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

Lakshmi Traders and Gupta Steel are in a commercial dispute. Gupta Steel pays the entire mediator fee of ₹60,000 in advance without any cost agreement, and the mediation fails. Lakshmi Traders refuses to contribute, arguing that the unsuccessful mediation means no cost is payable. Based on Section 25 of the Mediation Act, 2023, what is the correct view?

The costs are still shared equally, so Lakshmi Traders' share is ₹30,000. Section 25(2) makes equal sharing the default irrespective of whether mediation succeeds, and advance payment by one party does not change that allocation absent a contrary agreement.

  1. ALakshmi Traders owes nothing because mediation failed
  2. BLakshmi Traders bears the whole fee because it refused to settle
  3. CThe costs remain to be borne equally, so Lakshmi Traders' share is ₹30,000Correct
  4. DThe costs are borne by the mediator for failing to secure a settlement

Explanation

Section 25(2) does not make the equal sharing depend on a successful outcome. Absent a different agreement, all costs are borne equally, so each party's share of ₹60,000 is ₹30,000. Gupta Steel's advance payment does not shift the liability.

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