Jurist India Supreme Court rules pre-litigation mediation mandatory for commercial suits

[Dadparvar]

In a landmark decision, India’s Supreme Court Wednesday ruled that pre-litigation mediation is mandatory for all commercial suits initiated after India’s Commercial Courts Act of 2015. The court held that Section 12A of the 2015 Act, the enabling provision for pre-litigation mediation, is mandatory in nature. Thus, any commercial suit instituted before a commercial court under the 2015 Act without first exhausting the remedy of pre-litigation mediations shall be rejected under the Code of Civil Procedure, 1908.

The court delved into the legislative intent of Parliament in introducing Section 12A, opining:

Exhausting pre-institution mediation by the plaintiff, with all the benefits that may accrue to the parties and, more importantly, the justice delivery system as a whole, would make Section 12A not a mere procedural provision. The design and scope of the Act, as amended in 2018, by which Section 12A was inserted, would make it clear that Parliament intended to give it a mandatory flavour. Any other interpretation would not only be in the teeth of the express language used but, more importantly, result in frustration of the object of the Act and the Rules.

The judicial rationale underpinning this ruling stems from the court’s understanding that mandatory pre-litigation mediation allows judges to “concentrate on matters where urgent interim relief is contemplated” and the matters that “already crowd their dockets.”

The ruling further reinforces the Indian judiciary’s championing of mediation “as a new mechanism of access to justice.” Many judges believe that alternate dispute resolution is more time and cost effective than the traditional adversarial system of litigation. The court noted that a “trained Mediator can work wonders.”

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