Mandatory Pre-Litigation Mediation under the Mediation Bill, 2021

So far, pre-litigation mediation was mandatory in matters of commercial disputes of Specified Value as stipulated under the provisions of section 12A of the Commercial Courts Act, 2015, and the rules made thereunder.

On 2nd August 2023, Rajya Sabha passed the Mediation Bill, 2021 marking a new beginning for the Mediation as a more effective and a time bound procedure. With the enactment of the Mediation Bill, 2021, it will be mandatory to initiate pre-litigation mediation before filing any suit or proceedings of civil or commercial nature in any court, shall take steps to settle the disputes by pre-litigation mediation in accordance with the provisions of this Act.

The said Bill has the effect of broadening the scope of mediation and its acceptability and has the effect of making it a more cost-effective mechanism in comparison with the other modes of dispute resolution. The Bill further also accepts Online Mediation as a mode of the Mediation.

Section 4 of the Mediation Bill, 2021 defines the term “mediation” as “a process, whether referred to by the expression mediation, pre-litigation mediation, online mediation, community mediation, conciliation or an expression of similar import, whereby party or parties, request a third person referred to as mediator or mediation service provider to assist them in their attempt to reach an amicable settlement of a dispute”. Further in terms of Section 21 of the Mediation Bill, 2021, the Bill mandates the mandatory conclusion of the mediation process within one hundred and eighty (180) days from the first date fixed for appearance before the Mediator which may be extendable at the option of parties to a further capped period of 180 days. This together with mandatory pre-litigation mediation specifically sets out the entire mediation process as a highly promising affair for litigants. It is necessary to also understand that this will have a huge impact on the cost regime and perhaps now the Courts will start awarding the actual costs incurred in the litigation after the failure of the mediation process to deter any whimsical refusal to mediate.

Contributed by: Ms. R. Gayathri Manasa, Advocate