Settlement of CSR Project Disputes via Mediation – Scope and Limitations

Abstract

Corporate Social Responsibility (CSR) in India has undergone a significant transformation with the enactment of Section 135 of the Companies Act, 2013, making CSR expenditure mandatory for eligible companies. This statutory framework has resulted in large-scale implementation of CSR projects across diverse sectors such as education, healthcare, environment, and rural development. However, the multi-stakeholder nature of CSR initiatives—including corporates, non-governmental organisations, implementing agencies, local communities, and government authorities—often leads to disputes. These conflicts may stem from mismanagement of funds, deviation from project objectives, delays in execution, or dissatisfaction among beneficiaries.

Conventional dispute resolution mechanisms like litigation or arbitration are often unsuitable for CSR disputes. Litigation is time-consuming, adversarial, and may adversely affect the company’s public image, while arbitration, although private, can be expensive and less flexible in addressing community concerns. Mediation, with its emphasis on collaboration, confidentiality, and preserving relationships, offers a more suitable approach for CSR-related conflicts. The recent enactment of the Mediation Act, 2023, provides a formal legislative framework for mediation in India, potentially opening new avenues for resolving CSR disputes efficiently.

This paper examines the scope of mediation in CSR disputes by analysing the legal framework, stakeholder perspectives, and practical advantages. It also critically evaluates the limitations, including enforceability issues, low awareness among stakeholders, and challenges in mediating disputes involving non-contractual community groups. Comparative insights from other jurisdictions are explored to identify best practices. The study proposes a tailored framework for adopting mediation in CSR project disputes, ensuring that social objectives are not compromised by unresolved conflicts.