Nepal has a long history of settling disputes out of court. Community leaders and village elders have settled disputes in Nepal since time immemorial. Through the introduction of laws governing local bodies, elected leaders were authorized to settle disputes at the local level under village panchayat and municipalities laws. As part of the decentralization of judicial powers, local bodies were also authorized to settle certain kinds of disputes through mediation and arbitration.

The Mediation Act of 2011 and Mediation Regulation legislation of 2014 have recognized community mediation, ethnic community practice, and corporate mediation. Mediation and Negotiation techniques have been applied in Nepal to end political disputes on various occasions, including the comprehensive peace agreement between the then government and the Maoists in 2006.