Section 12A of the Commercial Courts Act, 2015 introduces pre-institution mediation for qualifying commercial disputes, subject to the statutory exception concerning suits that contemplate urgent interim relief.
Resolving Business Disputes Early: A Chennai Entrepreneur’s Guide to Pre-Institution Mediation
1. Identify whether the dispute is commercial
Not every civil dispute is a commercial suit. The underlying transaction, parties and subject matter should be tested against the Commercial Courts Act and applicable jurisdictional requirements.
2. Check the urgent interim-relief exception
The Supreme Court has recognised an exception for cases genuinely contemplating urgent interim relief. The real nature of the proposed relief should be assessed rather than relying only on a label in the plaint.
3. Initiate mediation through the prescribed mechanism
Where Section 12A applies and the urgent-relief exception does not, the plaintiff must initiate pre-institution mediation through the prescribed authority or service provider before instituting the commercial suit.
4. Prepare for participation
The claimant should organise the contract, invoices, payment records, communications, amount claimed and proposed commercial resolution. Clear preparation can make the mediation process more useful.
5. Settlement and non-starter reports
If mediation results in settlement, the settlement is recorded through the prescribed mechanism. If the process does not result in settlement and the appropriate report is issued, the claimant may proceed with the commercial suit in accordance with law.
6. Non-compliance can affect maintainability
Supreme Court decisions have treated Section 12A as a mandatory precondition for commercial suits to which it applies, subject to the statutory urgent-relief exception. Filing strategy should therefore be settled before the plaint is instituted.
Why businesses should prepare properly
Even where mediation does not settle the dispute, it can clarify issues, identify documents, narrow the monetary controversy and reveal whether a negotiated solution is commercially realistic.
Chennai-specific preparation
A Chennai business should identify the correct commercial jurisdiction, assemble the contract and invoice trail, calculate the claim, preserve electronic communications and evaluate any genuine urgent-relief requirement before filing.
Conclusion
Pre-institution mediation is an important procedural stage in qualifying commercial litigation. Applicability, the urgent-relief exception and the prescribed mediation record should be reviewed before instituting the suit.
