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

The Mediation Council of India, or MCI, is a government body created under the Mediation Act, 2023. It began functioning from new offices at the Indian Law Institute in central New Delhi. Its purpose is to organize and strengthen mediation across India. Unlike a court or arbitrator, the council is not described as deciding individual disputes.

The MCI is expected to regulate mediation service providers and mediators. It will also set standards, accredit institutions, and promote mediation. The law ministry notified provisions covering the qualifications of the council’s members and part-time members before the institution was formally established in late August.

The council’s work could shape how mediation services operate nationwide. Providers are seeking quick recognition for qualified institutions and clearer institutional rules. Its effectiveness may influence whether mediation becomes a stronger alternative to court proceedings and helps reduce pressure on India’s heavily burdened courts.

Mediation is an alternative dispute resolution process held outside court. A neutral third party helps the disputing sides communicate, understand their positions, and work toward a mutually acceptable settlement. The mediator facilitates discussion but does not impose an answer. The parties retain control over whether they settle and what the settlement includes.

Arbitration works differently. It is an adjudicatory process in which a neutral arbitrator hears the parties’ arguments and then delivers a binding decision. That decision is called an award. For example, businesses in a contract dispute may use mediation to negotiate their own solution, but arbitration transfers the final decision to the arbitrator.

Both methods avoid ordinary court litigation, but their decision-making structures differ sharply. Mediation depends on agreement by the parties. Arbitration produces an imposed, binding outcome. This distinction makes mediation more flexible, while arbitration provides a formal decision when agreement cannot be reached.

India’s courts faced roughly 35 million pending cases as of October. More than 32 million were in district courts, according to the National Judicial Data Grid. That backlog gives mediation a major practical purpose: resolving some disputes without adding another full court case. Mediation can offer parties a separate route to settlement.

The latest commercial figures show that settlements remain a small share of cases. In April-September FY26, 643 of 47,218 pre-litigation mediations resulted in settlements, a rate of 1.3%. The rate was 1.4% in FY25, when 877 of 59,568 cases settled. In FY20, 167 of 18,080 cases settled, or 0.9%.

These numbers show growth in settlement counts but limited overall uptake or success. The MCI is expected to strengthen standards, institutions, and awareness. Providers hope those changes will encourage more businesses to use mediation and help ease court pressure.

Section 12A of the Commercial Courts Act requires parties seeking to file a commercial suit to attempt pre-litigation mediation first. The goal is to give the sides an opportunity to settle before formal court proceedings begin. This matters because India’s courts had roughly 35 million pending cases as of October, including more than 32 million in district courts.

The required mediation period lasts three months. Both parties may agree to extend it by another two months. Commercial disputes can involve business transactions, contracts, joint ventures, intellectual property, construction, infrastructure agreements, and certain shareholder disputes. A settlement during this stage can prevent the suit from proceeding.

The requirement has an important exception. It does not apply when a party seeks urgent interim relief, such as an injunction. That exception allows someone facing an immediate problem to approach the court without waiting through the mediation period. Otherwise, pre-litigation mediation is the required first step for covered suits.

Mediation could ease court backlogs by resolving business disputes outside the courts. It gives parties a chance to settle through facilitated communication instead of continuing through a full lawsuit. Faster settlements could also reduce the time businesses spend managing disputes and may lower the expense associated with prolonged litigation. The article presents this as a potential benefit, not a guaranteed result.

For example, a contract, construction, intellectual property, or shareholder dispute can enter pre-litigation mediation. The parties may settle during the three-month process, which can be extended by two months with mutual agreement. If they reach agreement, the dispute need not proceed as an ordinary commercial suit.

The current scale remains limited. Only 643 of 47,218 cases settled in April-September FY26, a 1.3% rate. The MCI is expected to improve standards, institutions, mediator skills, and public awareness. Wider adoption could therefore help, but the settlement figures show that substantial growth is still needed.

Mediation service providers welcomed the MCI’s operationalization but urged faster recognition of providers and institutions. Recognition can help qualified organizations operate within a clear national framework. It may also give businesses greater confidence that an institution meets accepted standards. The request reflects the council’s central role in building India’s institutional mediation ecosystem.

An institutional provider can offer a mediator panel, clear procedural rules, and the infrastructure needed to conduct mediation. P Madhava Rao of AAMC said the MCI could directly recognize entities that contributed to Rajya Sabha committee consultations, because their records are already on file. He also referred to institutions whose rules conform to international standards and are approved by UNCITRAL.

Quick, consistent recognition could avoid duplication and what Rao called reinventing the wheel. Krunal Modi said India also needs stronger institutions, a skilled mediator pool, greater awareness, and wider business adoption. These steps could make mediation more predictable and efficient for users.

Alternative dispute resolution, or ADR, is a group of methods used to resolve disputes outside courts. The article identifies mediation and arbitration as ADR methods. Mediation uses a neutral facilitator to help parties reach agreement. Arbitration uses a neutral arbitrator who decides the dispute through a binding award. ADR matters because it offers another route for resolving conflicts.

Mediation can be arranged ad hoc, directly between parties, or through a specialized institution. An institution can provide a panel of mediators, clear rules of procedure, and the infrastructure needed for sessions. Those services reduce the need for parties to create the process from scratch for every dispute.

An institutional system can therefore make mediation more organized and predictable. The article reports that providers want the MCI to recognize qualified institutions quickly and set standards. Stronger institutions, skilled mediators, and greater awareness could support broader adoption in India, where courts face roughly 35 million pending cases.