1. Introduction — The Promise of Mandatory Mediation

When the Commercial Courts Act, 2015, was amended in 2018 to insert Section 12A, India signalled a critical policy shift: commercial parties must first attempt mediation before proceeding to litigation.[1] This mandate of Pre-Institution Mediation (PIM) was introduced with the dual objective of enhancing India’s ease of doing business ranking and substantially reducing the massive backlog faced by commercial courts.[1] PIM was conceived as a necessary condition precedent for instituting a suit, provided the plaintiff does not seek urgent interim relief.[2] Three years since its full implementation, the effectiveness of this statutory compulsion remains a central question for legal practitioners and businesses alike.

2. Judicial Validation and Enforcement Contours (2022–2025)

The judiciary has consistently affirmed the mandatory nature of Section 12A. The Supreme Court has rightly upheld the plain reading of the provision, confirming that pre-institutional mediation is a condition precedent for accessing the commercial courts.[2] This stance was recently reiterated by the Bombay High Court in a 2025 ruling (2025:BHC-OS:15574), reaffirming that a commercial suit lacking contemplation of urgent interim relief “shall not be instituted” unless the PIM remedy has been exhausted.[3]

However, the ongoing need for courts to establish compliance checklists prior to issuing notice suggests that litigants routinely attempt to bypass PIM by formally seeking urgent interim relief, treating the requirement as a mere procedural hurdle rather than a genuine settlement opportunity.[1]

3. Institutional and Systemic Challenges

The PIM mechanism, which operates through authorities designated by State Legal Services Authorities (SLSAs), is designed to be time-bound, typically within 90 to 120 days.[1] Despite this clear legal framework, systemic inefficiencies persist [4]:

• Expertise Gaps: There is a recognized lack of specialized training for mediators, an issue globally acknowledged as necessary for economical mediation.[4] In some jurisdictions, judicial officers are tasked with mediation duties, potentially diverting time from their primary adjudicatory roles.[4]
• Referral Inconsistency: The wider mediation ecosystem lacks uniformity in case referral practices.[4]
• Lack of Metrics: A critical challenge is the systemic failure of the designated authorities (SLSAs and NALSA) to disclose essential PIM metrics, including case typologies, adherence to mandatory timelines, and settlement rates.[1] Without this data, meaningful evaluation and reform of the process are severely hampered.[1]

4. Technology and the Modern Mediation Ecosystem

A positive development is the integration of digital pathways for dispute resolution. The framework for online mediation has been bolstered by the notification of the Mediation Act, 2023, which aims to foster and facilitate mediation as a preferred method for resolution, including making online mediation an acceptable and cost-effective process.[5] Platforms that specialise in Online Dispute Resolution (ODR), such as Presolv360 [6], are integrating digital technology to conduct mediation, conciliation, and arbitration, offering more flexible solutions for disputes that often span multiple geographies.

5. Comparative Insights and the Way Forward

For India’s PIM system to achieve its full potential, global models offer instructive guidance. Countries like Singapore have explored procedural and financial incentives, such as extending tax exemptions currently applicable to international arbitration to the conduct of commercial mediations.[7] India must similarly shift the focus beyond mere compulsion to adopt ‘carrots and sticks’:

1. Introduce Incentives: Implement cost awards or provide procedural benefits, such as reimbursement of court fees, for parties who successfully engage in and conclude PIM.[1]
2. Ensure Transparency: Mandate that SLSAs and NALSA disclose comprehensive PIM metrics to enhance accountability and facilitate policy adjustments.[1]
3. Capacity Building: Invest in accredited training to professionalise mediators in commercial and financial expertise.[4]

6. Conclusion

Section 12A has correctly been upheld as a mandatory gatekeeper, preventing premature litigation. However, the system’s effectiveness is currently constrained by structural gaps in implementation, training, and transparency. The success of India’s mediation moment hinges on moving beyond the legislative compulsion to cultivate a credible, data-driven, and incentivised ecosystem, ensuring that PIM matures into a mainstream path for efficient commercial dispute resolution.