India’s legal landscape is witnessing a shift as small businesses and startups increasingly incorporate mediation into their contractual dispute resolution clauses, Union Law and Justice Minister Arjun Ram Meghwal announced at the inaugural National Mediation Conference held in New Delhi on Saturday.
Highlighting the benefits of mediation, Meghwal described it as a cost-effective and swift mechanism for resolving conflicts, in contrast to more adversarial and expensive methods like arbitration. “We need more mediation and less litigation to enhance the investment climate in India,” the minister stated, adding that this change could positively influence how investors perceive the country’s legal environment.
The conference also saw the launch of the Mediation Association of India — a collective of legal professionals and mediation experts. This body will work closely with the government to propose procedural norms and best practices within the field of mediation.
A key component of the government’s broader strategy is the implementation of the Mediation Act 2023, which calls for the establishment of the Mediation Council of India (MCI). Although the council is yet to be formed, it is expected to play a pivotal role in accrediting mediators, framing procedural guidelines, and overseeing mediation institutions across the country.
Solicitor General Tushar Mehta echoed the minister’s sentiments, emphasizing how widespread use of mediation could significantly reduce the case backlog in Indian courts, thereby improving access to timely justice.
President Droupadi Murmu also lent her support to the mediation initiative, advocating for the expansion of the Mediation Act to rural India. She urged that village panchayats be legally empowered to mediate local disputes, reinforcing the role of community-based conflict resolution.
The government’s increased focus on mediation follows a notable policy shift in June 2024, when the Department of Expenditure under the Union Finance Ministry advised government bodies to prefer mediation or litigation over arbitration. The advisory cited the high costs and prolonged nature of arbitration proceedings, suggesting that mediation offers a more economical and efficient alternative.
Traditionally, arbitration has been the go-to dispute resolution method in commercial contracts, offering legally binding decisions through third-party adjudication. Mediation, on the other hand, facilitates mutual agreement between disputing parties with the assistance of a neutral third party, without imposing a decision.
As India works to modernize its legal infrastructure and reduce the burden on its courts, mediation appears poised to become a cornerstone of commercial dispute resolution in the coming years.