Before You File That Commercial Suit, Try the Mediation Room

Aditya — Thu, 22 Oct 2026 10:03:46 +0000

In August 2022, the Supreme Court of India decided Patil Automation Private Limited v. Rakheja Engineers Private Limited. The question in front of it sounded technical. Could a business skip the pre-institution mediation required by Section 12A of the Commercial Courts Act, 2015 and walk straight into court? The answer was no. The court held that the requirement is mandatory and that a plaint filed without it is liable to be rejected.

That ruling changed the first step of a commercial dispute for a lot of businesses. Yet many still treat mediation as a box to tick before the real fight begins. Is that the best use of the one stage where both sides still control the outcome?

What Section 12A asks of you
Section 12A was added to the Commercial Courts Act in 2018. It says a commercial suit that does not seek urgent interim relief cannot be filed until the plaintiff has tried pre-institution mediation. The process is meant to finish within three months, and the parties can extend it by two more months if they agree. If a settlement is reached, it is reduced to writing and signed by the parties and the mediator. The Act gives that settlement the same status and effect as an arbitral award on agreed terms, which means it can be enforced.
So the stage is not a formality. A settlement here carries real legal weight.

Why mediation deserves a proper attempt
Mediation is different from arbitration and litigation in one basic way. Nobody hands down a decision. The mediator helps the parties talk, test their positions and look for terms both can live with, but cannot impose an outcome on either side. That sounds weak on paper. In practice it is the reason mediation can work where other routes stall, because the people who know the business best are the ones shaping the result.
There is also the relationship to think about. A supplier, a distributor or a long-term client is often worth more than the amount in dispute. Litigation rarely leaves that relationship intact. A mediated settlement at least gives it a chance.
And confidentiality matters. What is said in mediation is meant to stay there, which lets both sides speak more freely than they would in a courtroom.

The shift to online mediation
The Mediation Act, 2023 gave online mediation formal recognition in Indian law. Section 30 of the Act says mediation, including pre-litigation mediation, can be conducted online with the written consent of the parties, using tools such as encrypted email, secure chat or video and audio conferencing. It also says the process must protect the integrity and confidentiality of the proceedings. The Act allows the government to bring different provisions into force on different dates, so it is worth checking which parts apply to your matter before you rely on them.
For businesses with counterparties in other cities, the practical case for going online is strong. Nobody has to book flights to sit in a room for one session, and sessions are easier to schedule around working hours. If you are weighing this option, look at how online mediation services in India handle consent, document sharing and confidentiality, since those are the three areas where a poorly run session can go wrong.
How to prepare for the first session
Go in knowing what you actually need, which is often different from what you are claiming. Bring the documents that support your position, and be ready to share the ones that matter. Send someone who has the authority to agree to terms on the spot, because a settlement that has to wait three weeks for board approval tends to lose momentum. Listen to the other side’s version even if you think you have heard it before.
Mediation will not settle every dispute. Some counterparties come to the table only to say they came, and some disputes turn on a point of law that one side wants a judge to decide. When that happens, the mediator issues a report noting that no settlement was reached and you can move on to court.
But if the dispute can be closed in a few sessions instead of a few years, that is time and money your business gets back to spend on things it would rather be doing.

About The Author
Aditya Aryan is a lawyer and mediator. He is currently building marketing at Sama, India’s leading online dispute resolution institution.

Signing a Contract With an Arbitration Clause? Read These Five Things First

Aditya — Thu, 22 Oct 2026 10:01:24 +0000

On 23 October 2015, an amendment to the Arbitration and Conciliation Act, 1996 took effect and changed how long a commercial dispute in India could drag on. For the first time, arbitrators had a statutory deadline to deliver their award. For businesses that had watched disputes run for years, it mattered a great deal.

Most people still skim past the arbitration clause when they sign a contract. It reads like boilerplate, so it gets copied from an old template and nobody looks at it again until something goes wrong. Is that a sensible way to treat the one clause that decides how you will fight if the deal falls apart?

Here is a look at what deserves a second read.

1. Make sure it really is an arbitration agreement
Section 7 of the Act says an arbitration agreement must be in writing. An exchange of letters or electronic communications that records the agreement can also count. The trouble usually comes from loose wording. A clause that says disputes "may" be referred to arbitration, or one that keeps the courts open as a parallel route, invites an argument about whether the parties ever agreed to arbitrate at all. And that argument can eat up months before anyone looks at the actual dispute.

2. Name the seat, not just the venue
The seat decides which courts supervise the arbitration and whose procedural law applies. The venue is simply where the hearings take place. Contracts that use the two words loosely end up in court. Spell out the seat in clear terms and you remove one of the most common early fights.

3. Decide how many arbitrators you want
The Act lets the parties choose, with one condition. Under Section 10, the number cannot be even. If the clause is silent, the tribunal will have a sole arbitrator. A sole arbitrator is usually cheaper. A panel of three suits a high-value contract, though fees grow with every person you add.

4. Know the timeline you are agreeing to
After the 2019 amendment, pleadings in a domestic arbitration are meant to close within six months of the arbitrator receiving notice of appointment. The award is then due within twelve months of the pleadings closing, and the parties can extend that by six months if both agree. Any further extension needs the court. These limits work differently for international commercial arbitration. In Tata Sons v. Siva Industries and Holdings, decided in 2023, the Supreme Court held that the twelve-month period is only directory in those cases and not binding.

5. Think about how the hearings will actually run
Plenty of commercial disputes never need everyone in the same room. Document exchange, written submissions and video hearings can carry most of the load, and parties based in different cities save real time on travel and scheduling. Section 19 of the Act lets the parties agree on the procedure the tribunal will follow, so there is room to plan for this at the drafting stage. If your counterparties are spread across states, it is worth reading up on how online arbitration services in India work and deciding whether your clause should allow a virtual process from the start. Then write that choice into the clause plainly.

What happens after the award?
An award is not always the last word. Section 34 allows a party to challenge it in court on limited grounds, and that challenge has to be filed within three months of receiving the award, with a further thirty days at the court’s discretion. Once that window closes, or a challenge fails, Section 36 lets the award be enforced in the same way as a decree of a court. So a good clause cannot promise a quick win. What it can do is strip out the procedural fights that tend to swallow the first year.
Arbitration is also not the right fit for every contract. A small dispute can cost more to arbitrate than it is worth, and some kinds of disputes cannot be sent to arbitration at all. Truth be told, the best clause is the one written with the most likely dispute in mind, not the one that happened to be in last year’s template.
Next time a contract lands on your desk, give the last few pages the same attention you give the payment schedule. It is a lot cheaper to fix a clause before signing than to argue about it in front of a tribunal.

About The Author
Aditya Aryan is a lawyer and mediator. He is currently building marketing at Sama, India’s leading online dispute resolution institution.

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Before You File That Commercial Suit, Try the Mediation Room

Signing a Contract With an Arbitration Clause? Read These Five Things First