Section 12A of the Commercial Courts Act, 2015 (for brevity “the CA Act”) mandates the parties to explore ways of settlement by mandatory rounds of mediation prior to the institution of a suit. This mandate is peculiar and limited to the commercial disputes as the same is not mandatory for other civil disputes.
The enactment of the provision reflects the intention of the legislature to reduce litigation and save years and hard-earned money in litigation battles. And yes, there are numerous instances when this noble intention has resulted in the speedier settlement of the disputes even prior to the institution of the commercial disputes. However, this pre-litigation mediation has raised more questions than answers for the parties seeking justice before the courts that are already burdened with long lists of cases and their slow speed. Among many plausible reasons, here are a few reasons that compel us to revisit the need of this provision.
√ In India, litigation is still considered as a last resort and the aggrieved parties approach the courts only after trying their best to resolve the disputes among themselves. The failure of every possible way to negotiate and settle the disputes force the aggrieved parties to approach the lawyers to pitch their grievances before the courts. Ergo, imposing a condition to go once again with the mediation process is nothing but an added hurdle for the aggrieved parties.
√ Indian courts have all the powers to refer a case to the mediation if desired by the parties at any stage of a case. Thus, there is no burning need of section 12A of the CA Act. Even Economic Advisory Council to the PM (EAC-PM) has suggested to make the pre-litigation mediation voluntarily as the same may reduce the time and cost of the litigations.
√ The pre-litigation mediation prolongs the journey of the litigants to reach to the conclusion of their cases. Thus, mandate of section 12A of the CA Act adds time to the litigation battles instead of making it shorter.
√ Section 12A of the CA Act comes with an exception and provides a remedy to directly approach the court without following the pre-litigation medication process in case of urgency in their grievances. The proviso to this effect is so widely worded that perhaps almost all kinds of commercial disputes may come within the framework of this exception, and thereby making section 12A and pre-litigation process infructuous.
√ Pre-litigation mediation involves a few rounds of negotiation among the parties. Further, even if only one party is appearing and other is absent in the rounds of mediation, even then atleast two rounds of mediation are bound to take place. This will not only prolong the case time, but further deepen the litigation cost burden upon the plaintiffs (parties who institute civil disputes).
There is no iota of doubt to encourage mediation and negotiation among the parties, but forcing them to undergo a comprehensive mediation process is definitely not the solution. A collective effort from the lawyers and judges to resolve the cases at the earliest either through mediation and negotiation, or through the trial is perhaps the only viable solution at this stage instead of pushing the aggrieved parties to undergo an infructuous and teethless pre-litigation mediation process.
Advocate Lalit Ajmani | New Delhi
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