Mediation in Nepal: Legal Process, Rules, and Benefits Explained

Mediation is an alternative dispute resolution (ADR) mechanism that emphasizes amicable settlement of disputes through mutual understanding and cooperation, without resorting to lengthy and adversarial court procedures. In Nepal, mediation has gained increasing importance as a tool to reduce the burden on the judiciary and promote harmonious conflict resolution. The Mediation Act, 2068 B.S. (2011 A.D.), serves as the primary legislation governing mediation in the country, outlining procedures, qualifications of mediators, and the legal status of mediated settlements.

The Constitution of Nepal, 2015, also encourages alternative dispute resolution practices, recognizing mediation as an effective and community-based approach to resolving disputes, especially at the local level. The Local Government Operation Act, 2074 B.S., further empowers local bodies to facilitate mediation in civil, familial, and minor criminal matters, thereby enhancing access to justice.

Mediation in Nepal is used in various sectors including family disputes, business conflicts, property matters, and community disagreements. It is voluntary, confidential, and focuses on achieving a win-win solution with the help of a neutral third-party mediator. With increasing legal reforms and institutional support from courts and local governments, mediation is becoming an integral part of Nepal's justice system, contributing to social harmony and efficient dispute resolution.

Legal Provisions of Mediation law.

Dispute may be settled through mediation :

A dispute may be settled through mediation under certain conditions as outlined in Nepal’s Mediation Act. If an agreement between parties includes a clause for mediation, any disputes arising under that agreement must follow the mediation procedure specified therein. Even if there is no such clause, parties can choose to resolve a dispute, whether or not it is currently under consideration by a court—through mediation, provided the issue is legally eligible for compromise. If a case is already sub judice, the parties may jointly request the adjudicating body to allow mediation at any stage, and the court must issue an order accordingly. Additionally, if the court itself deems mediation suitable and both parties agree, it may also order the dispute to be mediated. However, if the dispute includes any issue that requires a legal ruling and cannot be resolved through mediation, the court cannot issue an order for mediation.

Appointment of the mediator

If an agreement includes a provision for appointing a mediator, the mediator must be appointed according to that provision. However, if no such provision exists in the agreement, the mediator shall be appointed in accordance with the Mediation Act. In such cases, the parties involved in the dispute must mutually agree on the appointment of the mediator.

Mediator to be appointed by the adjudicating body

If a court orders a dispute to be settled through mediation or if the parties fail to appoint a mediator themselves, the adjudicating body will direct the parties to submit the name of a mediator within a specified time. If the parties agree on a mediator and submit the name in time, the adjudicating body will appoint that person. However, if the parties fail to propose a mediator, the adjudicating body will appoint a mediator from the list of eligible persons after obtaining the parties' consent.

An order to be issued for appointing the mediator

If a dispute is to be settled through mediation as directed by the adjudicating body, the adjudicating body must issue an official order to appoint a mediator. While doing so, the mediator must be selected from among individuals who have been certified to serve as mediators .

Matters to be Observed by the Mediator:

While carrying out mediation duties, a mediator must adhere to the following principles:

1. Act with complete impartiality during the mediation process.
2. Avoid any favoritism, bias, or prejudice, as well as any behavior that might appear partial.
3. Refrain from using fear, coercion, deception, or manipulation to influence either party.
4. Do not engage in any financial dealings with the parties until the dispute is resolved.
5. Ensure all actions comply with this Act and the related Rules throughout the mediation process.
6. Avoid any financial involvement or other actions that could lead to a conflict of interest during mediation.
7. Follow the prescribed code of conduct while conducting mediation proceedings.

Mediators May Be Removed

If a mediator is found to be unqualified according to Section 22, the parties involved, the appointing agency, or the adjudicating body must promptly remove the mediator. Additionally, the adjudicating body may remove a mediator at any time if a complaint is received or an issue is noticed involving the mediator’s misconduct. Grounds for removal include failure to perform duties as required, acting unfairly or fraudulently against a party or the dispute, repeated mistakes or irregularities during mediation, unjustified delays or reluctance in mediation proceedings, and unauthorized breach of confidentiality that harms a party’s interests.

Mediation Proceedings to Commence

Mediation proceedings are considered to have started when a party involved in a dispute (not yet filed in court) serves notice to the other party, or when the parties apply to the adjudicating body, or when the adjudicating body orders mediation under relevant provisions. For community-based mediation, the process begins when the concerned party requests the community’s intervention. Once mediation starts, the parties must present the dispute to the mediator. During the mediation process, no adjudicating body shall intervene in the case unless otherwise specified by law, until the mediation concludes.

Procedure Relating to Settlement of Dispute

The procedure for settling disputes through mediation is primarily determined by the parties involved. If the parties agree to follow rules set by a mediation service agency, those rules will govern the process. When mediation is ordered by an adjudicating body, the dispute must be settled according to the procedure prescribed by that body. If no specific procedure is provided, the mediator will establish an appropriate process, considering the nature of the dispute and the parties’ interest in a timely resolution. This procedure may include presenting claims and replies, holding meetings, exchanging information or evidence, and exploring alternative solutions. Additionally, the governing Board may develop and issue a model procedure for dispute resolution.

Termination of Mediation Proceedings

Mediation proceedings can be terminated under several conditions: if the parties do not agree to mediation as per the prescribed procedure; if the parties fail to appear before the mediator on the scheduled date; if the mediation process cannot proceed due to the absence of a party at a scheduled meeting; or if the parties reach an agreement on the terms and conditions and the mediation document is duly prepared. These conditions ensure that mediation either progresses with the parties’ cooperation or ends appropriately when an agreement is reached or participation is lacking.

Qualification of Mediator

To be eligible as a mediator in Nepal, a person must be a Nepali citizen, at least 25 years old, hold a bachelor’s degree from a recognized institution, and have completed prescribed mediation training. Additionally, the mediator must be of sound mind, not convicted of a criminal offense involving moral turpitude, not declared bankrupt, and not previously removed from the mediator roster for misconduct. However, if parties mutually agree, a literate person aged 25 or above may serve as a mediator even without formal mediation training. For disputes involving foreign parties or contracts, foreign nationals may also be appointed as mediators.

Mediation in Nepal is increasingly recognized as an effective alternative dispute resolution method that promotes amicable settlements while reducing the burden on courts. Governed primarily by the Mediation Act, 2068 B.S. (2011), and supported by constitutional and local government provisions, mediation encourages voluntary, confidential, and cooperative dispute resolution. The process begins with parties’ consent or court order, appointing qualified mediators either by agreement or adjudicating body. Mediators must act impartially, ethically, and without conflicts of interest, and can be removed for misconduct or incompetence. Mediation procedures are flexible, often tailored to parties’ needs, and terminate upon agreement or non-cooperation. Overall, mediation supports access to justice, social harmony, and timely conflict resolution in Nepal’s legal landscape.