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    Mediation

    Pre-Institution Mediation in Commercial Disputes

    The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015, was enacted in the year 2015 with the objective of ensuring speedy resolution of Commercial Disputes. To complement this, the Commercial Courts (Pre Institution Mediation and Settlement) Rules, 2018 were introduced to enable the prompt and effective settlement of such disputes through mediation.

    Under these provisions, any dispute that qualifies as “Commercial Dispute” under Section 2(1)(c) of the Commercial Courts Act, where the value of the claim is Rupees 3 Lakhs or more, shall not be filed unless the plaintiff first avails the remedy of Pre-Institution Mediation. This mediation must be conducted by the designated Legal Services Institutions.

    Accordingly, Legal Services Authorities across the country are actively facilitating Pre-Institution Mediation in Commercial matters, providing an accessible and time efficient alternative to litigation.

    Section 12A of the aforesaid Act states as follows:

    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 pre-institution mediation in accordance with such manner and procedure as may be prescribed by rules made by the Central Government.
    2. The Central Government may, by notification, authorise the Authorities constituted under the Legal Services Authorities Act, 1987 (39 of 1987), for the purposes of pre-institution mediation.
    3. Notwithstanding anything contained in the Legal Services Authorities Act, 1987 (39 of 1987), the Authority authorised by the Central Government under sub-section (2) shall complete the process of mediation within a period of three months from the date of application made by the plaintiff under sub-section (1):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 the purpose of limitation under the Limitation Act, 1963 (36 of 1963).
    4. If the parties to the commercial dispute arrive at a settlement, the same shall be reduced into writing and shall be signed by the parties to the dispute and the mediator.
    5. The settlement arrived at under this section shall have the same status and effect as if it is an arbitral award on agreed terms under sub-section (4) of section 30 of the Arbitration and Conciliation Act, 1996 (26 of 1996).