Concept of Mediation

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Concept of Mediation

Mediation is a widely practiced method of out of court dispute settlement. It is becoming a favoured dispute resolution mechanism across the world. In mediation, a neutral professional trained in conflict de-escalation designs a process of assisted negotiation between parties ensuring effective dialogue and solution focused discussions. The parties mutually agree on the terms of settlement and mode of enforcement. The terms of settlement may be recorded in the form of an arbitral award or conciliation settlement with the assistance of the CMC to make it enforceable like a court decree.

Role of a Mediator includes

  • Designing mediation process and create effective communication channels
  • Molding the process to craft agreement between parties
  • Helping the parties brainstorm win-win solutions
  • Moving the parties beyond ‘right’ and ‘wrong’


  • Fast : Resolution of disputes through mediation may take approximately three months. Based on our survey more than 85% of corporates were dissatisfied with the time and cost involved in resolution of disputes through litigation, arbitration and enforcement of arbitral awards.
  • Cost effective : Mediation not only saves costs related to dispute resolution but also indirect costs to company such as time spent by paid employees in assisting dispute resolution, time and cost of sustaining business in dispute situations and returns on capital which could have been earned by company on receivables stuck due to prolonged litigation.
  • Control over Outcome : Participants have ultimate control and decision-making power over the outcome of the mediation, unlike any other adjudicatory process where parties submit the outcome to an adjudicator who does not have any skin in the game.
  • Private and Confidential : All information volunteered by parties in mediation is confidential. All discussions, offers, counter offers and settlement discussions undertaken by parties during mediation do not in any way result in waiver of legal rights otherwise existing. A participant in mediation or a mediator cannot be called to court to give witness as to anything discussed in mediation process. Even in court annexed mediations, it is a standard best practice of courts in India to not publish terms of settlement in public domain.
  • Voluntary process : The process of mediation is participant driven and completely voluntary. No party is coerced to participate in the process or accept a settlement which is not win-win for them.
  • Preserves business relationship : When dispute arises, our first natural response should be ‘Let us find a solution’ and not ‘see you in court’. Opting for an adversarial process of dispute resolution without attempting to settle the dispute results in breakdown of business relations. Parties lose clients, vendors, contractors or business partners chosen after investment of lot of time, energy, finances and other capital resources. Instead of re-doing the entire process of choosing a new business connects, use mediation to strengthen existing business connects, explore new synergies and collaborate better. Breakdowns are inevitable but we should also emphasize on clean closures.
  • Interest-based process of dispute resolution : In dispute situations we tend to think linear in terms of ‘What we want and what the other party is not willing to give us’. Even in adversarial processes the adjudicator decides on ‘Who gets what’. In mediation, parties with the assistance of a trained facilitator explore ‘why they want something’ and try to satisfy the ‘why’ instead of the ‘what’.
  • No compromise : Facilitates negotiation between disputing parties enabling them to come to a negotiated agreement that best fulfils their business objectives and fulfils their interests. If parties do not like the options available, they are free to walk out without settling the dispute. There is no room for compromise. There is only room for business sustenance and growth.
  • Maintains Goodwill : Resolve disputes behind closed doors. This helps build brand image and gives a feeling of stability to stakeholders and customers.

Advantages of Mediation – A comparative study

Factors Litigation Arbitration Mediation
Time 10-15 years 1-5 years 90 days
Cost High Moderate Low
Control Parties are passive observers Parties are passive observers
Power to appoint arbitrator
Parties are active participants who find their own solutions mutually and control the final outcome
Outcome Win-Lose Win-Lose Win-Win
Confidentiality Low Moderate (Since most awards challenged) High
Procedural complexity Code of Civil Procedure and Indian Evidence Act Arbitration and Conciliation Act, 1996 Facilitated Negotiation,
No written submissions to mediator
Finality Judicial Order enforced through court proceedings Award enforceable through court proceedings Settlement agreement executed only when mutually agreed upon
Enforceable as contract before court
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