Small businesses, startups adopting mediation in contracts: law minister Meghwal
New Delhi: India's small businesses and startups have started adopting mediation in the dispute resolution clauses included in their contracts, Union law and justice minister Arjun Ram Meghwal said.
Mediation is an inexpensive and expedited means of resolving disputes as it is not adversarial, he said, speaking at the first National Mediation Conference in New Delhi on Saturday.
A dispute resolution clause determines how parties will resolve an issue if one arises. Commonly, most commercial contracts use arbitration as a dispute resolution mechanism.
The event also marked the launch of the Mediation Association of India, a body of legal practitioners and mediation experts, which would work on suggesting best practices as well as rules of procedure in the mediation domain to the union government.
The Union government had called for the creation of the Mediation Council of India under the Mediation Act 2023. The MCI, which has not been created yet, would have powers to ratify mediators, decide rules of procedure, and govern the actions and behaviour of mediators and mediation institutions, among other things.
Meghwal also called for more mediation and less litigation in resolving disputes in the country, as it was closely linked to the investment sentiment about India.
Solicitor general Tushar Mehta highlighted that mediation would reduce the burden on Indian courts and undo the pendency clog in the country's access to justice.
President Droupadi Murmu called for extension of the Mediation Act 2023 to rural areas, legally empowering village panchayats to mediate any issues between parties.
This mediation push comes in the wake of the Union government turning its back on arbitration, a preferred means of dispute resolution outside courts, in an advisory in June 2024.
The advisory, by the Union finance ministry's department of expenditure, asked government entities in the country to use mediation or litigation over arbitration. According to the advisory, arbitration was expensive and time-consuming for the government, and mediation would be a relatively cheaper alternative.
While arbitration involves parties bringing in a third party to adjudicate an issue and deliver a legally enforceable award, mediation involves both parties coming together to a consensus with the help of a third party.
First Published: 4 May 2025, 10:09 AM IST
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