Mint explainer: what the new Mediation Council of India means for dispute resolution

Summary

India's new Mediation Council is expected to standardize out-of-court dispute resolution. Its success will depend on recognising service providers, improving access to mediation and easing pressure on courts.

The Mediation Council of India (MCI), a government body established under a 2023 law to regulate mediation, began functioning from its new offices at the Indian Law Institute in central New Delhi on Monday. The council is expected to regulate mediation service providers and mediators, set standards, accredit institutions, and promote mediation across India.

The Union law and justice ministry had notified provisions of the Mediation Act, 2023, relating to the qualifications of the council's members and part-time members before formally establishing the institution in late August this year.

Mint explains what mediation means for commercial disputes, what service providers expect from the MCI, and how it could help ease pressure on courts, which had roughly 35 million pending cases as of October.

What is mediation and how is it different from arbitration?

Mediation is one of several alternative dispute resolution (ADR) methods used globally, with the Mediation Act, 2023, serving as India's primary law on the subject. It is a form of dispute resolution outside the courts in which a neutral third party facilitates communication between disputing parties to help them reach a mutually acceptable settlement.

Arbitration, by contrast, is an adjudicatory process in which a neutral arbitrator hears the parties and delivers a binding decision, known as an award. In mediation, the parties retain control over whether to settle and on what terms.

How is mediation used in commercial disputes in India?

Under Section 12A of the Commercial Courts Act, parties seeking to institute a commercial suit must first attempt pre-litigation mediation for three months before proceeding to court. The period can be extended by another two months if both parties agree. The requirement does not apply when a party seeks urgent interim relief, such as an injunction.

Commercial disputes cover business-related matters including transactions between merchants, contracts, joint ventures, intellectual property, construction and infrastructure agreements, and certain shareholder disputes.

The number of pre-litigation mediations resulting in settlements rose from 167 of 18,080 cases (0.9%) in FY20 to 877 of 59,568 cases (1.4%) in FY25. In April-September FY26, 643 of 47,218 cases resulted in settlements, a rate of 1.3%, according to a written statement by Union law minister Arjun Ram Meghwal in the Rajya Sabha on 29 January 2026.

What do mediation service providers expect from the MCI?

Some mediation service providers have welcomed the council's operationalization but called for faster recognition of providers and institutions, a key MCI function.

The MCI could be a "transformative step" for institutional dispute resolution in India, said P Madhava Rao, registrar of the Hyderabad-based Amika Arbitration and Mediation Council (AAMC).

"AAMC looks forward to an expedited process for granting recognition to qualified Mediation Service Providers and Institutions. To optimise efficiency and avoid reinventing the wheel, the MCI can directly recognise entities that actively contributed inputs during the Rajya Sabha Committee consultations prior to the Bill's enactment -- whose records are already on file -- alongside institutions whose rules conform to international standards and are approved by UNCITRAL for mediation and arbitration," said Rao.

Mediation can either be conducted ad hoc between parties, or through a specialized institution which provides mediation services, including the choice of mediators from its panel, clear rules of procedure, and necessary infrastructure.

"The real opportunity now lies in translating this institutional framework into a thriving mediation ecosystem. While markets such as the US, UK and Singapore have made mediation an integral part of dispute resolution, India can bridge this gap by strengthening mediation institutions, building a skilled pool of mediators, increasing awareness among businesses and citizens, and encouraging greater adoption of mediation in commercial disputes," said Krunal Modi, founding member and chief of staff, Presolv360, a Mumbai-based mediation service provider.

What can the MCI do to improve ease of doing business in India?

Contract enforcement, one of the metrics used by the World Bank in its erstwhile Doing Business Report, has long been a challenge for India. The country's overall ranking improved to 63rd in the 2020 report, the last one published, from 77th in 2019. However, its ranking on enforcing contracts remained unchanged at 163rd in both years.

India's courts are already burdened with around 35 million pending cases, including more than 32 million in district courts, according to the National Judicial Data Grid.

Over the past decade, India has introduced reforms to encourage alternative dispute resolution methods such as arbitration and mediation. Since the Mediation Act became law in 2023, the government has stepped up efforts to promote faster dispute resolution, including by establishing the MCI to standardize the process.

The broader aim is to move from ad hoc dispute resolution towards an institutional system with recognized providers overseeing proceedings.

India has no government dataset tracking ADR cases. However, reports by high-level committees have described the country's arbitration and mediation ecosystem as largely ad hoc, with parties deciding procedural rules and appointing arbitrators and mediators themselves. Industry experts say this model can leave parties dissatisfied and prompt them to return to the courts through appeals.