Mediation

Introduction
Mediation is an organised, voluntary and party‑centric dispute resolution process in which a neutral third person — the mediator — assists the parties to negotiate a mutually acceptable settlement. In India, mediation has moved from being an informal, peripheral mechanism to a mainstream tool for case management, decongestion of courts and commercial risk‑management. For practitioners it is simultaneously a settlement route and a strategic instrument: a means to preserve business relationships, secure tailored remedies and obtain quick, enforceable outcomes without protracted litigation.

Core Legal Framework
– Code of Civil Procedure, 1908
– Section 89 CPC — the primary statutory gateway for court‑referred alternative dispute resolution (ADR). Section 89 provides that where it appears to the court that there exist elements of a settlement which may be acceptable to parties, the court may refer the case for alternative dispute resolution — arbitration, conciliation, judicial settlement (including Lok Adalat) or mediation.
– First Schedule to the CPC — Order X (and notably Rule 1A of the relevant Order) and Order XXIII — procedural rules for referring suits to ADR and for recording compromise/consent. Practically, settlements reached by mediation can be recorded and made executable as consent decrees under Order XXIII.
– Legal Services Authorities Act, 1987
– Establishes Lok Adalats which operate as settlement forums; settlements through Lok Adalats are binding and enforceable, and the Act provides for settlement of disputes outside formal trial.
– Arbitration & Conciliation Act, 1996
– While not mediation‑specific, it intersects with mediation: (i) parties can agree to mediate even when arbitration clauses exist; (ii) mediated settlements arising from conciliation can be converted into consent awards or recorded and enforced; and (iii) many commercial contracts combine mediation‑then‑arbitration clauses.
– Institutional and judicial frameworks
– Supreme Court Mediation and Conciliation Project Committee (MCPC) and numerous court‑annexed and institutional mediation centres (Supreme Court Mediation Centre, Delhi Mediation Centre, state court mediation centres) implement mediation norms and pilot procedures.
– Legislation in legislative process (contextual)
– Successive versions of national Mediation legislation introduced in Parliament (e.g., the Mediation Bill) have sought to provide statutory standards on confidentiality, enforceability of mediated settlements and court‑designated enforcement mechanisms. Keep abreast of the latest enactment or final text in force in your practice area.

Practical Application and Nuances
How mediation is used in everyday judicial practice
– Court‑referred mediation under Section 89 CPC
– Trigger: At case management stages or at pre‑trial, when the judge, using a structured checklist, finds elements of a possible settlement.
– Procedure: Court issues a referral order, stays further proceedings for a fixed period and directs the parties to attend mediation at a designated centre or before an approved mediator. The mediator conducts sessions (joint, separate/caucus sessions), prepares minutes of each session and strives for a settlement. If the parties settle, they file the settlement terms; the court may record a consent decree (Order XXIII) making the settlement an executable court order.
– Example: In a landlord‑tenant suit, a court may refer the matter to mediation for payment plan and vacating timelines instead of lengthy possession proceedings; once parties agree on a staged payment and extension timeline, the court records a consent decree enforceable by execution.
– Pre‑litigation and contractual mediation
– Many commercial contracts include a mediation clause (mediation before arbitration/litigation). Parties typically follow a defined notice, cooling‑off and mediation timetable. If mediation fails, the dispute proceeds to arbitration or court as agreed.
– Example: In a supply agreement dispute, the contract may require a 60‑day mediation attempt; parties use a commercial mediation institution, agree on interim supply and an escrow, and record a settlement that avoids stoppage of business.
– Mediation outcomes and form of enforcement
– Settlement agreement: The usual immediate outcome is a private settlement agreement (memorandum of understanding). To secure enforceability, practitioners should aim to convert agreed terms into:
– Consent decree/compromise recorded under Order XXIII CPC (when in court).
– An arbitral consent award (where an arbitration clause and arbitral tribunal exist).
– A registered settlement deed (commercial practice to strengthen enforceability and meet stamp duty/formality issues).
– Timing: If parties settle during a court‑referred mediation, file for recording without delay. If a settlement is recorded as consent decree, thereafter the decree is executable as a decree of the court.
– Evidence and confidentiality
– While mediation sessions are intended to be confidential, once parties opt to convert the settlement into a consent decree, the terms may become part of the court record. Practitioners must therefore distinguish between privileged mediation communications (offers, candid admissions in caucus) and formal settlement terms to be recorded.
– Practical evidence requirement to prove a mediated settlement: signed settlement document, minutes of mediation, mediator’s certificate (where issued), and court order recording the settlement. To resist enforcement on grounds of coercion/absence of authority, the opposing party must produce evidence demonstrating lack of voluntary consent or fraud.
– Mediator appointment and neutrality
– Court‑annexed mediation centres maintain panels; parties can also appoint private mediators. For commercial mediation, use neutral mediators with subject‑matter expertise and procedural credentials. For enforcement and ethical safety, ensure mediator disclosure of conflicts.
– Use of caucus, technical experts and counsel
– Caucus (private meetings) is a frequently used technique to probe interests. Where claims are technical (e.g., construction, patents), bring neutral experts to advise realistic ranges of outcome and to draft implementable settlement mechanics (payment schedules, escrow, inspection regimes).
– Interaction with interim reliefs and limitation
– Mediation does not prejudice parties’ right to seek urgent interim relief (injunctions, preservation). If mediation lapses, ensure preservation steps were taken to avoid limitation pitfalls.

Landmark Judgments
– Salem Advocate Bar Association v. Union of India, (2005) 6 SCC 344
– Principle: The Supreme Court recognised and endorsed the institutionalisation of ADR mechanisms; it has been cited repeatedly to support court‑managed ADR initiatives. It underlined judicial encouragement of out‑of‑court settlements to reduce backlog and to respect party autonomy in dispute resolution.
– Practical lesson: Courts have constitutional and administrative support for actively referring matters to mediation where settlement elements exist.
– Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (JV) & Ors., (2010) 8 SCC 24 (selected aspects)
– Principle (as often relied upon in ADR jurisprudence): The Supreme Court has repeatedly emphasised clarity on the sanctity of consensual dispute resolution and the need for the judicial process to respect finality of settlements arrived at by parties. Courts will give effect to clear consensual settlements and will scrutinise allegations of coercion or mala fide conduct on the record.
– Practical lesson: Ensure that mediated settlements are documented clearly, executed by authorised signatories and free of indicia of coercion to achieve judicial imprimatur and finality.
– High Court pronouncements and MCPC directions
– Various High Courts (Delhi, Bombay, Madras, Karnataka) and the Supreme Court’s MCPC have issued procedural guidelines for court‑annexed mediation — appointment of mediators, time frames, fees and recording of settlement. These local rules materially affect practice: always consult the mediation rules of the forum or institution where the dispute lies.

Strategic Considerations for Practitioners
– Drafting and diligence
– Mediation clause: Draft clear mediation clauses — specify notice mechanism, mediation institution, mediator selection process, time limits, language, seat, confidentiality, and “mediation then arbitration/litigation” sequence.
– Authority to settle: Before mediation, obtain a written mandate from the client specifying settlement parameters (ceiling, non‑monetary remedies, time‑lines). Confirm board/authority approval where corporate clients are concerned.
– Documentation: Ensure settlement terms are precise (payment dates, interest, security, liquidated damages for non‑performance, dispute escalation for implementation). Include step‑in clauses, specific performance triggers and costs allocation.
– Managing confidentiality and admissions
– Protect privileged admissions: Insert a clear protective statement at the outset and use mediator’s confidentiality undertakings. Avoid voluntary admissions in joint sessions that you are not prepared to be recorded in a consent decree.
– Record only what you intend to be enforceable: Minutes of mediation should be limited; the final settlement document should be the operative instrument.
– Tactics during mediation
– BATNA assessment: Prepare a realistic Best Alternative to a Negotiated Agreement (BATNA) — know the litigation risks, likely timelines and cost to strengthen negotiation posture.
– Use caucus intelligently: Private sessions allow exploration of real interests (liquidity, reputational concerns) and creative remedies (structured payments, non‑compete carve‑outs, escrow).
– Consider interim measures: If immediate relief is needed (e.g., to preserve status quo or assets), obtain appropriate orders before or during mediation; do not rely solely on the mediator for urgent relief.
– Avoiding common pitfalls
– Do not treat mediation as a purely delay tactic — courts may penalise mala fide referrals or repeated futile references.
– Beware of informal settlements without proper authority or execution formalities — these are vulnerable to attack on grounds of lack of consent or stamp duty irregularities.
– Ensure enforceability in cross‑border cases: If one party is foreign‑seated, ensure the settlement contemplates enforcement mechanisms (consent award, choice of jurisdiction, courts’ jurisdiction).
– Enforcement strategy
– Where settlement is recorded as consent decree: proceed with execution under the CPC.
– Where settlement is a private deed: consider registration, inclusion of arbitration clause for enforcement, and use of Section 8/Section 48 mechanisms if arbitration path is chosen.
– For monetary settlements, implement escrow, bank guarantees or performance bonds to reduce risk of default.
– Ethical and professional considerations
– Counsel must maintain independent advice to clients; consent cannot be extracted through undue pressure by mediator or opposing counsel.
– Decline mediation where there is an evident conflict of interest in the mediator or where the party lacks capacity to consent.

Conclusion
Mediation today is an indispensable tool in the Indian lawyer’s toolkit. Statutorily underpinned by Section 89 CPC, supported by institutional infrastructure (MCPC and court mediation centres) and recognised by the judiciary, mediation offers rapid, flexible and tailored dispute resolution. Success in mediation requires preparation — mandate and authority, carefully drafted clauses and settlement terms, strategic use of caucuses and experts, and iron‑clad documentation to secure enforceability. For practitioners, mastery of mediation is not merely about negotiating a win — it is about converting negotiated outcomes into durable, executable instruments that meet the client’s legal and commercial objectives.