Arbitration, Mediation and Conciliation · Various Modes and Scope of Mediation including Role of Mediation in other ADR Domains

Cost of Mediation under Section 25 of the Mediation Act, 2023

Updated 11 October 2026 · Fact-checked

Section 25 of the Mediation Act, 2023 says the cost of mediation, other than community mediation, is as specified. Unless the parties agree otherwise, all costs, including the mediator's fees and the mediation service provider's charges, are borne equally by the parties. Your answer must state the default rule and the agreement exception.

Understand Cost of Mediation (Section 25)

Mediation is a voluntary, confidential process where a neutral mediator helps parties settle a dispute. The mediator and the institution that runs the process need to be paid. Section 25 answers one question: who bears that cost?

The section has two parts. Sub-section (1) says the cost of mediation, other than community mediation, shall be such as may be specified. So the amounts are not fixed in the Act itself. They are left to be specified separately. Community mediation is kept outside this sub-section.

Sub-section (2) gives the sharing rule. Unless otherwise agreed by the parties, all costs of mediation are borne equally by the parties. The costs expressly include the fees of the mediator and the charges of the mediation service provider.

Think of it as a default rule. If the parties say nothing, each side pays an equal share. If they agree a different split, for example the company pays 70% and the supplier 30%, their agreement prevails. The word 'equally' is about the parties, not about their claim sizes. A party with a larger claim does not pay more unless the parties agree so.

Remember one more point for answers. The section covers costs of the mediation process. It does not say the winner recovers costs from the loser, because mediation ends in a settlement, not in a decision.

Key rules to remember

Cost of mediation (Section 25(1)): Cost of mediation, other than community mediation = such as may be specified; The Act itself does not fix amounts. Community mediation is outside this sub-section.
Default sharing rule (Section 25(2)): Each party's share = Total costs ÷ Number of parties, unless otherwise agreed; Total costs include the mediator's fees and the mediation service provider's charges. Worked examples assume the shares fall equally on the parties.
Agreement exception: Parties' agreement on sharing > default equal sharing; The equal rule applies only when the parties have not agreed otherwise.

How to solve Cost of Mediation (Section 25) questions

Use this method for any question on who pays mediation costs. Keep the answer in provision, analysis, conclusion form.

1Identify the type of mediation. If it is community mediation, note that Section 25(1) excludes it from the specified cost rule.
2State Section 25(1): the cost is as specified, so the amount comes from the specified scale, not from the Act.
3Check the facts for any agreement between the parties on cost sharing, written or otherwise recorded in the facts.
4If there is no agreement, apply Section 25(2): all costs are borne equally by the parties.
5List what counts as cost: the mediator's fees, the mediation service provider's charges, and other mediation costs.
6Compute each party's share by dividing the total by the number of parties, or apply the agreed ratio.
7Conclude clearly: who pays how much, and the basis, either the default rule or the agreement.

Quickest way: Agreement first, then equal split

When to use it: Use this when the question gives a total fee and asks who pays what.

Look for words like 'agreed', 'as per the clause' or 'in the ratio'.
If found, apply that ratio to the total cost.
If not found, divide the total equally among the parties.
Write one line citing Section 25(2) and give the figures.

Common mistakes in Cost of Mediation (Section 25)

Saying the claimant alone pays the mediator's fees.
Students carry over the idea of the party who starts the proceeding paying, or of litigation costs following the result.
Fix: State that, unless otherwise agreed, all costs are borne equally by the parties, whoever started the mediation.
Leaving out the 'unless otherwise agreed' exception.
Students memorise only 'borne equally'.
Fix: Always write the rule with its condition: equal sharing is the default and a different agreement overrides it.
Treating the mediation service provider's charges as separate from costs.
Students think only the mediator's fee is a cost.
Fix: Section 25(2) says all costs include both the mediator's fees and the charges of the mediation service provider.
Quoting fixed fee amounts from the Act.
Students assume the Act gives a fee table.
Fix: Say that under Section 25(1) the cost is such as may be specified. Do not invent figures.
Applying Section 25(1) to community mediation.
The words 'other than community mediation' are easy to miss.
Fix: Note that sub-section (1) deals with the cost of mediation other than community mediation.
Sharing costs in proportion to claim amounts without any agreement.
Students think a bigger claim means a bigger share.
Fix: Default is equal sharing. Proportionate sharing needs the parties' agreement.

Worked examples

Example 1

Aarav Textiles Pvt Ltd and Bharat Dyes Ltd go to mediation over a supply dispute. Their contract is silent on mediation costs. The mediator's fees are ₹60,000 and the mediation service provider's charges are ₹20,000. Who pays what?

Show the solution

Provision: Section 25(2) of the Mediation Act, 2023 says that, unless otherwise agreed, all costs, including mediator's fees and the service provider's charges, are borne equally by the parties.
Facts: The contract is silent, so there is no agreement on a different split.
Total cost = ₹60,000 + ₹20,000 = ₹80,000.
Number of parties = 2, so each share = ₹80,000 ÷ 2 = ₹40,000.

Answer: Each company bears ₹40,000, because the default equal-sharing rule in Section 25(2) applies when the parties have not agreed otherwise.

Example 2

Kaveri Foods Ltd and Mehta Logistics LLP agreed in writing that Kaveri Foods will bear 75% of all mediation costs. The total costs are ₹1,20,000. Is the agreement valid for cost sharing, and what does each pay?

Show the solution

Provision: Section 25(2) makes equal sharing apply only 'unless otherwise agreed by the parties'.
Analysis: The parties have agreed a different ratio, so the default does not apply.
Kaveri Foods pays 75% of ₹1,20,000 = ₹90,000.
Mehta Logistics pays the balance 25% = ₹30,000.

Answer: The agreement prevails over the default rule. Kaveri Foods pays ₹90,000 and Mehta Logistics LLP pays ₹30,000.

Exam tips

Write the rule in two parts every time: costs as specified, and equal sharing unless otherwise agreed.
Name the cost heads from the section: the mediator's fees and the mediation service provider's charges.
In case questions, first hunt for an agreement on cost sharing in the facts, then apply the default.
Do not quote fee amounts or extra sections you are unsure of. Say the cost is as specified.
Show the arithmetic clearly: total, number of parties, each share.

Practice questions from Various Modes and Scope of Mediation including Role of Mediation in other ADR Domains

Cost of Mediation (Section 25): frequently asked questions

Who pays the mediator's fees under the Mediation Act, 2023?

Unless the parties agree otherwise, the parties bear all costs equally under Section 25(2). This includes the mediator's fees. If they have agreed a different split, that agreement applies.

Does the Mediation Act fix the amount of mediation fees?

No. Section 25(1) says the cost of mediation, other than community mediation, shall be such as may be specified. The amount is therefore determined by what is specified, not by a figure in the section.

Can parties share mediation costs in a ratio other than equal?

Yes. Section 25(2) applies the equal-sharing rule only unless otherwise agreed by the parties. They may agree any ratio.

Does Section 25 cover community mediation?

Sub-section (1) speaks of the cost of mediation other than community mediation. So the specified-cost rule in that sub-section does not extend to community mediation.