This article was authored by Ujjwal Agrawal and Aditi Singh from MNLU, Nagpur.


The large pendency of cases in Indian Courts as well as considering the economic impact of commercial disputes on the Indian economy, it has become a necessity to dispose off the commercial disputes as quickly and as efficiently as possible. Hence, commercial mediation is the need of the hour to help in reducing the pendency of cases as well as in providing speedy solutions. This paper explores the area of commercial mediation in India by analysing the current scenario of commercial mediation along with the various existing gaps that exist in the Indian laws and regulations which make it harder to implement mediation reforms. Thereafter, the paper compares the Indian mediation model with some of the successful mediation models of the world, like USA, UK, Singapore, Italy and Australia. The paper then concludes by providing suggestions on how to remove the existing gaps in Indian laws and putting forth the view that a strong and effective legislative framework is needed in India to implement mediation properly.

Keywords: Commercial Mediation, Commercial Disputes, Gaps in Legislation


‘The notion that ordinary people want black-robed judges, well-dressed lawyers and fine-panelled courtrooms as the setting to resolve their disputes isn’t correct. People with problems, like people with pains, want relief and they want it as quickly and inexpensively as possible. People want alternatives to the adversarial process of litigation that reduces crowded court dockets, and is more efficient, less formal, less expensive, less stressful and takes less time that the traditional system.’[1]

The above excerpt was said by Justice Warren Burger in April 1976 at the National Conference on the Causes of Popular Dissatisfaction with the Administration of Justice (“Pound Conference”).[2] This excerpt can be very easily applied to the concept of mediation as a method of Alternative Dispute Resolution mechanism. Mediation primarily focuses on a facilitated negotiation between two parties with the help and guidance of a mediator who is a neutral third party.[3] It is non-adjudicatory and non-binding in nature.[4] Mediation is a very useful tool which was previously used to resolve family matters, including divorces, as well as various interpersonal disputes.

The advent of new legislations and broadening the scope of mediation to include commercial matters has given rise to commercial mediation. Commercial mediation can be defined as a mediation which centres around commercial disputes, which includes but is not limited to, commercial disputes as defined in Section 2(c) of the The Commercial Courts, Commercial Division And Commercial Appellate Division Of High Courts Act, 2015 as well an any other disputes of a monetary nature.

Various laws are currently in existence in the Indian jurisprudence in which special emphasis is given to mediation. The first known legislative recognition given to mediation was in the Industrial Disputes Act, 1947. Thereafter, Section 89 of the Code of Civil Procedure, 1908 can be credited with giving legitimacy to ADR mechanisms in India. Recently, the Commercial Courts, Commercial Division And Commercial Appellate Division Of High Courts (Amendment) Act, 2018 have mandated pre-institution mediation for any commercial disputes, as has been given in the legislation, which is a huge step in terms of furthering the scope for commercial mediation in India.

However, there are numerous issues and challenges awaiting the implementation of this landmark step. No legislation has, as of yet, been drafted to regulate the mediation culture in India. Also, no agency has been charged with supervising that the mandatory pre-institution mediation is enforced correctly. Various steps are needed to efficiently implement mandatory pre-institution mediation as well as to strengthen the pre-existing mediation culture in India. It is in this light that the authors wish to argue that even though the importance of mandatory pre-institution mediation cannot be stressed enough yet it will only become a success with the enactment of proper legislation and having proper infrastructure in place for large scale mediation.


Mediation in India was brought for the first time through Industrial Dispute Act, 1947[5] and thereafter post independence many legislations were passed by the Parliament which provided for Mediation. Section 89 of The Code of Civil Procedure, 1908 was passed in 1999 through the Code of Civil Procedure Amendment Act which provides for commercial mediation[6] and was rewritten by Supreme Court in Afcons Infrastructure Limited v. Cherian Varkey Construction Company Private Limited[7] due to some typographical errors[8] and was held constitutionally valid by Supreme Court in Salem Advocate Bar Assn. v. Union of India[9] (Salem I).

The Commercial Mediation was boosted up in India after the passing of Companies Act, 2013 which makes it mandatory for central government to maintain a mediation and conciliation panel, comprising of experts of commercial mediation for resolving the dispute between the parties.[10] Further, the Companies (Mediation and Conciliation) Rules, 2016 provides for the procedure of empanelment of mediator, their qualification, time limit for conducting mediation etc.[11]

In 2018, Parliament passed The Consumer Protection Bill, 2018 which provides for mediation as a dispute settlement process after the consent of both the parties[12] and also provides for establishment of consumer mediation cell[13] and empanelment of mediation experts.[14]

The Commercial Courts, Commercial Division and Commercial Appellate Division of High Court (Amendment) Act, 2018 is a landmark statute which provides for compulsory Pre Institution commercial mediation for any commercial dispute as defined in Section 2(c) of the The Commercial Courts, Commercial Division And Commercial Appellate Division Of High Courts Act, 2015 whose value is greater than three lakhs, unless any urgent interim relief is sought by the parties, in which case mediation will not be required.[15] This Act will be potentially significant in increasing mediation culture in India. This Act will increase the awareness and acceptance of mediation as an alternative adjudication process in commercial dispute.[16]

The Commercial Courts, Commercial Division And Commercial Appellate Division of High Courts (Amendment) Act, 2018 was passed by the Lok Sabha on 1st August, 2018 and by the Rajya Sabha on 10th August, 2018.[17] It received the assent from the President on 20th August, 2018.[18] This Bill introduces the concept of mandatory pre-institution mediation before the filing of a suit, except where no urgent relief is sought by the parties, and which must be completed within three months, unless the parties agree to extend it by two more months. This bill has given a new lease of life to Mediation in India as it has brought the need for mediation to the forefront of public domain.

The need for commercial mediation arises not just from a huge pendency of cases but also from the economic effects which commercial disputes can have on the economy of India. Commercial disputes are almost always monetary in nature which can destabilise the market if they are stretched out for too long. Hence, it becomes even more imperative to fast track the commercial cases through mediation. Furthermore, if the commercial disputes are solved quickly and easily, then India’s Ease of Doing Business Rankings will also improve which can also have a huge impact on the investments which are pouring into India.

Presently, majority of the High Courts in India have established their Mediation and Conciliation Centres to promote mediation as an alternative to litigation. Bangalore Mediation Centre (BMC) is one of the successful mediation centres of India which has resolved 31,441 disputes from 2011 to 2015[19] and on an average the mediators at BMC receive more than 1000 dispute annually, highest among all the mediation centres.[20] Many mediation centres of different High Courts are way behind BMC in promoting mediation and haven’t taken any substantial steps to implement MCPC recommendations.[21] The BMC receives highest number of cases per mediator as compared to Delhi Mediation Centre and Allahabad Mediation Centre, with an increase in each year. In 2015 the BMC had 134 cases per mediator.[22]

Other than court referred mediation, there are other modes of mediation too such as private mediation, pre- litigation mediation. These types of mediation have also proved to be efficient in resolving disputes. Private Mediation is one of the fastest, cost effective and business friendly methods to solve commercial dispute.[23] Private Mediation, when conducted efficiently and professionally can be chosen as an alternative to court referred mediation which would result in less burdening of Mediation Centres.[24]


The commercial mediation in India is currently a work in progress. As per Section 12A (1) of Commercial Courts, Commercial Division And Commercial Appellate Division Of High Courts (Amendment) Act, 2018 every commercial dispute as defined in Section 2(1) (c) of The Commercial Courts, Commercial Division and Commercial Appellate Division Of High Courts Act, 2015 has to undergo Pre-Institute Mediation unless any urgent interim relief is required. Mediation has its limitations, it can be resorted only when the parties mutually agree. Mediation process does not guarantee a settlement or solution unless both the parties show maturity, understanding, tolerance and cooperation.[25]

As per the Section12A (2) of Commercial Courts Commercial Division and Commercial Appellate Division of High Court (Amendment) Act, 2018, the Legal Services Authorities (constituted under the Legal Services Authorities Act, 1987) were given the duty to provide for such Pre-Institute Mediation. But the issue is whether Legal Services Authorities (hereinafter, “LSA”) are competent enough to provide for such mediation?

According to Section 2(1) (i) of Commercial Courts, Commercial Division and Commercial Appellate Division of High Court (Amendment) Act, 2018 the minimum value for any commercial dispute to undergo compulsory mediation is of 3 lakhs which was earlier set to be of 1 crore, thus widening the scope of mediation process but the LSA are not competent enough to provide for adequate infrastructure and manpower, thus many of the legal services authorities could not implement many schemes and policies[26]. The principal objective of LSA is to provide free and competent legal services to the weaker sections of the society and to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities, and to organize Lok Adalats for amicable settlement of disputes[27], with such objective LSA’s are already immensely overburdened and lacks experience and expertise to provide for the sudden increase in the need for trained professionals in the field of commercial mediation.[28]

For conducting smooth and successful mediation, it is necessary that the regulators must provide with certain standardise mediation rules and regulations.[29] The Commercial Courts, Commercial Division And Commercial Appellate Division Of High Courts (Amendment) Act, 2018 provides for compulsory mediation before any matter is referred to courts, but in India we have no statute which provides for rules and regulations of conducting mediation. However, the Mediation and Conciliation Project Committee (MCPC) constituted by Supreme Court of India did mention certain guidelines to conduct the mediation process.[30] Yet, as these guidelines haven’t been given the supportive backing of any legislation, thus they are not sufficient enough to regulate mediation in India. Thus legislation should be brought in to regulate mediation facets such as training standards, confidentiality, enforcement of settlement agreements, and accountability mechanism for mediators.[31]

In India, another problem which is faced in Commercial Mediation is that of skilled and efficient mediators. The mediator assumes a largely passive role, his/her primary objective being to facilitate the parties in reaching an amicable settlement.[32] Across the globe, the assessment of mediators’ ability or eligibility is done through numerous mechanisms.[33] In India there exists no such mechanism but a framework given by Mediation and Conciliation Project Committee (MCPC) constituted by Mr. Justice R.C. Lahoti, the then Chief Justice of the Supreme Court of India,[34] which provides for minimum forty hour course that needed to complete by the mediators.[35] The present condition of a few mediation centres present in India is not up to the sufficient level and there has been very little or no effort from the High Courts in India to implement the MCPC guidelines for training mediators within their respective jurisdictions which ultimately lead to the suffering of the very few mediation houses present in India.[36] Also, due to the carelessness of government officers, many mediation houses do not use any legal document for Confidentiality and are carrying the mediation process through trust only.[37]

Another reason for lacking of mediation as adjudication process is deprivation of faith, belief and awareness of mediation process among the citizens. For increasing mediation as an adjudication process, the legal fraternity and the public should understand the relevance and impact of mediation and its impact on justice delivery system which will increase the faith, trust and confidence in the system.[38] The Judges should also be aware about mediation and its effectiveness as an ADR process,[39] such that they will refer Court cases to mediation and decrease the docket problem in Courts. The Indian government needs to provide mandatory training programmes to the judiciary to increase their support towards mediation such that it results in an increase in the number of Court referrals.


There are numerous countries in which mediation has managed to become a successful alternative to litigation. United States of America, Italy, Australia, Singapore, and United Kingdom are some of the few examples of successful implementation of mediation programmes which have successfully managed to reduce the pendency of cases and provide relief to both the parties in an efficient and speedy manner.

USA is recognised globally as one of the most advanced systems of ADR usage and implementation.[40] USA combines various different methods to implement mediation from providing statutory legislative framework to court referrals and mediation clauses in contracts. After the 1976 Pound Conference in Minneapolis, the modern facilitative model of mediation began in the US in early 1970s.[41]

Italy had made it necessary to have a mandatory mediation session for certain civil and commercial disputes through a legislation in September 2013. Since then, till 2017, Italy has managed to jump 49 places in the Ease of Business Rankings.[42] This feat can be largely credited to the mandatory mediation sessions as foreign economic operators are not encouraged to invest in a country where the slowness of justice exposes their projects and economic expectations to constant frustration,[43] hence, mandatory mediation sessions reduce the time taken to resolve a case which in turn helps the economy of a country.

The success of the Italian model of mediation was due to the structure created by strong legislation, and not due to any change in the culture or any special emphasis given to the quality of mediators. [44]

In Australia, on the other hand, even though there have been certain legislations that have imposed pre litigation dispute resolution,[45] yet normally Court referrals are made only when both the parties are willing to mediate. Emphasis is given to having a voluntary framework of mediation.[46] In the case of Superior IP International Pty Ltd v. Ahearn Fox Patent and Trade Mark Attorneys,[47] the Federal Court of Australia held that costs would be imposed on parties, if the parties do not genuinely try to resolve the dispute in mediation. This points towards importance of an implementation strategy as well as legislative support. User awareness is important for mediation to be integrated and popularised.[48]

In Singapore, mediation has historic roots in the late nineteenth and early twentieth century where community mediation by headman of villages took place.[49] Similarly, in India, Mediation was accepted in Singapore primarily through practice and as an alternative to litigation due to its viability,[50] though there is a bill which has been drafted to provide legislative backing to mediation.[51]

In the United Kingdom, the suitability of commercial/civil cases for mediation was recognised during the early 1990s.[52] Since then, commercial mediation has become extremely popular so much so that according to the CEDR 2014 Mediation Audit, 9500 commercial mediations were performed in 2014. The audit also shows that Euro 9 billion worth of commercial claims were mediated and that through mediation UK businesses will save E2.4 billion in management time, relationships, productivity and legal fees.[53]

There are many differences among all these jurisdictions but the only pertinent and striking similarity among all these different jurisdictions is that all these successful mediation models were backed by strong legislation on the finer nuances of mediation as well as having proper infrastructure for mediation, neither of which India has.


India has been progressive in bringing mediation as an alternative process of adjudicating commercial dispute but there is still a long road to go. Amendment in The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 and bringing Sec. 12A which provides for compulsory mediation process before instituting the matter in the court along with the provision of mediation at the option of the parties in the Consumer Protection Bill, 2018 are both the historic legislation and which shows progressive attitude towards the commercial mediation.

There is an urgent need to bring some potential reforms in mediation process to increase its popularity. Quality Infrastructure and well qualified and trained mediators are of utmost importance after passing of abovementioned legislations.[54]

Legislation to regulate mediation should be brought as soon as possible to curb the existing flaws in commercial mediation, many mediation centres are not competent and lacks basic amenities for conducting mediation and thus there should be a regular check on such mediation centres.[55]

Awareness programs must be conducted for developing awareness among the Judges, lawyers and general public.[56]Moreover, the judiciary should recognise the mediation as an effective tool for dispute resolution.[57]

The Legal Service Authorities are made responsible to provide for Mediators and to conduct mediation proceedings, but many LSA are not competent to comply with this and are overburdened with their some other commitments.[58] Thus a separate and independent body can be constituted by the central government to provide for mediators and to regulate commercial mediation. This will not only help in providing for well trained and accredited mediators but also will be able to maintain and promote mediation centres in the country.

The common denominator in all the countries in which mediation was found to be successful was that there was proper legislation which regulated mediators as well as the mediation process.[59] Moreover, more often than not, proper infrastructure as well as awareness and knowledge about the benefits of mediation is already present among the general public before mediation can be considered as a viable alternative to litigation. All of this evidence suggests that India needs a strong and effective legislative framework which would give authenticity to the mediation process and increase the user awareness to popularise mediation. Furthermore, the legal fraternity, especially the judges, need to be supportive of mediation and instil faith in the general public regarding the effectiveness and viability of mediation.

Nowadays, especially considering globalisation, the relevance of economic growth cannot be emphasised enough. Commercial mediation is the way forward in making India’s economy more reliable for foreign investors who are often turned off by India’s cumbersome legal processes and the long pendency of cases in Courts. As is evident from Italy’s mediation model example, having an effective system of commercial mediation improves not only the pendency of cases, but it also improves the Ease of Business Ranking, both of which are things that India needs to improve upon.

Therefore, it is concluded that in the future, India should provide effective legislations on mediation which will complement the Commercial Courts Commercial Division and Commercial Appellate Division of High Court (Amendment) Act, 2018 and help in gradually increasing the awareness among the public about mediation. Furthermore, Court referrals for commercial mediation should also be encouraged. Also, considering mediation’s ever-growing popularity throughout the world as well as its ever-emerging importance in the Indian context, it will not be far-fetched to say that India could very well have International Mediation Centres which would help resolve cross-border commercial and other disputes. Hopefully, the Commercial Courts Commercial Division and Commercial Appellate Division of High Court (Amendment) Act, 2018 is not a false dawn for the emergence of commercial mediation in India, and becomes the catalyst for a transformation in the way the legal system works in India where the emphasis is more on resolving disputes through a win-win situation rather than a years long struggles through the Indian Judiciary in a hope of getting justice.

  1. J. Clifford Wallace, ‘Review: Judicial Reform’, Vol 80, No 4, 1982, Survey of Books Relating to the Law (March 1982), 592-596.
  2. Id.
  3. ‘Mediation Training Manual’ (Mediation and Conciliation Project Committee, Supreme Court of India)
  4. Justice R.V. Raveendran, ‘Mediation-Its Importance and Relevance’, (2010) PL October 10.
  5. Akanksha Mathur, How Does The Mediation Process Work – Steps and Procedure, ipleadersblog, (December 25, 2018, 6:18 PM),
  6. Justice S.U.Khan, Judicial Settlement under Section 89 C.P.C. A Neglected Aspect.,
  7. Afcons Infrastructure Limited  v. Cherian   Varkey  Construction  Company  Private  Limited, 2010 (8) SCC 24 (India).
  8. Id
  9. Salem Advocate Bar Assn. v. Union of India, (2003) 1 SCC 49 (India).
  10. Section 442, Companies Act, 2013.
  11. Mr. M. GOVINDARAJAN, THE COMPANIES (MEDIATION AND CONCILIATION) RULES, 2016 – AN OVERVIEW, September 16, 2016, (Last visited on 26th December, 2018).
  12. Section 37, Consumer Protection Act, 2018.
  13. Section 74, Consumer Protection Act, 2018.
  14. Section 75, Consumer Protection Act, 2018.
  15. Section 12A, The Commercial Courts, Commercial Division and Commercial Appellate Division of High Court (Amendment) Act, 2018.
  16. Raveendran, Supra, Note 4 at 2.
  17. Anon, (2018). [online] Available at:
  18. Anon, (2018). [online] Available at:
  20. Id
  21. Id
  22. Id
  23. K Giriprakash, How private mediation helps corporates solve disputes faster, June 11, 2018, (Last visited on 26th December, 2018).
  24. Supra, Note 7
  25. Raveendran, Supra, Note 4
  26. Legal services authorities hit by lack of manpower, The Hindu (Tamil Nadu), February 6, 2015,
  27. Introduction,, (last visited on 25th December, 2018)
  28. Juhi Gupta, Mandatory Pre-institution Commercial Mediation in India, (Dec. 24, 2018, 2:05 PM),
  29. T Altobelli, New South Wales ADR Legislation: The Need for Greater Consistency and Co-ordination 6 AUSTRALIAN DISPUTE RESOLUTION JOURNAL 20 (1997).
  30. (Last visited on 23rd December, 2018).
  33. Roselle L. Wissler & Robert W. Rack, Jr., Mediator Performance: The Usefulness of Participant Questionnaires, 2004(1) J. OF DISP. RESOL. 229 (2004).
  34. Danny McFadden, Developments in International Commercial Mediation: US, UK, Asia, India and EU, 8Contemp. Asia Arb. J.,299 (2015).
  35. Mediation and Project Committee, Mediation and Training Manual of India, 16, available at (last visited on December 24th, 2018).
  36. Rashika Narain & Abhinav Sankaranarayanan, FORMULATING A MODEL LEGISLATIVE FRAMEWORK FOR MEDIATION IN INDIA, 11 NUJS L. Rev. 1 (2018).
  37. Id
  38. Raveendran, Supra, Note 4 at 2.
  39. Id
  40. Jay Folberg, ‘Development of Mediation Practice in the United States’, Juris Dicto, Vol. 17, (February-July 2015).
  41. Danny McFadden, Developments in International Commercial Mediation: US, UK, Asia, India and EU, 8 Contemp. Asia Arb. J. 299 (2015)
  42. Shantha Chellapa & Tara Ollapally, Mandatory Mediation under Commercial Courts Act – A Boost to Effective and Efficient Dispute Resolution in India,
  43. Giuseppe Conte, The Italian Way of Mediation, 6 Y.B. Arb. & Mediation 180 (2014).
  44. LEONARDO D’URSO, Italy’s ‘Required Initial Mediation Session’: Bridging The Gap between Mandatory and Voluntary Mediation; VOL. 36 NO. 4 APRIL 2018.
  45. Family Law Act, 1975
  47. Superior IP International Pty Ltd v. Ahearn Fox Patent and Trade Mark Attorneys, (2012) FCA 282.
  49. Goh Joon Seng, ‘Mediation in Singapore: The Law & Practice’, 159, 8th General Assembly, Singapore, 159 accessed 15 July, 2016.
  50. Sundaresh Menon, ‘Building Sustainable Mediation Programmes: A Singapore Perspective’, Asia-Pacific International Mediation Summit, New Delhi, India, 14 February, 2015, 4 accessed 15 July, 2016.
  51. Singapore Mediation Bill, 2016 is available at accessed 15 July, 2016; Singapore publishes draft Mediation Bill, Herbert Smith Freehills, 28 April, 2016 accessed 15 July, 2016.
  53. Danny McFadden, Developments in International Commercial Mediation: US, UK, Asia, India and EU, 8 Contemp. Asia Arb. J. 299 (2015)
  55. Narain & Sankarnarayanan, Supra, Note 36 at 7.
  56. Raveendran, Supra, Note 4 at 2.
  57. Tara Ollapally, Annapurna Sreehari and Shruthi Ramakrishnan ,The Mediation Gap: Where India Stands and How Far It Must Go, Approaches to Justice in India (2017).
  58. Gupta, Supra, Note 28 at 6.


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