Disputes Not Fit for Mediation under the Mediation Act, 2023

Mediation allows disputing parties to resolve their differences through negotiation with the assistance of a neutral mediator. However, every dispute cannot be settled privately. Some matters involve criminal liability, public rights, vulnerable persons, regulatory action or the interests of people who are not present in mediation. Section 6 and the First Schedule of the Mediation Act, 2023 identify such disputes as matters not fit for mediation.

Meaning of Disputes Not Fit for Mediation

A dispute not fit for mediation is one that cannot be resolved through mediation under the framework of the Mediation Act, 2023. Such disputes require adjudication or determination by a court, tribunal, statutory authority or another competent body.

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Mediation is based on party autonomy. The parties discuss their interests and voluntarily decide whether a settlement should be reached. A mediator does not determine legal rights, impose punishment or deliver a binding judgment after examining evidence.

This consensual character makes mediation suitable for many civil, commercial, family and contractual disputes. However, it also creates limitations. A private settlement cannot replace a legal determination where the dispute affects public interest, involves criminal prosecution, concerns rights enforceable against the world or requires action by a specialised regulator.

What Disputes are Not Fit for Mediation?

The expression “not fit for mediation” should also be distinguished from a dispute that is merely difficult to mediate. A complicated dispute may still be legally mediable if the parties have the capacity and authority to settle it. In contrast, a dispute included within Section 6 and the First Schedule cannot be mediated under the Act merely because all parties consent.

Section 6 of the Mediation Act, 2023

Section 6 is the principal provision dealing with disputes or matters not fit for mediation. It states that mediation under the Act shall not be conducted for the resolution of any dispute or matter contained in the indicative list under the First Schedule.

The use of the word “shall” makes the restriction mandatory. Once a matter falls within an excluded category, the parties cannot avoid the restriction by entering into a mediation agreement.

At the same time, the First Schedule is described as an “indicative list”. This indicates that the question of mediability may also depend on the nature of the dispute, the relief claimed and other laws governing the subject. The Schedule itself begins by excluding disputes that cannot be submitted to mediation under any law in force.

Section 6 further authorises the Central Government to amend the First Schedule by notification where it considers such amendment necessary or expedient. The categories of non-mediable disputes can therefore be expanded or modified in response to legal and regulatory developments.

Disputes Prohibited from Mediation by Law

The first category covers disputes that cannot be submitted to mediation by virtue of any law in force.

This is a general exclusion intended to preserve restrictions imposed under other statutes. The Mediation Act cannot be used to overcome a specific legal prohibition against compromise or private settlement.

Before referring a matter to mediation, it is therefore necessary to examine both the Mediation Act and the special law governing the dispute. A matter may appear civil or commercial in form but may still be non-mediable if the applicable statute requires determination by a designated authority.

This category also confirms that party consent alone cannot make a legally prohibited dispute mediable. The power to settle must exist under the law governing the subject matter.

Claims Against Minors, Deities and Protected Persons

The First Schedule excludes disputes relating to claims against minors and deities. It also covers claims involving specified persons with intellectual disabilities, persons with disabilities having high support needs, persons with mental illness and persons of unsound mind whose proceedings are governed by Order XXXII of the Code of Civil Procedure, 1908.

These exclusions protect persons who may not be able to understand, negotiate or independently consent to the terms of a settlement. Mediation depends upon free, informed and voluntary participation. Where a party lacks legal capacity or requires special protection, an ordinary consensual process may not provide sufficient safeguards.

A compromise involving a minor cannot be treated in the same manner as an agreement between two competent adults. Courts exercise supervisory control over compromises affecting minors because the settlement must protect the minor’s interests.

A deity is also treated as a juristic person under Indian law and acts through a lawful representative or manager. Rights belonging to a deity cannot be compromised merely according to the personal preferences of persons managing its affairs.

The exclusion is thus connected with legal capacity, adequate representation and judicial protection rather than with the subject matter alone.

Suits for Declaration of Title Against the Government

The First Schedule excludes suits seeking a declaration of title against the Government.

A declaration of title determines the legal status and ownership of property. When such a declaration is sought against the Government, the matter may affect public records, public property and governmental interests. It ordinarily requires formal adjudication after examination of legal documents, possession, title and statutory authority.

An administrative officer or government representative attending mediation may not possess unrestricted authority to concede title to public property. A mediated settlement cannot be allowed to transfer or recognise governmental property rights without compliance with applicable law and approval procedures.

The exclusion does not necessarily mean that every contractual or monetary dispute with the Government is non-mediable. The precise relief and nature of the rights involved remain important.

Declarations Affecting Rights in Rem

The First Schedule also excludes declarations having the effect of a right in rem.

A right in rem is a right enforceable against the world at large, rather than merely against a particular person. Matters concerning legal status, title and certain public rights may produce consequences for persons who are not parties to the proceedings.

Mediation ordinarily creates obligations only between the persons who consent to the settlement. Two parties cannot privately determine a legal status that binds everyone else. Such matters require an authoritative decision by a competent court or tribunal.

By contrast, rights in personam operate against specific persons and are generally more capable of settlement. Contractual payment claims, private commercial obligations and many personal disputes usually fall within this category, subject to other statutory restrictions.

Disputes Involving Criminal Prosecution

Disputes involving prosecution for criminal offences are included in the First Schedule.

A criminal prosecution is brought to enforce public law. Its purpose is not limited to resolving a private disagreement between the complainant and the accused. It also concerns public order, accountability and the administration of criminal justice.

The parties cannot ordinarily settle a non-compoundable criminal offence through a private mediation agreement. A mediator has no authority to determine guilt, impose a sentence or terminate criminal proceedings.

However, Section 6 creates an important exception for compoundable offences.

Exception for Compoundable Offences

A court may, where it considers the case appropriate, refer a dispute relating to a compoundable offence to mediation. This includes compoundable matrimonial offences pending between the parties.

A compoundable offence is an offence that the law permits the affected person to compromise in the manner prescribed. The court must still examine whether referral is legally permissible and appropriate in the circumstances.

The outcome of such mediation does not automatically become a judgment or decree enforceable under the ordinary enforcement provision for mediated settlement agreements. It must be placed before the court, which will consider it in accordance with the applicable criminal law.

Therefore, mediation may assist the parties in reaching an understanding, but the final legal effect remains subject to judicial scrutiny.

Professional Discipline and Misconduct Proceedings

Complaints and proceedings before statutory authorities concerning registration, discipline or professional misconduct are not fit for mediation.

This category covers regulated professionals such as advocates, medical practitioners, dentists, architects and chartered accountants. It also extends to other professions regulated under law.

Professional misconduct proceedings do more than resolve a personal grievance. They protect the integrity of the profession, maintain public confidence and ensure compliance with prescribed ethical standards.

A complainant and a professional cannot privately bargain away the disciplinary jurisdiction of a statutory body. Even where compensation or an apology resolves the personal aspect of the dispute, the regulator may still need to decide whether misconduct occurred and whether disciplinary action is required.

The exclusion applies specifically to regulatory and disciplinary proceedings. A separate fee dispute or contractual disagreement involving a professional may still be mediable if it does not require determination of professional misconduct.

Disputes Affecting the Rights of Third Parties

A dispute is not fit for mediation where its outcome affects the rights of a third party who is not participating in the mediation.

The rule follows from a basic principle of consent. A settlement can bind only those who have voluntarily agreed to its terms. Persons who are absent from mediation cannot be deprived of property, benefits or legal rights through a private arrangement made by others.

This exclusion may arise in disputes involving several owners, beneficiaries, creditors, shareholders or persons claiming through different legal interests. If the proposed settlement changes the rights of an absent person, mediation between only some interested parties may be inappropriate.

The Schedule recognises a limited qualification for matrimonial disputes in which the interests of a child are involved. Family settlements frequently require arrangements concerning custody, residence, education or maintenance of children. Even in such cases, the welfare of the child remains the primary consideration, and a settlement cannot be accepted merely because the parents have agreed.

Matters Within the Jurisdiction of the National Green Tribunal

Proceedings concerning subject matters covered by enactments over which the National Green Tribunal has jurisdiction are excluded from mediation.

Environmental disputes often affect communities, ecosystems, public health and future generations. Their consequences may extend far beyond the immediate parties.

The National Green Tribunal is a specialised adjudicatory body created to deal with environmental protection, conservation and compensation under specified environmental laws. Such matters may require technical evidence, application of statutory standards, environmental restoration and enforcement of the polluter-pays principle.

A private compromise between a project operator and one affected person may not protect the wider public interest. It also cannot authorise conduct prohibited by environmental law.

Direct and Indirect Tax Disputes

The First Schedule excludes disputes relating to the levy, collection, penalties, offences or refunds concerning direct or indirect taxes enacted by Parliament or a State Legislature.

Tax liability arises under statute and not merely from an agreement between the taxpayer and the Government. Revenue authorities must apply the law uniformly and cannot ordinarily alter statutory liability through private negotiation.

The exclusion covers a wide range of tax matters, including:

• Whether a tax has been lawfully levied;
• The amount recoverable from the taxpayer;
• Penalties imposed under taxation statutes;
• Tax-related offences; and
• Claims for statutory refunds.

This does not prevent the legislature or Government from introducing a statutory settlement, amnesty or dispute-resolution scheme. Such a scheme derives authority from law and operates differently from private mediation under the Mediation Act.

Competition and Telecom Regulatory Proceedings

Investigations, inquiries and proceedings under the Competition Act, 2002 are excluded, including proceedings before the Director General.

Competition law protects the competitive structure of markets and the interests of consumers. Proceedings concerning anti-competitive agreements, abuse of dominant position or combinations may affect an entire sector. The parties cannot privately settle away the statutory powers of the competition regulator.

The First Schedule also excludes proceedings before the Telecom Regulatory Authority of India and the Telecom Disputes Settlement and Appellate Tribunal under the telecom law.

These bodies exercise specialised statutory jurisdiction over matters involving telecom regulation, service providers, licensing and sectoral obligations. Their regulatory functions cannot be replaced by a purely consensual process.

Electricity Regulatory Proceedings

Proceedings before the appropriate Electricity Regulatory Commissions and the Appellate Tribunal for Electricity under the Electricity Act, 2003 are not fit for mediation.

Electricity regulation concerns tariffs, licensing, generation, transmission, distribution and consumer interests. Decisions may have broad consequences for an entire class of consumers and market participants.

A bilateral settlement cannot be permitted to alter statutory tariffs or regulatory obligations applicable to people who were not parties to the mediation. Regulatory approval and adjudication remain necessary where public and sector-wide interests are involved.

Petroleum and Natural Gas Regulatory Proceedings

Proceedings before the Petroleum and Natural Gas Regulatory Board, along with appeals before the relevant Appellate Tribunal, are excluded.

The Board regulates important aspects of the petroleum and natural gas sector, including infrastructure, transportation networks and market-related obligations. These proceedings may involve statutory powers and industry-wide consequences.

Commercial disputes between private entities operating in the sector may still be mediable where they concern contractual rights and do not fall within the Board’s exclusive regulatory jurisdiction.

Proceedings Before SEBI and the Securities Appellate Tribunal

Proceedings before the Securities and Exchange Board of India and the Securities Appellate Tribunal are included among matters not fit for mediation.

Securities regulation protects investors, promotes orderly markets and addresses misconduct affecting market integrity. Regulatory action may involve disclosure violations, market manipulation, insider trading or failure to comply with statutory duties.

A private settlement cannot prevent SEBI from exercising its regulatory and enforcement powers. The parties may settle certain connected civil claims where permitted, but statutory proceedings themselves remain governed by the securities law framework.

Land Acquisition and Determination of Compensation

Land acquisition proceedings and determination of compensation under land acquisition laws are excluded from mediation.

Compulsory acquisition involves the State’s statutory power to acquire property for a legally recognised purpose. The validity of acquisition, persons entitled to compensation and the method of determining compensation are governed by legislation.

Such proceedings may affect several landowners, interested persons, public projects and government records. A private settlement between limited parties may not conclusively resolve all statutory rights.

This exclusion should be distinguished from an ordinary private property dispute. Disagreements concerning sale agreements, partition, possession or contractual payment may remain mediable where no other exclusion applies.

Other Disputes Notified by the Central Government

The final category permits the Central Government to notify any other subject matter as not fit for mediation.

This provision allows the law to respond to new forms of disputes, changes in regulatory policy and practical difficulties arising during implementation. A dispute that is currently mediable may later become excluded if the Government issues a valid notification.

Legal practitioners and mediation institutions must therefore examine the First Schedule together with subsequent notifications before commencing mediation.

Any amendment made through notification under Section 6 is also subject to the statutory requirement of being placed before Parliament.

Difference Between Non-Mediable and Unsuitable Disputes

A non-mediable dispute is legally barred from mediation under Section 6, the First Schedule or another applicable law. Consent of the parties cannot remove this prohibition.

An unsuitable dispute, on the other hand, may be legally mediable but practically inappropriate. Mediation may be unsuitable where there is serious intimidation, an extreme imbalance of bargaining power, lack of authority to settle, an urgent need for protective relief or unwillingness to participate meaningfully.

This distinction is important. Legal non-mediability concerns jurisdiction and statutory limits, while practical unsuitability concerns the circumstances in which the process would operate.

Conclusion

The Mediation Act, 2023 strongly promotes consensual dispute resolution but does not treat mediation as suitable for every legal controversy. Section 6 and the First Schedule exclude matters involving legal incapacity, criminal prosecution, public rights, professional discipline, taxation, environmental regulation, sectoral authorities, securities regulation and land acquisition.

These exclusions preserve the role of courts, tribunals and statutory regulators where authoritative adjudication or public oversight is necessary. The list must be applied by examining the true nature and legal effect of the dispute. Proper assessment of mediability ensures that mediation remains voluntary, lawful and effective without interfering with protected rights or statutory responsibilities.