What to Do in Mediation and Arbitration Cases

Introduction: When Going to Court Isn't the Only Option

Imagine you have a dispute with your business partner over money, or your landlord refuses to return your security deposit, or a contractor didn't finish the work you paid for. Your first thought might be: "I'll take them to court."

But court cases in India can take years — sometimes even decades. They are expensive, stressful, and unpredictable.

That's where mediation and arbitration come in. These are faster, cheaper, and more private ways to settle disputes without going through the long court process.

This article will explain — in plain, simple language — what mediation and arbitration are, how they work in India, and most importantly, what you should do if you find yourself in one of these cases.

First, Let's Understand the Difference

Before diving into what to do, let's quickly understand the two terms:

What Is Mediation?

Mediation is a process where both parties in a dispute sit together with a neutral third person called a mediator. The mediator doesn't take sides or give a verdict. Instead, the mediator helps both parties talk to each other, understand each other's point of view, and come to a mutual agreement.

Think of it like a trusted family elder helping two quarrelling relatives reach a compromise — except this is formal and legally supported.

Key point: In mediation, you decide the outcome. The mediator only facilitates.

What Is Arbitration?

Arbitration is a process where both parties present their case before a neutral person (or a panel) called an arbitrator. After hearing both sides, the arbitrator gives a binding decision called an arbitral award — similar to a court judgment.

Think of it like a private judge. The arbitrator's decision is final and enforceable by law.

Key point: In arbitration, the arbitrator decides the outcome.

When Are These Used in India?

In India, mediation and arbitration are widely used in:

• Commercial and business disputes (contracts, partnerships, joint ventures)

• Construction and infrastructure projects

• Property and real estate disputes

• Employment and labour matters

• Consumer complaints

• Banking and finance disputes

• Family matters (property disputes among family members)

• International trade disputes

The legal backbone for these processes in India includes:

• The Arbitration and Conciliation Act, 1996 (amended in 2015, 2019, and 2021)

• The Mediation Act, 2023 — India's first standalone law on mediation

• The Code of Civil Procedure, 1908 (Section 89) — allows courts to refer cases to alternative dispute resolution

• The MSME Development Act, 2006 — mandates conciliation/arbitration for MSME-related disputes

Part 1: What to Do in a MEDIATION Case

Step 1 — Understand Whether Mediation Is Right for You

Mediation works best when:

• You want to preserve your relationship with the other party (business partner, family member, neighbour)

• You are open to compromise

• The dispute involves emotions or communication breakdown, not just legal technicalities

• You want a quick and confidential resolution

Mediation may not work well if the other party is completely uncooperative, or if the matter involves serious criminal conduct.

Step 2 — Know How Mediation Can Be Initiated

Mediation can begin in three ways:

1. Voluntary: Both parties mutually agree to go for mediation before any legal proceedings begin.

2. Court-referred: A court, under Section 89 of the CPC, may refer your case to mediation.

3. Pre-litigation: Under the Mediation Act, 2023, commercial disputes must attempt pre-litigation mediation before filing a lawsuit (in cases notified by the government).

Step 3 — Choose a Mediator or Mediation Centre

You can approach:

• High Court Mediation Centres (available in most High Courts across India)

• District Court Mediation Centres

• SAMA (Society of Accessible and Mediated Adjudication) — for online mediation

• ICADR (International Centre for Alternative Dispute Resolution), New Delhi

• FICCI, CII, ASSOCHAM Mediation Centres — for commercial disputes

• Lok Adalats — for settlement of pending cases at no cost

The mediator must be neutral, trained, and acceptable to both parties.

Step 4 — Prepare for the Mediation Session

This is a crucial step many people overlook. Here's what you should do:

• Organise your documents: Contracts, invoices, emails, WhatsApp messages, receipts — anything relevant to the dispute.

• Write down your key points: What do you want? What is the minimum outcome you will accept?

• Think about the other party's perspective: What do they want? Where is there common ground?

• Consult a lawyer (optional but recommended): A lawyer can help you understand your legal position before the session, even if they don't attend with you.

• Be emotionally prepared: Mediation is a conversation. Keep your tone calm and respectful.

Step 5 — During the Mediation Session

Here's what typically happens:

1. Opening statements: Each party explains their side without interruption.

2. Joint sessions: The mediator facilitates dialogue between both parties.

3. Private sessions (Caucus): The mediator may meet each party separately to understand their real concerns and priorities.

4. Negotiation: The mediator helps both parties explore options and find common ground.

What YOU should do during the session:

• Listen carefully — do not interrupt the other party.

• Be honest about your priorities. The mediator's sessions are confidential.

• Do not make unrealistic demands — mediation is about finding workable solutions.

• Ask for a break if you feel overwhelmed or pressured.

• Never sign anything you don't fully understand.

Step 6 — The Settlement Agreement

If both parties agree, the mediator prepares a settlement agreement (also called a mediated settlement agreement). Under the Mediation Act, 2023:

• The agreement is final and binding on both parties.

• It can be enforced as a court decree if it is authenticated by a court.

• It cannot be challenged except on grounds of fraud, corruption, or impersonation.

Important: Read the settlement agreement carefully before signing. Once signed, you cannot easily go back.

Step 7 — If Mediation Fails

If no agreement is reached, mediation terminates. You can then:

• Proceed to arbitration (if there is an arbitration clause)

• File a case in court

• Try Lok Adalat for eligible disputes

Nothing said during mediation can be used as evidence in court — your disclosures remain confidential.

Part 2: What to Do in an ARBITRATION Case

Step 1 — Check If There Is an Arbitration Clause

Most commercial contracts in India contain an arbitration clause — a provision that says any dispute arising from the contract must be settled through arbitration.

Look for language like:

"Any dispute arising out of or in connection with this agreement shall be referred to and finally resolved by arbitration..."

If there is such a clause, you are legally bound to go to arbitration before going to court (in most cases).

If there is no clause, both parties can still mutually agree in writing to go for arbitration.

Step 2 — Send or Respond to a Notice

If you are starting arbitration:

Send a written Notice of Arbitration to the other party. This notice should include:

• A description of the dispute

• The relief or amount you are claiming

• Your request to appoint an arbitrator (or initiation of the appointment process)

If you receive a Notice of Arbitration:

• Do not ignore it. Respond within the time limit mentioned.

• Consult a lawyer immediately — the response you give sets the tone for the entire arbitration.

Step 3 — Appointment of the Arbitrator

This is often the most contested part. Here's how it works:

• For a sole arbitrator: Both parties mutually agree on one person.

• For a three-member tribunal: Each party appoints one arbitrator, and those two appoint the third (presiding) arbitrator.

• If parties cannot agree, either party can approach the Supreme Court, High Court, or a designated institution under the Arbitration Act to appoint the arbitrator.

Under the 2019 amendment, graded arbitral institutions (accredited by the Arbitration Council of India) can appoint arbitrators quickly, reducing delays.

Step 4 — Understand Your Rights Before the Arbitration Begins

You have the right to:

• Challenge an arbitrator if there is a conflict of interest or doubt about impartiality (within 15 days of becoming aware).

• Choose the seat (location) and venue of arbitration — this matters for which court will have jurisdiction.

• Agree on the rules — whether to follow Institutional Rules (like SIAC, ICC, DIAC, or domestic institutions) or ad-hoc arbitration.

• Interim relief — you can apply to the arbitral tribunal or a court for urgent orders (like freezing assets) even before arbitration begins.

Step 5 — Prepare Your Case Thoroughly

Arbitration, while less formal than a court, is still a legal proceeding. Here's what to do:

• Hire a lawyer — preferably one with arbitration experience.

• Gather all evidence: Contracts, purchase orders, invoices, correspondence (emails, letters, WhatsApp), bank statements, delivery receipts, etc.

• Identify your witnesses: People who can support your version of events.

• Prepare a Statement of Claim (if you are the claimant) — this is your formal written case that explains what happened and what you want.

• Review the other party's Statement of Defence carefully and prepare a counter.

Step 6 — The Arbitration Proceedings

Typically, the process looks like this:

Stage	What Happens
Preliminary hearing	Procedural issues, timelines, and scope are fixed
Statement of Claim	Claimant submits their written case
Statement of Defence	Respondent replies
Document exchange	Both parties share evidence
Oral hearings	Witnesses are examined and cross-examined
Final arguments	Written or oral closing submissions
Award	Arbitrator(s) issue the final decision

What YOU should do during proceedings:

• Attend all hearings or be represented by your lawyer.

• Submit documents on time — delays can hurt your case.

• Be truthful in your statements. Arbitrators value credibility.

• Do not make personal attacks — keep arguments focused on facts and law.

• Ask your lawyer to file for interim measures if you fear the other party is disposing of assets.

Step 7 — The Arbitral Award

Once the hearings are over, the arbitral tribunal will pass an Arbitral Award. This is the final decision.

Under the Arbitration and Conciliation Act:

• The award is binding on both parties.

• It can be enforced like a court decree under Section 36 of the Act.

• The time limit for passing an award is 12 months from when the tribunal is constituted (extendable by 6 more months with consent, and beyond that only by court order).

Step 8 — Challenging the Award (If Needed)

You can challenge an arbitral award by filing an application in the High Court under Section 34 of the Arbitration Act. However, the grounds are very limited:

• You were not given proper notice

• You were unable to present your case

• The award deals with matters beyond the scope of arbitration

• The arbitral procedure was not as agreed

• The award is against the public policy of India

• The award was obtained by fraud or corruption

Important: The deadline to challenge is 3 months from the date you receive the award. Do not miss this window.

If you don't challenge within the deadline, the award becomes final and can be enforced against you.

Quick Comparison: Mediation vs Arbitration

Feature	Mediation	Arbitration
Who decides?	The parties themselves	The arbitrator
Is the outcome binding?	Only if a settlement is signed	Yes, always
Can it be challenged?	Limited grounds	Yes, but limited grounds
Time taken	Days to weeks	Months to a year or more
Cost	Lower	Higher than mediation
Confidentiality	Yes	Usually yes
Suitable for	Relationship-based disputes	Commercial, legal disputes
Legal representation	Optional	Recommended

Common Mistakes to Avoid

1. Ignoring a mediation or arbitration notice — This can go against you legally.

2. Going without legal advice — Even in mediation, understanding your rights helps.

3. Signing documents under pressure — Take your time; once signed, the settlement or award is hard to undo.

4. Not preserving documents — Always save your emails, messages, and contracts digitally.

5. Assuming arbitration is like a casual meeting — It is a formal legal process with strict timelines.

6. Missing the deadline to challenge an award — 3 months is strict; courts rarely extend it.

7. Choosing the wrong arbitrator — Always check for potential conflicts of interest.

Helpful Institutions in India

• Arbitration Council of India (ACI) — Grades and regulates arbitral institutions

• ICADR — International Centre for Alternative Dispute Resolution, New Delhi

• DIAC — Delhi International Arbitration Centre

• MCIA — Mumbai Centre for International Arbitration

• SAMA — Online mediation platform for commercial disputes

• Lok Adalats — Free settlement forums for pending court cases

• Consumer Commissions — For consumer disputes (an alternative to arbitration for consumers)

• MSME Facilitation Councils — Mandatory conciliation/arbitration for MSME payment disputes

Final Thoughts

Whether you are a business owner facing a contract dispute, a homebuyer stuck in a real estate argument, or an employee with a workplace grievance — mediation and arbitration offer you a faster, cheaper, and more private path to resolution compared to the traditional court system.

The key is to be prepared, informed, and proactive. Don't wait for things to escalate. If you see a dispute coming, explore mediation early. If you are already in arbitration, take it as seriously as you would a court case.

India's legal system is actively pushing towards these alternative methods — and rightly so. Use them wisely.