Mediation: What It Is, and How It Differs from Conciliation and Arbitration
Chapter Fifty-Five
Syllabus topic 3.3, "Mediation and Negotiation"
Pages 281 to 285 of 377
In one line
Mediation is a neutral third person helping two parties reach their own settlement, and in India it is the hardest of the ADR words to pin down because our statutes have used it and conciliation almost interchangeably.
In exam wording: mediation is a voluntary process in which a neutral third person, the mediator, assists the parties to a dispute to reach an amicable settlement, without any power to adjudicate or to impose an outcome.
The definition, and where it now comes from
Until 2023 no Indian statute defined mediation. Section 3(h) of the Mediation Act 2023 now does, describing mediation as a process, whether referred to by expressions such as mediation, pre-litigation mediation, online mediation, community mediation, conciliation or an expression of similar import, whereby parties seek an amicable resolution of their dispute with the assistance of a third person, the mediator, who does not have the authority to impose a settlement upon the parties.
Read the words in the middle: the definition expressly includes conciliation within mediation. Parliament, drafting in 2023, treated the two as the same family rather than trying to separate them. That is the best guide a student has, and it is the safest thing to say in an answer.
But section 3 of the Mediation Act is itself in force while the operative sections around it are not, which is chapter 620's subject. Use the definition; do not assume the Act's machinery is running.
The classical distinction, and how far it holds in India
The textbook distinction is between two models of what a neutral does.
Facilitative mediation. The mediator manages the conversation, tests each side's case privately, and helps the parties construct their own solution. He does not offer a view on the merits and does not propose terms.
Evaluative mediation, and conciliation. The neutral goes further: he assesses the strengths and weaknesses, tells the parties what he thinks, and may put forward terms.
Indian statute reflects that split in one place, and it is the sentence to cite: section 67(4) of the Arbitration and Conciliation Act 1996 provides that the conciliator may, at any stage, make proposals for a settlement, and that those proposals need not be in writing and need not be accompanied by reasons. Chapter 560 works it through. A purely facilitative mediator would not do that.
Do not overstate it. Three things cut against a clean division in India:
- Section 30 of the 1996 Act, chapter 370, lets a tribunal use "mediation, conciliation or other procedures", treating them as alternatives of the same kind.
- Section 89 of the Code of Civil Procedure lists both as separate options, and, as chapter 600 shows, the Supreme Court found its definitions of two of them to have been interchanged by a drafting error.
- The Mediation Act 2023 definition folds conciliation into mediation outright.
Mediation: What It Is, and How It Differs from Conciliation and Arbitration
So the honest answer, and the one that shows understanding rather than recitation, is: the distinction is real as a description of practice, and unstable as a matter of Indian statutory language. In an examination, state the practice distinction, cite section 67(4) as the one place the statute marks it, and then note that the Mediation Act 2023 has now defined mediation to include conciliation.
The three compared
| Mediation | Conciliation, Part III | Arbitration, Part I | |
|---|---|---|---|
| Neutral's function | Assists the parties to settle | Assists, and may propose terms, s.67(4) | Decides, and makes an award |
| Source of the outcome | The parties' agreement | The parties' signed settlement, s.73(3) | The tribunal's decision |
| May meet a party alone | Yes, normally | Yes, s.69(1) | No; s.18 forbids it |
| What binds | The agreement, as recorded | The signed settlement, with the status of an award, s.74 | The award, s.35 |
| Governing statute in India | Mediation Act 2023, largely not in force | Complete code, ss.61 to 81 | Complete code, ss.2 to 43 |
| Can it be imposed on a party | No | No, s.62(3) | Yes, on an arbitration agreement, s.8 |
The stages of a mediation
MU sets this as a clinical topic, so a student should be able to describe what actually happens, not only what it is called. A mediation ordinarily moves through six stages.
One, preparation. The mediator gets brief statements of each side's case and the documents, checks who will attend, and confirms that whoever comes has authority to settle. That last point is the commonest practical failure in Indian mediations: a representative arrives who must "check with the office", and nothing can be concluded.
Two, the opening. The mediator explains the process, the confidentiality, and his own role, and confirms that he decides nothing. Each side then makes an uninterrupted opening statement.
Three, joint session. The parties speak to each other, often for the first time about interests rather than positions.
Four, private sessions, the caucus. The mediator meets each side alone, tests the case, and finds out what each will really accept. Chapter 560 shows that section 69(1) authorises exactly this in a conciliation.
Five, negotiation and reality-testing. Offers move between the rooms. A skilled mediator asks each side what happens if there is no settlement, which chapter 630 calls the best alternative to a negotiated agreement.
Six, closing. If the parties agree, the terms are written down and signed before anybody leaves. Haresh Dayaram Thakur, chapter 570, is the authority for why: in a conciliation the settlement takes shape only when the parties sign, and an unsigned document produced by the neutral is worth nothing. The same practical lesson applies to a mediation.
Mediation: What It Is, and How It Differs from Conciliation and Arbitration
Where mediation actually happens in India today
This is worth knowing, because the statute a student expects to govern it largely does not.
- Court-annexed mediation under section 89 of the Code of Civil Procedure, and the mediation centres attached to the High Courts and district courts. Chapter 600.
- Pre-institution mediation under section 12A of the Commercial Courts Act 2015, which is compulsory for certain commercial suits. Chapter 610.
- Lok Adalats and Permanent Lok Adalats under the Legal Services Authorities Act 1987, which are settlement forums in substance, and the District ADR Centres and Nyaya Seva Sadans that house counselling, mediation, Lok Adalat and legal services under one roof. Chapters 100 to 170.
- Conciliation under Part III of the Arbitration and Conciliation Act 1996.
- Private and institutional mediation by agreement.
- The Mediation Act 2023, in the limited respects in which it is in force. Chapter 620.
Notice what that list means for an answer on this topic. Mediation in India is not principally governed by the Mediation Act. It runs on section 89, on section 12A, and on the legal services machinery.
What makes mediation work, and what it cannot do
What it does well. It is quick and cheap. It is private. It can produce outcomes a court cannot order: an apology, a continuing supply arrangement, a payment schedule, a change in how two companies deal with each other. And it preserves relationships, which is why it suits family, partnership and long-term commercial disputes.
What it cannot do.
- It cannot decide. A party determined not to settle defeats it, and chapter 140 shows Parliament creating the Permanent Lok Adalat precisely because of that weakness.
- It cannot bind a stranger. Only the parties who agree are bound.
- It cannot produce a precedent, so where the point needs to be settled for many future cases, litigation is the right forum.
- It is a poor fit where there is a serious power imbalance and no lawyer on one side, because the process depends on both sides assessing their own case realistically.
- It is unsuitable where urgent coercive relief is needed, or where the matter is one the law does not permit to be settled privately. Chapter 250 explains arbitrability, and chapter 600 sets out the categories Afcons identifies as unsuitable for reference.
A worked example
A family company's two branches are in dispute over management and a property. They have been in litigation for six years and still have to attend the same weddings.
Is this suitable for mediation? Yes, and on Afcons' own list, chapter 600, cases arising from strained or soured relationships, including disputes relating to partition or division among family members, and cases where there is a need for continuation of the pre-existing relationship, are normally suitable for ADR processes.
Mediation: What It Is, and How It Differs from Conciliation and Arbitration
What can a mediation give them that the court cannot? A division that both accept; a schedule of payments; an arrangement about the company's management; and an end to the litigation without either being publicly held to be in the wrong. A decree can order none of that.
Who mediates? If the suit is pending, the court may refer them under section 89, chapter 600. If not, they may agree on a private mediator, or use a District ADR Centre.
Will the mediator tell them who is right? A purely facilitative mediator will not. A conciliator under Part III may, under section 67(4), and may propose terms orally and without reasons.
Nothing is agreed until when? Until it is written and signed. That is the lesson of Haresh Dayaram Thakur, and it is why a mediation should not break for the day on a handshake.
One branch refuses to attend at all. Then mediation fails, because it cannot be imposed. Their remedies are the pending suit, or, if their dispute concerned a public utility service, the Permanent Lok Adalat, which can decide.
What beginners get wrong
A mediator does not decide anything. If a neutral imposes an outcome, the process was not a mediation.
"Mediation" and "conciliation" are not cleanly separated in Indian law. Section 67(4) is the one clear statutory marker, and the Mediation Act 2023 defines mediation to include conciliation.
The Mediation Act 2023 does not govern most mediation in India today. Section 89, section 12A and the legal services machinery do.
Mediation is not always the right answer. It cannot decide, bind strangers, create precedent, or supply urgent coercive relief.
Nothing binds until it is signed.
Quick revision
- Mediation: a voluntary process in which a neutral third person assists the parties to reach their own settlement and has no authority to impose one.
- Section 3(h) of the Mediation Act 2023 defines it to include conciliation and similar expressions.
- The statutory marker of the distinction is section 67(4) of the 1996 Act: a conciliator may propose terms at any stage, orally and without reasons.
- Stages: preparation and authority to settle; opening; joint session; caucus; negotiation and reality-testing; written and signed closing.
- Where it happens in India: section 89 of the Code of Civil Procedure and court-annexed centres; section 12A of the Commercial Courts Act 2015; Lok Adalats, Permanent Lok Adalats and District ADR Centres; Part III conciliation; private and institutional mediation; and the Mediation Act 2023 so far as it is in force.
- Limits: it cannot decide, bind a non-party, create precedent, correct a serious power imbalance, or grant urgent coercive relief.
Mediation: What It Is, and How It Differs from Conciliation and Arbitration
Test yourself
1. Define mediation, and say what makes it different from arbitration. Mediation is a voluntary process in which a neutral third person assists the parties to reach an amicable settlement of their dispute and has no authority to impose a settlement upon them. An arbitrator, by contrast, adjudicates: he hears both sides and makes an award that binds them whether they agree with it or not.
2. What is the clearest statutory difference in India between a conciliator and a mediator? Section 67(4) of the Arbitration and Conciliation Act 1996, under which a conciliator may at any stage make proposals for a settlement, which need not be in writing and need not be reasoned. A purely facilitative mediator does not propose terms.
3. Does the Mediation Act 2023 keep mediation and conciliation apart? No. Its definition in section 3(h) describes mediation as a process whether referred to as mediation, pre-litigation mediation, online mediation, community mediation, conciliation or an expression of similar import, and so treats conciliation as a form of mediation.
4. Name three routes by which mediation actually happens in India. Court-annexed mediation on a reference under section 89 of the Code of Civil Procedure; compulsory pre-institution mediation under section 12A of the Commercial Courts Act 2015; and settlement through the legal services machinery, that is Lok Adalats, Permanent Lok Adalats and District ADR Centres, together with conciliation under Part III and private or institutional mediation.
5. Give two kinds of dispute for which mediation is a poor choice, and say why. One where a party simply refuses to settle, because a mediator cannot decide and the process then fails; and one where a point of law needs to be settled for many future cases, because a mediated settlement binds only the parties and creates no precedent. Disputes needing urgent coercive relief, and matters the law does not permit to be settled privately, are equally unsuitable.
The rest of this subject
These notes are cut from the University's printed syllabus. Open the syllabus itself for the same subject.