Court-Referred Mediation in India

Disputes brought before courts do not always require a full-fledged trial. In many cases, an amicable settlement can save time, costs and relationships. Court-referred mediation enables parties to resolve disputes with the assistance of a neutral mediator while the case remains under the supervision of the court. 

The Mediation Act, 2023 has strengthened this mechanism by providing a comprehensive legal framework for court-referred mediation in India. 

Add LawBhoomi as your preferred source on Google.

Add Now →

What Is Court-Referred Mediation?

Court-referred mediation is a form of mediation in which a court or tribunal directs the parties involved in a pending dispute to attempt mediation before continuing with judicial proceedings. Instead of immediately deciding the dispute through litigation, the court gives the parties an opportunity to explore a mutually acceptable settlement with the help of a neutral third party known as the mediator.

The mediator does not decide the dispute or impose a solution. Instead, the mediator facilitates discussions, helps identify common interests and encourages the parties to negotiate an acceptable settlement.

Court-referred mediation is an important part of the Alternative Dispute Resolution (ADR) system in India and aims to reduce litigation while promoting consensual dispute resolution. 

What Is the Legal Framework for Court-Referred Mediation?

Court-referred mediation is governed by multiple legal provisions that together create a structured system for resolving disputes outside the traditional trial process.

Explore LawBhoomi's free law library for students and lawyers.

Visit Library →

The primary legal framework includes:

• The Mediation Act, 2023
• Section 89 of the Code of Civil Procedure, 1908
• Order X Rules 1A to 1C of the Code of Civil Procedure
• Relevant High Court Mediation Rules
• Court-annexed mediation centre regulations

The Mediation Act, 2023 has become the principal legislation governing mediation in India and applies to mediation conducted pursuant to a court reference unless specifically excluded. 

Why Do Courts Refer Cases to Mediation?

Courts encourage mediation because not every dispute requires a judicial determination. Many disagreements arise due to misunderstandings, communication failures or commercial differences that can be resolved through dialogue.

Court-referred mediation helps:

• Reduce the burden on courts
• Promote speedy dispute resolution
• Preserve business and family relationships
• Lower litigation expenses
• Encourage voluntary settlements
• Provide confidential dispute resolution

Instead of focusing solely on legal rights, mediation allows parties to explore practical and commercially workable solutions.

What Is the Power of Courts to Refer Parties to Mediation?

Section 7 of the Mediation Act, 2023 gives courts and tribunals the authority to refer parties to mediation at any stage of proceedings.

Important features include:

• Referral may take place even if pre-litigation mediation was unsuccessful.
• The court may pass appropriate interim orders to protect the interests of the parties before referring the dispute.
• Parties remain free to accept or reject any settlement proposal during mediation.
• No party can be compelled to enter into a settlement merely because mediation has been ordered. 

This provision ensures that mediation remains a voluntary settlement process even when initiated through a court reference.

Explore practical law courses to build career-ready legal skills.

Explore Courses →

How Does Section 89 of the Code of Civil Procedure Apply?

Section 89 of the Code of Civil Procedure has long been the statutory basis for referring suitable civil disputes to Alternative Dispute Resolution mechanisms.

Where the court finds that there are elements of settlement, it may refer the dispute to:

• Arbitration
• Mediation
• Lok Adalat
• Judicial settlement

Following the enactment of the Mediation Act, 2023, Section 89 specifically recognises mediation and provides that the Mediation Act applies to such referrals. 

Thus, Section 89 and the Mediation Act now operate together to facilitate court-referred mediation.

Which Disputes Can Be Referred to Mediation?

A wide range of disputes may be referred to mediation where settlement appears possible.

Common examples include:

Family Disputes

These include:

• Matrimonial disputes
• Divorce matters
• Child custody issues
• Maintenance disputes
• Family property disputes

Commercial Disputes

Business-related disputes frequently benefit from mediation, including:

• Partnership disputes
• Contract disputes
• Supply agreements
• Service agreements
• Commercial recovery matters

Property Disputes

Examples include:

Find the latest legal internship opportunities, updated daily.

Find Internships →

• Partition disputes
• Boundary disputes
• Easement disputes
• Co-ownership conflicts
• Landlord-tenant disputes

Consumer Disputes

Disputes involving:

• Defective goods
• Deficient services
• Compensation claims

Other Civil Matters

Courts also refer disputes relating to:

• Motor accident claims
• Employment disputes
• Neighbourhood disputes
• Recovery suits
• Compoundable matrimonial offences, where appropriate.

Which Matters Cannot Be Referred to Mediation?

The Mediation Act, 2023 contains an indicative list of disputes that are generally not suitable for mediation.

These broadly include matters involving:

• Serious criminal offences
• Rights affecting third parties who are not part of the mediation
• Certain disputes involving public interest
• Matters expressly excluded under the First Schedule of the Act

However, the Act permits courts to refer disputes relating to compoundable offences, including compoundable matrimonial offences, where considered appropriate. 

When Can the Court Refer a Case to Mediation?

A referral can be made at different stages of litigation.

Depending on the facts of the case, mediation may be directed:

• Soon after filing of the suit
• After pleadings are completed
• After issues are framed
• During recording of evidence
• Even at a later stage before final judgment if settlement appears possible

The Mediation Act expressly allows referral “at any stage of the proceeding,” providing flexibility to courts. 

How Does the Court-Referred Mediation Process Work?

The process generally follows a structured sequence.

Step 1: Identification of Settlement Possibility

The court examines whether the dispute contains elements that may be resolved through negotiation.

Step 2: Referral Order

If appropriate, the court refers the parties to:

• A court-annexed mediation centre
• A mediation service provider
• A mutually agreed mediator

Step 3: Appointment of Mediator

The mediator may be selected by the parties or appointed according to applicable rules.

Step 4: Mediation Sessions

The mediator conducts confidential meetings with the parties.

Discussions generally focus on:

• Interests of each party
• Possible settlement options
• Practical solutions
• Future relationship between parties

Step 5: Settlement or Failure Report

If settlement is reached:

• A Mediated Settlement Agreement is prepared.

If settlement is not achieved:

• The mediator reports non-settlement to the referring court.

The litigation then proceeds according to law.

What Is the Role of the Mediator?

The mediator acts as an impartial facilitator rather than a judge.

The mediator’s responsibilities include:

• Conducting mediation fairly
• Encouraging constructive dialogue
• Helping parties identify issues
• Exploring settlement options
• Maintaining neutrality
• Preserving confidentiality
• Avoiding conflicts of interest

The mediator has no authority to decide the dispute or impose a binding decision. 

What Is the Role of Court-Annexed Mediation Centres?

Court-annexed mediation centres have become an important feature of India’s ADR framework.

These centres:

• Receive court referrals
• Maintain trained mediator panels
• Schedule mediation sessions
• Provide administrative support
• Ensure confidentiality
• Submit reports to referring courts

Many High Courts and District Courts now operate dedicated mediation centres that handle thousands of disputes annually.

Is Mediation Confidential?

Yes. Confidentiality is one of the most important features of mediation.

Generally:

• Discussions during mediation remain confidential.
• Settlement negotiations cannot ordinarily be used as evidence in court.
• Mediators are expected to maintain confidentiality.
• Parties may communicate privately with the mediator where necessary.

Confidentiality encourages open communication and increases the likelihood of successful settlements.

Can the Court Pass Interim Orders During Mediation?

Yes.

Section 7 of the Mediation Act authorises the referring court or tribunal to pass suitable interim orders before or during mediation where necessary to protect the interests of any party.

Such orders may help preserve the subject matter of the dispute while mediation is in progress.

What Happens If the Parties Reach a Settlement?

Where mediation succeeds, the parties execute a Mediated Settlement Agreement.

The agreement typically records:

• Terms accepted by both parties
• Rights and obligations
• Payment arrangements, if any
• Timelines for performance
• Other mutually agreed conditions

The agreement acquires legal enforceability under the Mediation Act, subject to the provisions governing enforcement and challenge. 

What Happens If Mediation Fails?

Not every mediation results in settlement.

If the parties fail to resolve the dispute:

• The mediator submits a non-settlement report.
• Confidential discussions are not disclosed.
• The case returns to the referring court.
• Litigation resumes from the stage at which it was referred.

Failure of mediation does not prejudice the rights of either party in the pending proceedings.

Conclusion

Court-referred mediation has become an integral part of India’s dispute resolution system. The Mediation Act, 2023 has further strengthened this framework by providing clear procedures, recognising mediated settlement agreements and encouraging institutional mediation. As awareness and mediation infrastructure continue to expand, court-referred mediation is expected to play an increasingly significant role in delivering timely, cost-effective and mutually acceptable resolution of disputes across India.