3. Is a mediation settlement legally binding on both parties in India?
Yes. Under Section 27 of the Mediation Act, 2023, a mediated settlement agreement that is signed by the parties and authenticated by the mediator is generally final and binding on them, subject to the Act’s requirements and exceptions.
The Act provides for enforcement of a qualifying settlement in the same manner as a court judgment or decree, subject to the applicable legal provisions.
However, not every informal promise made during mediation automatically qualifies for this statutory enforcement process. The type of mediation, the form of the agreement and the applicable legal requirements matter.
4. What happens if one party refuses to follow the settlement?
If one party signs a valid settlement but later refuses to comply, the other party may have legal options.
For example, suppose two business partners agree through mediation that one partner will pay ₹5 lakh to the other within 30 days. If the responsible partner refuses to pay, the affected party may be able to seek enforcement of the settlement through the appropriate legal process.
The following steps may help:
- Keep a copy of the agreement. Preserve the signed settlement, the mediator’s authentication and any related correspondence.
- Identify the breached term. Determine exactly what the other party has failed to do, such as make a payment, transfer property or comply with a deadline.
- Send a written demand. Ask the other party to comply with the agreed terms and retain proof of the communication.
- Seek legal advice. A lawyer can determine whether the agreement qualifies for enforcement under the Mediation Act or another applicable law.
- Approach the competent court if necessary. Depending on the type of settlement, the court may be able to enforce the agreement through the prescribed procedure.
A party should not assume that a fresh full trial is always necessary. The available procedure depends on the nature and legal status of the settlement.
5. Can a signed mediation settlement be challenged?
Yes, but a party generally cannot escape an agreement simply by changing their mind.
Under Section 28 of the Mediation Act, 2023, a settlement covered by that provision may be challenged on specified grounds, including:
- Fraud.
- Corruption.
- Impersonation.
- The mediation concerned a dispute or matter that was not suitable for mediation under the Act.
The Act generally prescribes a period of 90 days from receipt of the settlement copy for filing such a challenge. A further period of up to 90 days may be allowed if the court or tribunal is satisfied that sufficient cause prevented the application from being filed in time.
The applicable provisions and any relevant commencement or transitional issues should be checked for the particular case.
6. What should someone check before signing a mediation settlement?
Before signing, consider these practical points:
- Read every clause carefully and ensure the terms are clear.
- Confirm the payment amounts, deadlines and responsibilities of each party.
- Make sure the agreement reflects what was actually agreed during mediation.
- Obtain the required signatures and mediator authentication.
- Complete any necessary registration or other legal formalities for property transfers.
- Keep the original agreement and copies of supporting documents.
- Consult a lawyer if the settlement involves substantial money, property ownership, inheritance or continuing obligations.
