The Role of Mediation in Resolving Energy Disputes


“An ounce of mediation is worth a pound of arbitration and a ton of litigation.” Joseph Grynbaum. Mediation is a process where a neutral third party facilitates communication and negotiation between the parties involved in a dispute to reach a mutually agreeable solution. A mediator does not impose a solution but creates a conducive environment in which disputing parties can resolve all their disputes.[1] In cases of energy disputes mediation is well-suited compared to arbitration and litigation as in litigation and arbitration, the judge or lawyers facilitate the process and the parties can’t participate in the discussion, whereas, in mediation, the disputing parties facilitate and control the discussion.

This research paper examines the role of mediation in resolving energy disputes by examining cases and taking foreign countries’ examples. This paper also critically analyses the need for mediation and explains why it should be preferred over litigation and other modes of alternative dispute resolution. In the end, the paper also proposes solutions and suggestions to improve the style of mediation adopted in the field of energy disputes.


Mediation, Energy Disputes, Draft National Energy Policy 2017, Alternative Dispute Resolution for energy, Conciliation.


In recent years, the global demand for energy has witnessed significant growth, triggering an upsurge in energy production and consumption. However, this expansion has also brought about a rise in energy-related disputes. As a critical player in the global energy landscape, India has experienced its fair share of conflicts both within its borders and beyond. Energy disputes are a common occurrence in the energy sector and can arise from a variety of issues such as contract disputes, environmental concerns, and regulatory compliance. These disputes can be complex and costly and can have significant impacts on the parties involved, as well as on the broader energy market. Mediation has emerged as an effective tool for resolving energy disputes, providing parties with a cost-effective and efficient way to resolve their differences.

Research Methodology

This research paper uses an analytical approach to provide insight into the subject of the role of mediation in energy disputes. The research is based on secondary sources like journal articles, Indian bills, UN reports, newspapers, and journal articles.  This research paper is based on a review of domestic and international case laws along with Indian statutory reports and national policy. The case studies are drawn from a range of energy disputes, including contract disputes, environmental disputes, and regulatory disputes. This research paper examines the role of mediation in resolving energy disputes and critically signifies the importance of mediation. The key findings suggest that mediation can be an effective tool for resolving energy disputes, particularly in cases where parties have an international relationship. The paper concludes with recommendations for improving the use of mediation in energy disputes.

Review of Literature

The existing body of literature on mediation and energy disputes suggests that mediation can be an effective tool for resolving energy disputes, particularly in cases where parties have a continuing relationship. Mediation is a form of alternative dispute resolution that involves a neutral third party, or mediator, who facilitates communication and negotiation between the parties in dispute. Mediation is based on the principles of voluntary participation, confidentiality, and impartiality. Research has shown that mediation can be an effective tool for resolving disputes, providing parties with a cost-effective and efficient way to resolve their differences. The case laws mentioned in the research paper elucidate the growing demand for alternative dispute resolution. NITI Ayog’s draft on national energy policy indicates the need for a modified legislature for Mediation.

Mediation- The Marvel

The specific reason mediation fits best is that energy contracts run for a long haul hence the contract often coincides with the current time. Due to the huge time lapse ordinarily, there are statutory changes that force a modification in the contract which usually gives an unfair advantage to one party over the other. Due to policy changes the parties are often seen attacking each other rather than mutually modifying the agreement. This is where mediation comes in place unlike arbitration and litigation a neutral third party doesn’t judge both parties’ fight instead the mediator facilitates a fruitful discussion. Mediation provides a platform for both the aggrieved party to renegotiate in good faith. One key advantage of mediation is price negotiation since the price fluctuates over the decades the contract last. The contracts relating to energy contain clauses for a price review, including indexation or references embedded in contracts to market prices, with corresponding clauses to renegotiate contracts. Considering the very substantial volumes provided over the course of a long-term gas contract, even a little change in price per unit of gas can result in a massive shift in revenue, perhaps in the hundreds of millions of dollars[2]. Mediation is better than arbitration as both parties retain their power and engage in a fresh negotiation smoothen with the help of an experienced mediator.

Pros and Cons of Mediation


Cost-Effectiveness: Compared to litigation or arbitration, mediation is generally a more cost-effective option. It reduces legal expenses, avoids lengthy court proceedings, and allows parties to allocate resources toward resolving the dispute rather than costly legal fees.

Time Efficiency: Mediation offers a faster resolution process than traditional litigation or arbitration. Parties can schedule mediation sessions at their convenience, potentially resolving the dispute within weeks or months, rather than years.

Preserving Relationships: Energy disputes can strain long-term business relationships. Mediation promotes open communication and collaboration, helping parties maintain constructive relationships and explore mutually beneficial outcomes, which can be crucial in the energy industry. It is also confidential and doesn’t hamper the parties’ reputation.

Flexible and Tailored Solutions: Mediation allows parties to craft customized solutions, it is difficult to retain the original contract completely but mediation allows for the formulation of a fresh contract mutually agreed upon by the two parties.


Voluntary Participation: Mediation relies on the voluntary participation of all parties involved. If one party refuses to engage in the mediation process or is not genuinely committed to finding a resolution, the effectiveness of mediation may be compromised.

Power Imbalance: Mediation may be less effective when there is a significant power imbalance between the parties. If one party holds a dominant position or has more resources and leverage, it may exert undue influence during the mediation process, making it challenging to achieve a fair and balanced resolution.

Limited Discovery and Evidence: Unlike litigation or arbitration, mediation does not typically involve an extensive discovery process or formal presentation of evidence. While this can be advantageous in terms of cost and time efficiency, it may limit the parties’ ability to thoroughly explore and substantiate their claims or defenses.

Lack of Precedent: Mediation proceedings are confidential, and the outcomes are typically not publicly disclosed. As a result, there is a lack of precedent and legal guidance that can be drawn from previous mediation cases. This can make it difficult for parties to assess the potential outcomes of mediation and may discourage some from choosing this method of dispute resolution.

Energy disputes

One of the key reasons for the energy dispute in India is its dependence on coal. Some of the issues leading to the power deficit situation in the country include shortage of fuel, high AT&C losses, a differential tariff structure, and delays in tariff revisions.[3] While India has shown positive steps towards adopting renewable energy access to energy is a tremendous problem in India and major inequalities of access plague the subcontinent. According to one census, 77 million households in India still use kerosene for lighting.[4] Some of the key areas of energy dispute in India is as follows:-

Energy Disputes in India:

Natural Resource Allocation: India’s rich reserves of coal, oil, and natural gas have been at the center of numerous disputes. Allocation of mining rights and licenses has been a contentious issue, often leading to conflicts between government entities, private companies, and local communities. These disputes highlight the need for transparent and equitable allocation mechanisms to ensure sustainable resource management.

Power Purchase Agreements (PPAs): The power sector in India has witnessed several disputes related to Power Purchase Agreements. These agreements define the terms and conditions for electricity procurement between power generators and distribution companies. Disputes arise over issues such as tariff revisions, non-compliance with contractual obligations, and force majeure events. Timely resolution of these conflicts is crucial to maintaining a stable and investor-friendly energy market.

Renewable Energy: India’s ambitious renewable energy targets have led to an increase in disputes in this sector. Issues such as land acquisition, tariff renegotiations, delays in project execution, and payment defaults have created hurdles for renewable energy developers. Balancing the interests of developers, consumers, and the environment is crucial to promote sustainable growth in the renewable energy sector.

Import Issue- India’s energy imports are estimated to grow 43.6 per cent in FY2023 over the previous year. Energy imports include coal, coke, crude oil, LNG, and LPG. Energy-related products dominate India’s import basket and account for 36.6 percent of the total merchandise import bill. India’s energy import bill for FY23 is estimated to be $260 billion.[5] Due to the huge dependency on other nations, disputes are often solved following other counties’ laws or international laws. India is yet not self-sufficient to reach its own energy demands.

Energy Disputes Abroad:

International Oil and Gas Disputes: India’s dependence on oil and gas imports exposes it to international energy disputes. Pricing disputes, supply disruptions, and contractual disagreements with foreign oil and gas suppliers can impact India’s energy security. Ensuring robust diplomatic and commercial relationships with supplier nations becomes vital to prevent disruptions in energy supplies.

Cross-Border Energy Infrastructure: The development of cross-border energy infrastructure projects, such as pipelines and transmission lines, often leads to disputes among involved nations. Disagreements over project costs, transit fees, and territorial claims can impede the progress of such ventures. Constructive dialogue and cooperation between nations are essential to overcome these challenges and foster regional energy integration.

International Arbitration: Indian energy companies investing abroad have occasionally encountered disputes that require international arbitration. Disputes may arise due to differences in the interpretation of contracts, regulatory changes, or allegations of corruption. The resolution of such disputes through fair and efficient arbitration mechanisms is vital to protect the interests of all parties involved.


The mediation process used in energy disputes involves a series of steps, including the selection of a mediator, the preparation of parties for mediation, the opening session, the negotiation phase, and the closing session. The role of the mediator is to facilitate communication and negotiation between the parties and to help them reach a mutually acceptable agreement. The advantages of mediation in energy disputes include its flexibility, confidentiality, and cost-effectiveness. However, mediation also has some limitations, including the need for parties to be willing to participate, and the potential for power imbalances between the parties. The Energy Charter Treaty (ECT) encourages the amicable resolution of investment disputes and allows parties to an investment dispute to resort to mediation at any point in time.[6] There is often a cooling period varying from 1 month to 3 months provided to both parties. Mediation usually only occurs if it’s pre-decided by both parties and the laws applicable are mutually agreed upon by both parties. The mediator is appointed by either party but must be jointly approved. The success of mediation hugely depends on the capabilities and talents of the mediator. Mediation often starts with conciliation which maybe frowned upon by the parties but is an important step to establish a supportive environment for the negotiations to take place.  The aim of mediation is to reach a solution and not pinpoint blame on one another. The mediator should ensure neither party suffer and both receive the equitable solution as per the situation. The mediation meetings must be recorded and summarised in written records that can be used later by the parties. The mediator must conduct individual sessions with the parties and understand what exactly the party needs from the other party. After assessing the situation, it should propose amicable solutions. If the solution is rejected by the party’s joint session should be held. The mediator should carefully interrupt the discussion. Overall the mediation should be settlement oriented evaluative and factual-based. The mediator must adopt design thinking and find the gap in both the parties’ arguments to reconcile them together.


Meditation is not quite developed in India and is often used in commercial disputes only.  The Arbitration and Conciliation Act 1996[7] is the only governing law that mandates mediation as of now. The Indian parliament passed a mediation bill with the intention to provide sanctity to the procedure as well as provide a common platform for its practice and remove inconsistencies between existing legislation.[8] However, the bill is not passed yet. NITI Ayog had also prepared a draft National Energy Policy which aimed at making the energy sector more effective by giving it more independence and reducing the interference from other ministries. It also focused on the adoption of renewable energy for domestic purposes. In India mediation happens in two ways either private mediation which is often pre-planned and widely used in cases of commercial dispute or court-referred mediation. If the honourable judge believes the dispute should be handled by mediation it can use its discretion power and advise the parties for the same. It widely occurs in cases of matrimonial disputes or civil cases.  


There are many examples of energy disputes that have been resolved through mediation. One notable example is the dispute between the government of Ecuador and Chevron[9] over environmental contamination in the Amazon rainforest. The parties agreed to a settlement of $9.5 billion, which was paid by Chevron to the government of Ecuador without any public apology. The case started in 2009 and ended in 2018. It is the greatest arbitral award ever awarded in an environmental lawsuit.  Another example is the dispute between the government of India and Reliance Industries[10] over allegations of illegal gas extraction. The parties agreed to a settlement of $1.5 billion, which was paid by Reliance Industries to the government of India. However, this decision was further challenged by Reliance Industry under sections 68 and section 69 of the Arbitration Act 1996 (‘the 1996 Act’)[11] which the reliance industry ultimately won after a period of 24 months of mediation.


Based on the findings of this study, we recommend that the use of mediation in the energy sector should be encouraged, particularly in cases where parties have a continuing relationship. To improve the use of mediation in energy disputes, we suggest that energy companies should develop internal mediation programs and that regulators should promote the use of mediation as a means of resolving disputes. We also recommend that mediators should be trained in the specific issues and challenges of the energy sector. Mediation can only be successful in India if laws are either amended or a separate piece of the legislature like the mediation bill is passed. Another obstacle in the way of mediation is the lack of well-trained mediators. Institutions must be set up to improve the quality of mediation and the quantity of mediators. Developing mediation in India requires a multi-faceted approach that involves raising awareness, strengthening the legal framework, providing comprehensive training, establishing institutional support, encouraging court integration, fostering public-private partnerships, and promoting research and data collection. By implementing these suggestions, India can foster a culture of mediation and realize its potential as an effective and preferred method of dispute resolution, benefiting individuals, businesses, and the overall justice system. Many countries and organizations have implemented policies and regulations that promote the use of mediation in energy disputes. For example, the European Union’s Directive on Mediation requires member states to encourage the use of mediation in cross-border disputes, including energy disputes. The International Energy Charter also promotes the use of alternative dispute resolution mechanisms, including mediation, for resolving energy disputes. In the United States, the Federal Energy Regulatory Commission has established a program to encourage the use of alternative dispute resolution mechanisms, including mediation, in the energy industry. The program provides training and support to industry stakeholders and has been successful in resolving many disputes.


Mediation is a valuable tool for resolving energy disputes, offering a flexible and confidential process that allows the parties to maintain a working relationship and control the outcome of the dispute. By improving the mediation procedure, analyzing important case law, and promoting policies that support its use, India can help to reduce the costs and impacts of energy disputes and promote a more sustainable energy industry. Mediation offers a valuable alternative to traditional approaches in resolving energy disputes. By fostering communication, understanding, and collaboration, mediation helps parties find sustainable agreements while preserving relationships. Its flexibility, cost-effectiveness, and time efficiency make it an attractive option for addressing complex issues in the energy sector. However, mediation is not a one-size-fits-all solution, and its success depends on skilled mediators, voluntary participation, and a commitment to meaningful dialogue. As the demand for energy continues to rise, the role of mediation in resolving energy disputes is becoming increasingly relevant and necessary for achieving sustainable outcomes.

By Ruchi Baid, 1st year Law Student, Jindal global law school.

[1] Taniya Yadav, Difference between mediation and arbitration IPLEADERS (June 13, 2023, 10:04 AM),

[2] Stephen P Anway , The Evolution of Natural Gas Price Review Arbitrations, GLOBAL ARBITRATION REVIEW (June 14th 2023, 12:10 PM),

[3]Prachee Mishra, Overview of issues in the power sector in India, PRS LEGISLATIVE RESEARCH (June 14th, 2023),,iv)%20delays%20in%20tariff%20revisions.

[4]  by Sean Durns, 5 energy problems confronting India, GLOBAL RISK INSIGHTS (June 14th 2023),

[5] Ajay Srivastava, Energy imports must be slashed, THE HINDU (June 14th, 2023)

[6] Brussels, Decision of the energy charter conference, ENERGY CHARTER

SECRETARIAT, (June 14th, 2023)

[7] The Arbitration and Conciliation Act, 1996, No. 26, Acts of Parliament, 1996 (India)

[8]  Shashank Singh, Mediation In India: Solving Disputes Out Of Court, LEGALSERVICEINDIA (June 14th, 2023)

[9] CHEVRON CORPORATION and Texaco Petroleum Company, Apelles v. The Republic of ECUADOR, 7103 U.S. 13 (2009)

[10] Union of India V. Reliance industries limited & ors. [2022] EWHC 1407 (Comm)

[11] The Arbitration and Conciliation Act, 1996, No. 26, Acts of Parliament, 1996 (India)

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