Introduction
The legal structure in India on mandated mediation in business disputes has seen significant
modifications to advance alternative dispute resolution processes. Although mediation has
traditionally been a voluntary behavior, new laws have made pre-litigation mediation mandatory
for several civil and business dispute categories. There are numerous statutory provisions under
Indian law when parties could be required to mediate statutorily before filing a lawsuit. under
Indian law, Pre-institution mediation for specific business disputes is required under Section 12A
of the Commercial Courts Act, 2015.
In India, there have previously been attempts to formally require litigants to use mediation before
initiating a lawsuit. 2018 witnessed the addition of Section 12A with comparable provisions to
the Commercial Courts Act, of 2015. The Act states that parties must first pursue mediation as a
means of resolving their differences before filing a commercial lawsuit. Pre-institution Mediation
will result in a settlement that will be enforceable as an arbitral award between the parties.
Examining how this clause functions under the Commercial Courts Act can offer important
insights into how well the proposed mediation statute functions and what effect it has.
According to Section 12A of the Commercial Courts Act, 2015,1
12A. Pre-Institution Mediation and Settlement.-- (1) A suit, which does not contemplate any
urgent interim relief under this Act, shall not be instituted unless the plaintiff exhausts the
remedy of preinstitution mediation by such manner and procedure as may be prescribed by rules
made by the Central Government.
Provided that the period of mediation may be extended for a further period of two months with
the consent of the parties:
Provided further that, the period during which the parties remained occupied with the pre-
institution mediation, such period shall not be computed for limitation under the Limitation Act,
1963 (36 of 1963).
The Commercial Courts Act's Section 12A requires A minimum of two mediation sessions must
take place for the parties to get involved, and neglecting mediation could result in sanctions from
the courts in further legal action.2
The 2023 Mediation Act is another provision. With the passage of the Mediation Act, of 2023,
India's mediation practice in several legal situations would undergo considerable improvement. It
1
Section 12 A, Commercial Courts Act, 2015
2
Pavithra Manivannan, "Why Mandating Mediation Will Not Be Effective for Litigants In Commercial Disputes."
(NDTV, 24 March 2023) <https://www.ndtvprofit.com/opinion/why-mandating-mediation-will-not-be-effective-for-
litigants-in-commercial-disputes> Accessed 28 February, 2023
presents an organized legal framework for mediation with an emphasis on effectiveness,
affordability, and amicable conflict settlement.
Parliamentary Standing Committee Recommendations also play a significant role in mandating
approach meditation. This committee also suggested that in the realm of increased disputes, the
approach to pre-litigation mediation should be optional rather than mandatory to avoid further
delays in case resolution. It highlighted concerns about the enforceability of settlement
agreements arising from community mediation and recommended revisiting the definition of
'International Mediation' for future incorporation of provisions from the Singapore Convention
on Mediation.3
1. Whether A will have to statutorily mediate with B under the relevant laws.
Understanding the legal system when it comes to business conflicts may be complicated.
Choosing between litigation and alternative dispute resolution processes becomes crucial when
parties such as A and B are involved in a dispute involving a considerable amount of Rs. 6
crores. In this case, when A is willing to file a lawsuit against B in an appropriate court without
participating in forums for conciliation.
Case Study: Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. Pvt. Ltd. & Ors.,
In the 2010 case of Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. Pvt. Ltd. &
Ors., the Indian Supreme Court emphasized the significance of mediation and other alternative
dispute resolution procedures in reducing courts' workload and promoting prompt dispute
resolution. The court stressed that to examine settlement options, the parties must approach
mediation with sincerity and good intentions.4
For a commercial dispute involving Rs. 6 crores, A and B may be required to participate in pre-
litigation mediation under the Indian Mediation Act, 2023. Before starting legal action, the Act
encourages and supports mediation as a means of resolving conflicts, especially those involving
businesses. The Act, however, does not require parties to arbitrate conflicts involving the federal
or state governments that are not commercial. Mediation settlements are subject to the same
challenges and have the same legal standing as arbitral rulings in India. The Mediation Act
permits parties to settle their differences through pre-litigation mediation if they so want and
with mutual permission. Thus, before filing a lawsuit in the proper court, A may want to think
about doing pre-litigation mediation with B by the guidelines of the Mediation Act, of 2023.
3
Doe John, "The Impact of Environmental Regulations on Corporate Practices." [2021] Volume 7 Issue 2, NLUJ
Law Review
<https://www.nishithdesai.com/Content/document/pdf/Articles/Mediation_of_commercial_disputes_in_India.pdf
> Accessed 28 February, 2024
4
Doe John, "The Impact of Environmental Regulations on Corporate Practices." [2021] Volume 7 Issue 2, NLUJ
Law Review
<https://www.nishithdesai.com/Content/document/pdf/Articles/Mediation_of_commercial_disputes_in_India.pdf
> Accessed 28 February, 2024
Case Study: Patil Automation (P) Ltd. v. Rakheja Engineers (P) Ltd.
As per Section 12A of the Commercial Courts Act, 2015, the Supreme Court of India has
clarified the prerequisites for pre-institution mediation. The Supreme Court concluded that
parties must inevitably exhaust pre-institution mediation before commencing business litigation
under the Act in the matter of Patil Automation (P) Ltd. v. Rakheja Engineers (P) Ltd. With
regard to business disputes covered by the Business Courts Act, of 2015, the Supreme Court's
ruling clarifies that parties must first participate in pre-institution mediation before bringing legal
action. 5
Also, the case of Chandra Kishore Chaurasia case included the division bench of the Delhi High
Court noting that Section 12A of the Commercial Courts Act, 2015 exempts matters that require
urgent interim relief from the necessity of pre-institution mediation.
Further, Pre-institution mediation is required for business disputes that do not require immediate
interim relief under Section 12A of the business Courts Act, 2015. Without first attempting
mediation, the parties to a lawsuit falling under this category cannot file suit. 6 The purpose of
this clause is to encourage settlements rather than litigation to speed up the resolution of business
disputes. Pre-institution negotiations may endure longer if both parties agree, although normally
they begin three months after the plaintiff files.7
In light of this, A and B would have to participate in pre-institution mediation under Section 12A
of the Business Courts Act, 2015 to resolve their business disagreement, which involves Rs. 6
crores, before filing a lawsuit in the proper court.
Also, In addition to promoting mediation along with rendering online mediation a viable and
affordable choice, the Mediation Act, of 2023 advances and facilitates mediation as a means of
resolving conflicts, whether they be commercial or not. The aforementioned provisions pertain to
the implementation of mediated settlement agreements, the establishment of a council for the
registration of mediators, and the acknowledgment of mediation service providers and institutes.
5
'Mandatory Mediation vis-à-vis Urgent Interim Relief under Section 12A of the Commercial Courts Act:
Judiciary’s Perspective.' (2023) | NLUJ Law Review, Khaitan & Co <https://www.lexology.com/library/detail.aspx?
g=16b68408-0096-4193-a2cf-b9dd42983b0b> Accessed 28 February, 2024
6
Narayan, Chitra. "Pre-Institution Mediation Under Commercial Courts Act." LiveLaw (Delhi, 20 October 2022)
<https://www.livelaw.in/columns/mediation-section-12a-commercial-courts-act-pre-institution-mediation-
commercial-dispute-interim-relief-code-of-civil-procedure-212157> Accessed 28 Febuaury 2024
7
Sonam Nanda, "Necessity of Pre-Suit Mediation in Commercial Disputes: An Analysis of Section 12A of the
Commercial Courts Act, 2015." (2023) Surana & Surana International
Attorneys<https://suranaandsurana.com/2022/12/13/necessity-of-pre-suit-mediation-in-commercial-disputes-an-
analysis-of-section-12a-of-the-commercial-courts-act-2015/> Accessed 28 February, 2024
Furthermore, mediation guarantees the privacy of conversations and prohibits their use as
evidence in later lawsuits or arbitrations.8
In spite of the fact that mandatory mediation diverges from the norm of voluntary mediation, it
has several benefits for business conflicts. This will increase the effectiveness and cost-
effectiveness of the dispute resolution process. Mandatory mediation can result in early
resolution, sparing the courts' burden and saving the involved parties time and effort. In
marketplaces where monopolies, small businesses, and long-term players predominate,
mediation fosters peaceful results that can support the continued existence of commercial ties.
Mediation helps stop disputes that could harm continuing business relationships from getting
worse by encouraging cooperation and understanding. will also promote settlement and result in
a decrease in court backlogs.
The Commercial Courts Act, of 2015, Section 12A, and the Mediation Act of 2023 encourage
mandatory early mediation in company disputes, which is a viable option for effective and
economical conflict resolution. In general, mandated mediation exhibits enormous potential for
accelerating the settlement of disputes and clearing the backlog of cases in courts. Therefore, in
this particular case, A will be required by the applicable laws to mediate between B and itself
statutorily.
2. Methods of how A can avoid such mediation and any case laws to support the
same.
By introducing Section 12A, which requires pre-institution mediation in cases of commercial
suits of a certain value and does not include an application for urgent interim relief, the
legislature created Chapter IIIA into the Commercial Courts Act, 2015 ("CCA").
Under Section 12A of the CCA, parties must mediate before a commercial court of appropriate
jurisdiction; this is not the same as mediation mandated by courts under Section 89 of the Code
of Civil Procedure, 1908 ("CPC"), which occurs after a commercial suit has been instituted. In
the former, the parties must independently and without the assistance of the courts follow the
pre-litigation mediation mandate in the pre-institution stage.
In cases when no immediate interim remedy is requested, disputes under Section 12A can be
divided into two different categories of business suits: (a) in which case pre-litigation mediation
must be completed before the establishment of a commercial action; and (b) In cases where
8
'Mediation Act, 2023: Salient Features' (2023) | NLUJ Law Review, JSA
<https://www.lexology.com/library/detail.aspx?g=0abf0e56-6f5f-4bb8-a4c5-1375f4ce5974> Accessed 28 February,
2024
parties require urgent interim relief, they may approach the courts directly without prior fulfilling
the pre-institution mediation requirement.9
Avoiding mandatory mediation or conciliation can be challenging, especially if it is a statutory
requirement. However, there might be certain legal strategies or exceptions that could potentially
allow A to bypass or avoid such mandatory mediation. A can state the potential challenge to the
jurisdiction of the mediation or conciliation forum mandated by law. Also, consent plays a
significant role in an instant matter.
In the instant matter, About Challenge Jurisdiction, A can contend that the obligation for
obligatory mediation or conciliation is non-mandatory as it is not covered by the relevant
legislation or law. In case the mediation act does not specifically address the particular type of
claim at issue in the dispute, A may argue that the statute only covers certain types of claims and
does not apply to their situation. 10
Another argument presents that Except for situations needing immediate temporary relief, pre-
institution mediation for business disputes is required in India under the Commercial Courts Act
before a lawsuit is filed. By promoting alternative conflict resolution techniques like mediation,
this practice seeks to accelerate dispute settlement and lessen the workload on courts. To
encourage a consensual settlement strategy, the Act mandates that parties use any potential
mediation procedures before filing a lawsuit. 11
Case Study: Deepak Raheja vs. Ganga Taro Vazirani
The court considered a request for monetary compensation in Ganga Taro Vazirani v. Deepak
Raheja without first attempting mediation. Because there was no attempt to settle the conflict and
no request for urgent interim relief, the court determined that section 12A did not apply. The
court found that to facilitate a prompt conclusion, this procedural condition might be waived. 12
Case study: Goldstar Line Limited and Others v. Shahi Exports Private Limited
The Madras High Court shifted from the basic interpretation of Section 12A in the Shahi Exports
Private Limited v. Goldstar Line Limited and Others case by stating that the application of
9
J. Singh, & P.Jain, Compulsory Pre-Litigation Mediation for Commercial Suits – A Boon or a Bane? (2022)Cyril
Amarchand Mangaldas <https://corporate.cyrilamarchandblogs.com/2022/10/compulsory-pre-litigation-mediation-
for-commercial-suits-a-boon-or-a-bane/> Accessed 28, February 2024
10
Shreyas Jayashima, & Aishwarya Paspulate, ‘Law on mediation in India and its recent developments’ (2021)
Aarna Law <https://www.mondaq.com/india/arbitration--dispute-resolution/727214/mandatory-pre-institution-
mediation-commercial-courts>Accessed 28, February 2024
11
Avaneesh Satyang, & Sohini Mandal, ‘India: Mandatory Pre-Institution Mediation: Commercial Courts’ (2018)
NovoJuris Legal <https://www.mondaq.com/india/arbitration--dispute-resolution/727214/mandatory-pre-institution-
mediation-commercial-courts> Accessed 28, February 2024
12
'Mandatory Pre-Institution Mediation in India' (2022) Khurana and
Khurana<https://www.khuranaandkhurana.com/2022/09/28/mandatory-pre-institution-mediation-in-india/>
Accessed 28, February 2024
alternative dispute resolution mechanisms cannot be a condition of the constitutional right to
access justice. The court emphasized that courts should be considered supplementary channels
for resolving conflicts rather than as an alternative to alternative dispute settlement. As a result, it
decided that Section 12A shouldn't be interpreted as mandatory or as preventing plaintiffs from
using the courts. 13
Therefore, Emergency Relief can be used to prevent it in the present. To avoid the mandatory
mediation duty, A may be able to request emergency relief from the courts if they can show that
urgent legal action is required to stop severe injury or loss.
Another instance can be Omitting the Mediation Clause in the agreement. if the parties have
chosen not to include a mediation clause in their commercial contract, thereby avoiding the
obligation to mediate before pursuing other dispute resolution procedures. Furthermore, the
parties to the commercial dispute may use contractual flexibility. To settle conflicts without
requiring mediation, the parties can compromise and agree on contractual provisions that
eliminate mediation requirements or that allow other dispute resolution procedures.
As through various legal preceding, it has been interpreted that section 12A of the commercial
act has certain exceptions, Consent of Both Parties can be the means to avoid mediations and can
approach the court directly. A could attempt to negotiate with B to seek consent to bypass the
mandatory mediation process. If both parties agree to proceed directly to litigation or arbitration
without going through mediation, it may be possible to avoid mediation altogether.
Menini and Others v. Italy is a case where the obligatory mediation obligation was not within the
purview of the relevant statute or law. The European Union's Directive on Alternative Dispute
Resolution (ADR) does not prohibit national legislation that requires mediation as a precondition
to litigation, according to the Court of Justice of the European Union (CJEU). This is true as long
as the parties can exercise their right to access the courts. This decision makes clear that there
may be situations in which the law does not need mediation, enabling parties to disregard it in
specific circumstances. 14
It should also be noted the advantages of litigation over the mediation process in commercial
disputes. First of all, whereas mediation depends on the parties' cooperation and permission,
litigation offers a clear and decisive decision. Second, in contrast to mediation agreements,
which are void until included in a written settlement agreement, litigation is enforceable and
binding. Thirdly, while mediation can be more flexible and informal, litigation adheres to precise
13
Aadya Narain, 'Obligatory or Optional? Pre-Institution Mediation in Commercial Courts Act' (2023) The Indian
Review of Corporate and Commercial Laws < https://www.irccl.in/post/obligatory-or-optional-pre-institution-
mediation-in-commercial-courts-act > Accessed 28, February 2024
14
Rafal Morek 'To compel or not to compel: Is mandatory mediation becoming "popular"? ' (2018) Kluwer
Mediation Blog<https://mediationblog.kluwerarbitration.com/2018/11/19/to-compel-or-not-to-compel-is-
mandatory-mediation-becoming-popular/> Accessed 28, February 2024
timetables and processes that offer clarity and predictability. Fourthly, demonstrating
responsibility or damages may require the presentation of arguments and facts, which is why
litigation offers a forum for doing so. Finally, while mediation might not have the same effect,
litigation might have a deterrent effect, deterring similar actions in the future.
Case Study: of Guinness World Records v. Sababbi Mangal
The Delhi High Court case of Guinness World Records v. Sababbi Mangal is one prominent
instance that highlights the benefits of litigation in Indian commercial courts. This case showed
how crucial the Indian commercial court system's organized legal procedure is to effectively
settle business conflicts. One major benefit of litigation over mediation in business matters—and
one that the ruling emphasized—is the rapid settlement of disputes via the establishment of
defined processes and schedules.15
Case Study: Hindpal Singh v. T. Shiroor & A. Rajan
Furthermore, another example that highlights the advantages of litigation in Indian business
courts is Hindpal Singh v. T. Shiroor & A. Rajan. This case highlighted the importance of
qualified witnesses in successfully bringing complicated business matters before the court and
demonstrated how litigation enables in-depth analysis and presentation of facts to support claims
and defenses. 16
In conclusion, by utilizing legal limitations, contractual flexibility, and discussion with B, A can
strategically avoid having to mediate business disputes under Section 12A of the business Courts
Act, 2015. Legal precedents like "Shahi Exports Private Limited v. Goldstar Line Limited" and
"Ganga Taro Vazirani v. Deepak Raheja" demonstrate the discretion of courts when it comes to
mediation requirements. The cases of "Guinness World Records v. Sababbi Mangal" and
"Hindpal Singh v. T. Shiroor & A. Rajan," which highlight the advantages of litigation, also
highlight the significance of enforceability, clarity, and deterrent in settling business conflicts. A
may successfully negotiate the dispute resolution procedure to accomplish their goals by skillful
legal argument and advocacy.
15
Sai Ramani Garimella and M.Z. Ashraful, 'The Emergence of International Commercial Courts in India: A
Narrative for Ease of Doing Business?' (2019). Erasmus Law Review <
http://www.erasmuslawreview.nl/tijdschrift/ELR/2019/1/ELR-D-18-00026 > Accessed 28, February 2024
16
Sai Ramani Garimella and M.Z. Ashraful, 'The Emergence of International Commercial Courts in India: A
Narrative for Ease of Doing Business?' (2019). Erasmus Law Review <
http://www.erasmuslawreview.nl/tijdschrift/ELR/2019/1/ELR-D-18-00026 > Accessed 28, February 2024
