist in fully realizing mediation’s potential. Limited data collection and a lack of comprehensive studies on mediation outcomes across different industries and regions hinder an accurate assessment of its success. Moreover, the perception of mediation as a secondary option compared to litigation persists among businesses and individuals. Efforts to enhance awareness about mediation’s benefits and expand access to skilled mediators are crucial to overcoming these obstacles.

Major Benefits of Mediation: Survey Insights

Legal Professionals' Perspectives on Mediation Benefits

The pie chart illustrates the most significant advantages of mediation as identified by 179 respondents in the context of commercial dispute resolution. The largest segment, representing 26.8%, highlights faster resolution as the primary benefit of mediation, emphasizing its ability to conclude disputes much quicker than traditional court proceedings. This advantage is crucial in the fast-paced business environment where time is often of the essence.

Close behind, 26.3% of respondents recognize mediation’s cost-effectiveness, as it significantly reduces the financial burden associated with prolonged litigation. Additionally, 24.6% of participants appreciate the confidential nature of mediation, particularly valuable for businesses seeking to safeguard sensitive information and avoid public scrutiny.

Furthermore, 18.4% of respondents value mediation’s role in preserving business relationships. By fostering collaboration rather than confrontation, mediation helps maintain or even strengthen professional ties between disputing parties. Interestingly, only 3.9% of respondents did not identify any specific advantage, indicating widespread acknowledgment of mediation's benefits, though awareness gaps may still exist.

Awareness and Effectiveness of Mediation in India

This graph illustrates the responses of 121 individuals regarding their experience with mediation as a method of resolving disputes. The analysis of the percentages provides valuable insights into the awareness, adoption, and effectiveness of mediation among the respondents, shedding light on both its promise and its challenges.

A notable 28.9% of respondents (35 individuals) reported having successfully used mediation to resolve disputes. This highlights mediation’s growing traction as an effective alternative dispute resolution (ADR) mechanism. For these respondents, mediation offered a satisfactory and efficient way to address conflicts, emphasizing its potential to preserve relationships and reduce litigation costs. The successful experiences of this group demonstrate the value mediation can bring when implemented effectively.

However, not all experiences with mediation have been favorable. A significant 19.8% of respondents (24 individuals) indicated that while they had used mediation, it failed to resolve their disputes. This finding underscores a critical challenge: mediation does not always deliver the desired results. Factors such as a lack of skilled mediators, the complexity of certain disputes, or insufficient trust between parties may contribute to these outcomes. This emphasizes the need to address these barriers to ensure mediation’s reliability and success across a wider range of cases.

Interestingly, 32.2% of respondents (39 individuals) preferred other methods for resolving disputes over mediation. This preference suggests that many people still view traditional litigation as a more authoritative or familiar option. It may also reflect skepticism toward mediation’s ability to deliver binding or satisfactory outcomes. Building confidence in mediation’s advantages, such as confidentiality, speed, and cost-effectiveness, could encourage more people to explore it as a viable alternative.

Another critical insight is that 19.0% of respondents (23 individuals) were unaware of mediation as an option for resolving disputes. This points to a significant gap in awareness, underscoring the importance of campaigns and educational efforts to promote mediation. Increasing visibility and knowledge of mediation’s availability and benefits could play a vital role in boosting its adoption.

Overall, the graph highlights a promising but uneven landscape for mediation in dispute resolution. While some respondents have embraced it successfully, others remain unaware of its potential or skeptical of its efficacy. These findings suggest a need for a two-pronged approach: raising awareness and trust in mediation while improving the quality and accessibility of mediation services. Policymakers and legal institutions can address these challenges by investing in mediator training, enhancing infrastructure, and promoting the benefits of mediation through targeted outreach.

ROLE OF THE JUDICIARY IN PROMOTING MEDIATION

The Indian judiciary has played a pivotal role in promoting mediation as an effective alternative dispute resolution (ADR) mechanism. Through various judgments and the establishment of court-annexed mediation centers, courts have actively encouraged parties to resolve disputes amicably.

A.  Judicial Support for Mediation through Orders and Judgments

Indian courts have consistently endorsed mediation to alleviate the burden on the judicial system and provide parties with a more efficient dispute resolution process. A landmark case in this regard is Salem Advocate Bar Association v. Union of India, where the Supreme Court emphasized the importance of ADR mechanisms, including mediation, and provided guidelines for their implementation[19].

In Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., the Supreme Court clarified the scope of Section 89 of the Code of Civil Procedure, 1908, which pertains to the settlement of disputes outside the court.[20] The Court outlined the categories of cases suitable for mediation and highlighted the judiciary's role in referring appropriate matters to mediation[21].

B.  Overview of Court-Annexed Mediation Centres

To institutionalize mediation, the judiciary has established court-annexed mediation centres across various jurisdictions. These centres operate within court premises and provide structured environments for parties to engage in mediation facilitated by trained mediators.

For instance, the Delhi High Court Mediation and Conciliation Centre, known as 'Samadhan,' was established to handle cases referred by the High Court and subordinate courts. It has successfully mediated numerous disputes, showcasing the effectiveness of court-annexed mediation.

Similarly, the Bangalore Mediation Centre, initiated by the High Court of Karnataka, has been instrumental in resolving disputes through mediation. It facilitates court-annexed mediation by trained advocate-mediators and has received cases not only from trial courts but also from the High Court and the Supreme Court[22].

These centers have contributed significantly to reducing the backlog of cases and promoting a culture of amicable dispute resolution. They provide parties with a less adversarial and more collaborative platform to resolve their differences, thereby preserving relationships and ensuring quicker resolutions.

LEGISLATIVE SUPPORT FOR MEDIATION IN INDIA

Mediation, as an alternative dispute resolution (ADR) mechanism, has gained legislative backing in India through various statutes and amendments aimed at promoting its adoption and effectiveness.

A.  Review of the Arbitration and Conciliation Act and Other Relevant Laws

The Arbitration and Conciliation Act, 1996 (the Act) is a cornerstone legislation that provides a framework for arbitration and conciliation in India. Part III of the Act, encompassing Sections 61 to 81, specifically deals with conciliation, which is akin to mediation. These provisions outline the procedures for initiating conciliation, the role of conciliators, and the binding nature of settlement agreements. Notably, Section 73 stipulates that a settlement agreement reached through conciliation has the same status and effect as an arbitral award on agreed terms, thereby making it enforceable under the Act.[23]

In addition to the Act, the Commercial Courts Act, 2015 introduced significant provisions to encourage mediation. Section 12A mandates pre-institution mediation for commercial disputes, requiring parties to attempt mediation before filing a suit, unless urgent interim relief is sought. This provision aims to reduce the burden on courts and promote amicable settlements.[24]

B.     Impact of Recent Amendments on Promoting Mediation

The Arbitration and Conciliation (Amendment) Act, 2015 brought substantial changes to the original Act, aiming to make arbitration and conciliation more user-friendly and cost-effective. One of the key amendments was the insertion of Section 29A, which imposed a time limit for the completion of arbitral proceedings, indirectly encouraging parties to consider faster ADR mechanisms like mediation.[25]

Further, the Arbitration and Conciliation (Amendment) Act, 2019 introduced the establishment of the Arbitration Council of India (ACI) under Section 43B.[26] The ACI is tasked with promoting and encouraging arbitration, mediation, conciliation, and other ADR mechanisms. This institutional support is expected to enhance the quality and credibility of mediation services in India[27].

These legislative measures reflect a concerted effort by the Indian government to integrate mediation into the legal framework, providing parties with viable alternatives to litigation and fostering a culture of amicable dispute resolution.

CHALLENGES TO EFFECIVE MEDIATION IN INDIA

Mediation, as an alternative dispute resolution (ADR) mechanism, offers a promising avenue for resolving disputes amicably. However, its effective implementation in India faces several challenges, particularly in the legislative domain.

5.1.1. Public Perception of Mediated Settlements

The graph illustrates survey responses on the perceived reliability of mediated settlements compared to court judgments, highlighting significant trust issues in adopting mediation as an alternative dispute resolution mechanism. Among the 121 respondents, approximately 35.5% believe that mediated settlements are not as reliable as court judgments. This skepticism likely stems from the perception that court judgments carry greater authority due to their formal structure and legal enforceability, which mediation outcomes might appear to lack. Court judgments are seen as binding and final, while mediated settlements are often perceived as less authoritative, despite legal advancements such as the Mediation Act, 2023, which ensures their enforceability.

Around 28.9% of respondents expressed uncertainty regarding the reliability of mediation. This hesitation reflects a broader lack of awareness about how mediation works and its potential benefits. Mediation, though cost-effective, confidential, and time-efficient, is still underutilized due to limited understanding of its processes and outcomes. This uncertainty also highlights a gap in public education about mediation, contributing to hesitation in opting for it as a dispute resolution method.

A smaller proportion, 19.8%, believe that mediation is reliable only for certain types of disputes. This indicates that mediation is often viewed as suitable for low-stakes or straightforward cases but not for high-stakes or complex disputes requiring strong legal oversight. This perception limits mediation’s adoption to less contentious or simpler cases, reducing its utility in the broader spectrum of dispute resolution.

Only 15.7% of respondents fully trust mediated settlements as being reliable. This low percentage underscores the systemic challenges faced by mediation in building public confidence. Factors such as a lack of standardized mediator training, limited institutional infrastructure, and a general trust deficit in the neutrality and professionalism of mediators contribute to this distrust. Many individuals fear that mediation may not guarantee impartiality or enforceable outcomes, especially in the absence of widespread awareness of the legal provisions supporting mediation agreements.

Mediation also faces cultural resistance in India, where traditional reliance on courts for dispute resolution creates a bias against alternative methods. Court judgments are deeply ingrained as the preferred means of achieving justice, which positions mediation as a less legitimate option. Furthermore, enforceability concerns remain a significant barrier despite the Mediation Act, 2023, which explicitly provides legal backing to mediated settlements. Many individuals are unaware of these legislative safeguards, which further hampers their confidence in mediation.

To address these challenges, public education campaigns are necessary to increase awareness of mediation's benefits and enforceability. Promoting mediator training and accreditation can build trust by ensuring professionalism and neutrality. Sharing successful mediation case studies can also demonstrate its efficacy and reliability. Legislative outreach emphasizing the enforceability of mediated agreements can further enhance public confidence. By overcoming these barriers, mediation can establish itself as a trusted and reliable alternative to court proceedings in India.

REASONS FOR LIMITED BELIEF IN MEDIATED SETTLEMENTS

1.      Perceived Lack of Authority

Mediated settlements may not be seen as authoritative compared to court judgments, which come with the weight of the judicial system. People often believe that a court decision is final and enforceable, whereas mediated agreements might appear to lack legal binding force despite recent legislative changes like the Mediation Act, 2023.

2.      Trust Deficit in Mediators

Concerns about mediator impartiality or professionalism can lead to skepticism. In India, a lack of accreditation systems for mediators contributes to this issue, making parties question the credibility of the process.

3.      Cultural Preference for Litigation

India has a long-standing tradition of relying on courts for dispute resolution. This cultural bias makes mediated settlements seem less legitimate or authoritative.

4.      Awareness and Knowledge Gaps

A significant portion of the population is unaware of how mediation works and its potential benefits, such as cost-effectiveness, confidentiality, and time efficiency. This lack of understanding fosters distrust and uncertainty.

5.      Concerns About Enforceability

While mediated agreements are legally enforceable under the Mediation Act, 2023, many people remain unaware of this provision. Fear of non-compliance by the opposing party also discourages trust in mediated outcomes.

6.      Suitability for Specific Disputes

There’s a perception that mediation is not suitable for complex or contentious disputes, such as those involving significant monetary stakes, intricate legal issues, or severe personal grievances.

GAPS IN LEGISLATIVE FRAMEWORKS

India's legislative framework for mediation has historically been fragmented. Prior to the enactment of the Mediation Act, 2023, mediation provisions were scattered across various statutes, leading to inconsistencies and ambiguities. For instance, while the Arbitration and Conciliation Act, 1996, addressed conciliation, it did not comprehensively cover mediation. This lack of a unified legal framework resulted in uncertainties regarding the enforceability of mediated settlement agreements and the standardization of mediation procedures.

The absence of a dedicated mediation law led to several issues:

• Enforceability of Settlement Agreements: Without clear legislative backing, parties often faced challenges in enforcing mediated settlements, leading to reluctance in opting for mediation.

• Lack of Standardized Procedures: The absence of uniform guidelines resulted in varied mediation practices, affecting the quality and predictability of outcomes.

• Limited Institutional Support: Without a robust legal framework, the development of mediation institutions and training programs was hindered, leading to a shortage of qualified mediators.

The enactment of the Mediation Act, 2023, aims to address these gaps by providing a comprehensive legal framework for mediation in India. The Act seeks to standardize procedures, ensure the enforceability of settlement agreements, and promote the development of mediation institutions and training programs.

INSTITUTIONAL BARRIERS

Several institutional barriers impede the effective practice of mediation in India:

• Lack of Trained Mediators: There is a significant shortage of professionally trained mediators. Many existing mediators lack formal training, leading to variations in the quality of mediation services. This inconsistency undermines confidence in the mediation process.

• Inadequate Infrastructure: Many regions lack dedicated mediation centers equipped with necessary facilities. This scarcity limits access to mediation services, especially in rural and semi-urban areas.

• Limited Awareness and Acceptance: Both the public and legal professionals often have limited awareness of mediation's benefits. This lack of understanding leads to a preference for traditional litigation over mediation[28].

ESTIMATED TIME TO BUILD INFRASTRUCTURE AND ANALYSIS

Addressing these institutional barriers requires a concerted effort and time investment:

• Training Mediators: Establishing comprehensive training programs and certifying mediators could take approximately 3 to 5 years. This timeline accounts for developing curricula, training trainers, and certifying a sufficient number of mediators to meet demand.

• Developing Infrastructure: Setting up dedicated mediation centers across the country, especially in underserved areas, may require 5 to 7 years. This period includes planning, funding allocation, construction, and operationalization.

Raising Awareness: Implementing nationwide awareness campaigns and integrating mediation education into legal studies could span 2 to 4 years. This effort aims to shift cultural perceptions and encourage acceptance of mediation as a viable dispute resolution method[29].

Lack of Awareness and Education in Mediation

Mediation, as an alternative dispute resolution (ADR) mechanism, offers numerous benefits, including cost-effectiveness, time efficiency, and the preservation of relationships. However, its potential remains underutilized in India due to insufficient awareness and education among businesses and the general public.

Insufficient Awareness of Mediation Among Businesses and the Public

Despite the advantages of mediation, there is a notable lack of awareness among Indian businesses and the public regarding its processes and benefits. Many perceive litigation as the default method for dispute resolution, often overlooking mediation as a viable alternative. This limited awareness stems from several factors:

• Cultural Preferences: Traditional reliance on court systems and a perception that judicial decisions carry more authority contribute to the preference for litigation over mediation.

• Limited Exposure: Many individuals and businesses have not been exposed to successful mediation cases, leading to skepticism about its effectiveness.

• Lack of Information: There is a scarcity of accessible information and resources that explain mediation processes and their benefits, further hindering its adoption[30].

Need for Education and Training in Mediation Practices

To bridge the awareness gap, comprehensive education and training in mediation practices are essential:

• Professional Training Programs: Establishing structured training programs for mediators can enhance the quality and credibility of mediation services. Institutions like the Indian Institute of Corporate Affairs (IICA) offer certified mediator programs aimed at developing skilled professionals.

• Incorporating Mediation in Legal Education: Integrating mediation courses into law school curricula can equip future legal professionals with the necessary skills and knowledge to advocate for and facilitate mediation. The National Law School of India University (NLSIU) offers specialized courses in mediation, reflecting this approach.

• Public Awareness Campaigns: Organizing seminars, workshops, and media campaigns can inform the public and businesses about the benefits of mediation. Initiatives like the Indian Mediation Week aim to promote mediation awareness across the country.

EPILOGUE& SUGGESTIONS

Legislative Advancements and Judicial Support

One of the key developments that supports mediation in India is the introduction of the Mediation Act, 2023. This new law aims to create a clear framework for mediation, making it easier for businesses and individuals to use it effectively. The Act ensures that mediated agreements are legally enforceable, which helps increase trust in the process. Additionally, existing laws like the Arbitration and Conciliation Act, 1996, and the Commercial Courts Act, 2015, also support mediation by promoting it as an alternative to traditional court proceedings. These laws encourage businesses to seek mediation before filing lawsuits in court, which helps reduce the burden on the judicial system and ensures faster resolutions.

The Indian judiciary has played a significant role in promoting mediation through the establishment of court-annexed mediation centers, such as the ones in Delhi and Bangalore. These centers have been successful in resolving a large number of disputes, proving that mediation can be a practical alternative to litigation. Moreover, the judiciary has supported mediation through various rulings, encouraging parties to attempt mediation before heading to court.

Advantages of Mediation

Mediation offers several key advantages, especially in commercial disputes. First, it is cost-effective: legal fees in litigation can be expensive, and mediation generally costs much less. Second, it is faster: court cases often take years to resolve, while mediation can help settle disputes in a matter of weeks or months. Third, mediation provides confidentiality, meaning the details of the dispute and settlement remain private. This is especially important for businesses that want to avoid publicizing sensitive information. Finally, mediation helps in preserving relationships between the parties involved. Since the process is less adversarial than going to court, it often allows businesses to maintain positive working relationships even after a dispute has been resolved.

Globally, countries like Singapore, the United States, and the United Kingdom have successfully implemented mediation frameworks. These countries offer valuable lessons for India in terms of how to build support for mediation, create effective legal frameworks, and ensure the process is trusted by businesses. For example, Singapore has become a global leader in mediation by creating institutions that provide high-quality mediation services, which could be a model for India to follow.

Challenges to Mediation in India

Despite the benefits of mediation, several challenges have hindered its widespread adoption in India. One of the main issues is the lack of awareness about mediation among businesses and the general public. Many businesses are still unfamiliar with how mediation works or the advantages it offers. In India, there is also a cultural preference for litigation, as people tend to view court judgments as more authoritative and final compared to mediated agreements. Additionally, businesses are often concerned about the enforceability of mediation agreements, fearing that they may not be as reliable as court orders.

Before the Mediation Act, 2023, India's legal framework for mediation was fragmented. Mediation laws were spread across different statutes, leading to confusion and inconsistency in practice. The absence of a dedicated law for mediation made it difficult to establish clear procedures and standards for the process. This also created uncertainty regarding whether mediated settlements would hold the same weight as court judgments.

Another challenge is the lack of trained mediators. Mediation requires skilled professionals who can facilitate discussions between disputing parties, but India faces a shortage of such trained individuals. Moreover, mediation infrastructure is insufficient, especially in rural and semi-urban areas, making it difficult for businesses in those regions to access mediation services.

Recommendations for Improving Mediation

To overcome these challenges, several steps need to be taken:

1. Increase Awareness: There needs to be a nationwide effort to educate businesses and the public about the benefits and processes of mediation. This can be done through campaigns, workshops, and media outreach. Highlighting successful cases of mediation can help show its value and encourage more people to consider it.

2. Improve Training and Infrastructure: The availability of skilled mediators is crucial to the success of the mediation process. India needs to establish training programs that provide professional certifications for mediators. It is also essential to set up more mediation centers across the country, especially in smaller cities and towns, to ensure that people have access to mediation services.

3. Strengthen Legal Support: The legal framework should be further strengthened to make mediation agreements more reliable. One key area of improvement is ensuring that mediated settlements are enforceable in the same way that court decisions are. This would help build trust in the mediation process and encourage businesses to opt for it.

4. Cultural Shift: There needs to be a change in how businesses and society view mediation. People need to understand that mediation is not about compromising on justice but about finding fair and efficient solutions to disputes. This can be achieved by integrating mediation training into law school curricula and encouraging businesses to adopt mediation as part of their regular dispute resolution process.

The Future of Mediation in India

Looking ahead, mediation has the potential to play a major role in resolving commercial disputes in India. If the necessary reforms are implemented—such as improving awareness, increasing training, building infrastructure, and ensuring stronger legal support—mediation could become the go-to method for resolving disputes in the business world. This would not only reduce the burden on the court system but also promote quicker, fairer, and more collaborative solutions for businesses.

By learning from successful international models and addressing the current challenges, India can establish mediation as a mainstream method of dispute resolution. This would benefit businesses by saving time and money, preserving relationships, and providing more control over the dispute resolution process. With continued reforms and widespread support from all stakeholder’sgovernment, judiciary, legal professionals, and businessesmediation can become a cornerstone of India's commercial dispute resolution system.

The trajectory of mediation in India has seen substantial advancements, particularly with the enactment of the Mediation Act, 2023. However, there remains significant room for growth to establish mediation as the preferred method for resolving commercial disputes. A multi-pronged approach targeting institutional frameworks, legislative enhancements, and awareness-building is essential.

SUGGESTIONS

Strengthening Institutional Infrastructure

To ensure that mediation becomes more accessible and effective, robust institutional support is critical.

• Expansion of Mediation Centers: Mediation centers should be established across rural and semi-urban areas to ensure equitable access. These centers can act as localized hubs for dispute resolution, reducing the reliance on litigation in underserved regions.

• Technology Integration: Leveraging technology to establish online dispute resolution platforms is key to making mediation efficient and accessible. Virtual mediation services can overcome geographical barriers, reduce costs, and provide convenience for parties involved in disputes.

• Standardized Accreditation for Mediators: The establishment of a unified accreditation body will enhance the quality and consistency of mediation practices. Uniform certification standards can build trust among stakeholders and ensure professional service delivery.

Enhancing Legislative Support

Strengthening the legal framework governing mediation can address many of the current ambiguities and enhance its credibility.

• Amend Existing Laws: Refining the Mediation Act, 2023, to address procedural ambiguities and enforcement mechanisms will create a more predictable legal environment for mediation.

• Mandatory Pre-Litigation Mediation: Expanding mandatory pre-litigation mediation beyond commercial disputes to include family, community, and other civil disputes will broaden its application and utility.

• Strengthening Enforcement Mechanisms: Ensuring that mediated agreements are seamlessly enforceable as court decrees will enhance confidence in mediation as a reliable resolution mechanism.

Promoting Awareness and Education

The adoption of mediation is often hindered by a lack of awareness and understanding. Educational initiatives can foster a culture of acceptance.

• Public Awareness Campaigns: Launching targeted campaigns to highlight mediation’s benefitsconfidentiality, cost-effectiveness, and speedcan help address misconceptions and encourage adoption.

• Incorporating Mediation in Education: Integrating mediation into law school and business curricula will ensure that future legal and business professionals are equipped with the knowledge and skills to promote its use.

• Targeted Training Programs: Continuous professional development programs for mediators will ensure they remain updated on the latest practices and standards in the field.

Judicial Advocacy

The judiciary plays a pivotal role in promoting mediation through endorsement and structured support.

• Judicial Promotion of Mediation: Courts can encourage mediation by emphasizing its advantages in judgments and orders, as seen in landmark cases like Salem Advocate Bar Association v. Union of India.

• Court-Annexed Mediation Centers: Increasing the number of court-annexed mediation centers can provide structured environments for amicable dispute resolution. These centers should also receive adequate resources and training to function effectively.

Corporate Engagement

Businesses are critical stakeholders in adopting and mainstreaming mediation.

Mediation Policies in Businesses: Companies should integrate mediation as part of their internal dispute resolution policies, setting an example for others to follow.

Incentives for ADR Usage: Offering tax incentives or other benefits for companies that successfully resolve disputes through mediation can encourage wider adoption.

Measuring Impact

To ensure the success and continual improvement of mediation, systematic evaluation is necessary.

Data-Driven Strategies: Regular collection and analysis of data on mediation outcomes will provide insights into its effectiveness and areas for improvement.

Stakeholder Feedback: Engaging businesses, mediators, and judicial representatives in shaping policies will ensure that the system remains inclusive and responsive to evolving needs.

By implementing these recommendations, India can fully realize the potential of mediation, fostering a culture of collaboration and trust. Mediation can not only alleviate the burden on courts but also provide a faster, more efficient, and mutually beneficial path to justice.

* Assistant Professor, KLE Law College, A Constituent College under KLE Technological University, Bengaluru

** Student, KLE Law College, Bengaluru.

*** Assistant Professor, KLE Law College, Bengaluru

[1]Fali S Nariman, 'Growth of ADR in India: Challenges and Prospects' (2020) Journal of Indian Law Institute.

[2]Government of India, The Mediation Act, 2023 https://www.indiacode.nic.in accessed 2 November 2024.

[3]Mediation Act 2023, s 4.

[4]Mediation Act 2023, s 10.

[5]Mediation Act 2023, s 12.

[6]Mediation Act 2023, s 17.

[7]Mediation Act 2023, s 22.

[8]Commercial Courts Act 2015, s 12A.

[9]Arbitration and Conciliation Act, s 30.

[10] PON Staff, ‘Types of Mediation: Choose the Type Best Suited to Your Conflict’ (Program on Negotiation, Harvard Law School, 2023) https://www.pon.harvard.edu/daily/mediation/types-mediation-choose-type-best-suited-conflict/ accessed 16 November 2024.

[11]Aumirah.com, ‘Global Mediation Landscapes: A Comparative Study of Legal Frameworks’ (Aumirah, 2023) https://aumirah.com/global-mediation-landscapes-a-comparative-study-of-legal-frameworks/accessed 16 November 2024.

[12]National University of Juridical Sciences, ‘Challenges to ADR in India’ (NUJS, 2023) https://www.nujs.edu/wp-content/uploads/2023/04/Vol-7-Issue-4-5.pdf accessed 16 November 2024.

[13] Jindal Global Law School, ‘A Critical Study of Mediation Process in India: The Challenges and Potential Solutions’ (JGU ADR Initiative, 2023) https://jgu.edu.in/mappingADR/a-critical-study-of-mediation-process-in-india-the-challenges-and-potential-solutions/ accessed 16 November 2024.

[14]The Legal Quorum, ‘ADR Mechanism in India: Achievements and Challenges’ (The Legal Quorum, 2023) https://thelegalquorum.com/adr-mechanism-in-india-achievements-and-challenges/ accessed 16 November 2024.

[15] Osborne Clarke, ‘UK Signs the Singapore Convention on Mediation’ (Osborne Clarke, 2023) https://www.osborneclarke.com/insights/uk-signs-singapore-convention-mediation accessed 16 November 2024.

[16] Singapore Convention on Mediation, ‘Overview and Handbook’ (Singapore Convention, 2019) https://www.singaporeconvention.org/sites/singaporeconvention.org/files/SMU%20SOL%20Singapore%20Convention%20Mediation%20Handbook.pdf accessed 16 November 2024.

[17]SCC Online, ‘Mediation: The Future of Dispute Resolution’ (SCC Online, 2020) https://www.scconline.com/blog/post/2020/06/25/mediation-the-future-of-dispute-resolution/ accessed 16 November 2024.

[18]Bangalore Mediation Centre, ‘Annual Report 2023’ (BMC, 2023).

[19] Salem Advocate Bar Association v. Union of India (2005) 6 SCC 344.

[20]Code of Civil Procedure 1908, s 89.

[21] Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd. (2010) 8 SCC 24.

[22] Nyaya Degula, ‘Bangalore Mediation Centre: About Us’ (Nyaya Degula, 2023) https://nyayadegula.kar.nic.in/aboutus.html accessed 16 November 2024.

[23]Arbitration and Conciliation Act 1996, s 73.

[24]Commercial Courts Act 2015, s 12A.

[25]Arbitration and Conciliation (Amendment) Act 2015, s 29A.

[26] Arbitration and Conciliation (Amendment) Act 2019, s 43B.

[27] Arbitration and Conciliation (Amendment) Act 2015, s 29A https://www.mondaq.com/india/arbitration-dispute-resolution/494184/critical-analysis-of-the-arbitration-and-conciliation-amendment-act-2015 accessed 16 November 2024.

[28] Vidhi Legal Policy, ‘Strengthening Mediation in India: A Report’ (Vidhi Centre for Legal Policy, 2016) https://vidhilegalpolicy.in/wp-content/uploads/2019/05/26122016_StrengtheningMediationinIndia_FinalReport.pdf accessed 16 November 2024.

[29] CBCL NLIU, ‘Mediation in India: Challenges, Recommendations, and Relevance in Post-COVID Scenario’ (CBCL NLIU, 2021) https://cbcl.nliu.ac.in/contemporary-issues/mediation-in-india-challenges-recommendations-and-relevance-in-post-covid-scenario/ accessed 16 November 2024.

[30] CBCL NLIU, ‘Mediation in India: Challenges, Recommendations, and Relevance in Post-COVID Scenario’ (CBCL NLIU, 2021) https://cbcl.nliu.ac.in/contemporary-issues/mediation-in-india-challenges-recommendations-and-relevance-in-post-covid-scenario/ accessed 16 November 2024.