Key Details
The Asian Development Bank Institute (ADBI) policy brief, Practical Measures to Promote the Wider Use of Mediation, shifts attention from mediation law to the incentives and institutional concerns influencing actual dispute-resolution decisions.
Barrier identified | Practical measure proposed |
|---|---|
Officials and executives may be blamed for accepting an unfavourable settlement | Advance settlement authority, settlement-review committees and qualified safe-harbour protections |
Hourly billing can make early settlement financially unattractive to external counsel | Success fees or incentives linked to demonstrable cost savings |
Parties doubt whether mediators add value beyond failed negotiations | Accreditation, sector expertise, competency standards and continuing professional development |
Mediation may fail, adding another procedural stage before arbitration or litigation | Limited information exchange and hybrid Arb-Med or Arb-Med-Arb procedures |
Suggesting mediation can be perceived as weakness or an admission that negotiation failed | Corporate mediation pledges, professional training and a duty to consider mediation in public contracts |
For investor–state disputes, the brief cites indicative arbitration costs of around $5 million for the state and a duration of three to four years. Mediation is estimated to cost $25,000–$100,000 per party and take an average of approximately eight months from appointment of the mediator to conclusion.
The brief is a policy analysis informed by an ADBI–ADB dialogue, not a new cross-country evaluation of mediation outcomes. It does not separately assess India.
Lower Cost Alone Does Not Make Mediation the Preferred Option
Mediation allows disputing parties to determine the outcome rather than have a decision imposed by a court or arbitral tribunal. It can also produce commercial solutions unavailable through adjudication, including revised delivery arrangements, continued cooperation or restructured contracts.
These advantages do not remove a fundamental concern: mediation cannot guarantee a settlement. If it fails, parties may still face arbitration or litigation, making the time and money spent on mediation appear to be an additional cost. The brief therefore argues that promoting benefits alone will not overcome uncertainty about finality.
Accountability Can Make Litigation the Institutionally Safer Choice
The most consequential finding concerns public bodies, state-owned enterprises and senior corporate decision-makers. A mediated settlement requires them to accept responsibility for a negotiated outcome. Litigation and arbitration, by contrast, place the final decision in the hands of a judge or tribunal.
Where settlements may later be examined by auditors, regulators, boards or legislatures, officials can fear being judged against a hypothetical better result. The brief proposes documented prior authorisation, independent settlement review and protection for good-faith decisions taken through established procedures. These measures would preserve accountability while reducing the personal risk attached to reasonable settlements.
This has direct relevance for India: passing a mediation law does not by itself ensure that government departments and public enterprises have the authority, internal procedures or institutional confidence to settle disputes.
Lawyers’ Advice and Payment Structures Shape the Choice
Legal advisers often influence dispute-resolution clauses before a dispute arises and determine whether mediation is proposed once one begins. A survey cited in the brief found that 61% of respondents choosing international commercial mediation did so on the advice of external counsel.
Yet an early mediated settlement may reduce work billed by the hour. The authors consequently propose remuneration guidelines that allow clients and lawyers to use performance-based fees or share verified cost savings. These are presented as voluntary models, not mandatory fee rules.
The larger point is that mediation policy must address the commercial incentives of those advising parties, rather than assume awareness campaigns will change professional behaviour.
Mediator Quality Determines Whether the Process Adds Value
Businesses that have already attempted direct negotiation may question what another facilitator can contribute—particularly in technically complex disputes. The policy brief therefore places importance on sector knowledge alongside negotiation and mediation skills.
Accreditation should demonstrate more than completion of training. Competency standards, continuing education and quality assurance are needed if businesses are to trust mediators with complex commercial, infrastructure, technology or financial disputes.
Hybrid Procedures Can Reduce the Risk of a Failed Mediation
The brief supports Arb-Med and Arb-Med-Arb models that combine mediation’s flexibility with arbitration’s procedural certainty. A narrowly limited exchange of important documents — or “mini-discovery” — could help parties assess the strengths and risks of their positions before negotiating.
If mediation succeeds, the settlement can be formalised through the applicable legal mechanism. If it fails, arbitration can continue without the parties having to begin an entirely separate process. Such models may be especially useful where businesses want to attempt settlement without sacrificing a route to a binding decision.
What Is Arb-Med-Arb?
Arb-Med-Arb is a staged dispute-resolution process. Arbitration begins first, after which proceedings are paused for mediation. If the parties settle, the agreement may be recorded as a consent award where legally appropriate; if they do not, arbitration resumes. The structure combines an opportunity for negotiated settlement with the assurance that the dispute can still reach a binding conclusion.
Policy Relevance
India has enacted the Mediation Act, 2023, and already provides for pre-institution mediation in specified commercial disputes. It also signed the Singapore Convention on Mediation in 2019, although the UN treaty record did not list India as having ratified it as of July 2026. India’s legal framework therefore forms only one part of the transition from litigation-led dispute resolution to routine commercial mediation.
For Indian policymakers, the ADBI analysis points to three operational priorities:
Public-sector settlement authority: Departments and public enterprises need clear approval thresholds, documentation standards and responsibility for deciding when mediation is commercially justified. Without these protections, officials may rationally prefer prolonged litigation.
A credible professional market: Mediator accreditation must establish competence, specialisation and continuing quality, while lawyers’ fee arrangements should not penalise early resolution.
Compatible dispute-resolution pathways: Commercial contracts and institutional rules can enable parties to move efficiently between mediation and arbitration, limiting the risk that an unsuccessful mediation merely duplicates cost and effort.
The policy objective is not simply to increase the number of mediation referrals. It is to make mediation a credible, accountable and commercially rational choice for businesses and public institutions.
Follow the Full Policy Brief Here: Practical Measures to Promote the Wider Use of Mediation