The Mediation Act, 2023 gives India a comprehensive statutory framework for mediation for the first time. It covers institutional mediation, online mediation and community mediation, and establishes the Mediation Council of India to regulate mediators and mediation service providers.
The Act sets a timeline: mediation is to be completed within 120 days, extendable by up to 60 days by consent of the parties. Parties can withdraw from mediation after the first two sessions, which preserves the voluntary character of the process while ensuring a genuine attempt at settlement.
The most important feature for businesses is enforceability. A mediated settlement agreement signed by the parties and authenticated by the mediator is final and binding, and can be enforced in the same manner as a judgment or decree of a court. It can be challenged only on limited grounds — such as fraud, corruption, impersonation, or the dispute not being suitable for mediation — and within a fixed time.
Confidentiality is built in. What is said in mediation cannot be used in later arbitration or court proceedings, which allows parties to negotiate candidly without worrying that concessions will be used against them.
For commercial parties, the practical effect is that mediation is no longer an informal step with uncertain results. A settlement reached through mediation now carries real legal force, making mediation clauses — or mediation-first, arbitration-fallback clauses — a sensible default in most commercial contracts.