Whalesbook
1. THE SEAMLESS LINK
Despite the significant legislative push to streamline commercial dispute resolution through mandatory pre-institution mediation, the efficacy of Section 12A of the Commercial Courts Act appears critically undermined. The sheer volume of applications filed, exceeding 5.6 lakh since July 2018, suggests initial procedural compliance, yet the subsequent settlement outcomes paint a grim picture. This stark contrast with the high throughput and binding resolutions achieved by Lok Adalats highlights fundamental inefficiencies within India's alternative dispute resolution (ADR) framework.
The Mediation Mirage: High Hopes, Low Yields
Data submitted to Parliament indicates a pervasive issue with mandatory pre-institution mediation under the Commercial Courts Act. Between July 2018 and September 2025, 565,676 applications were filed, yet settlements were recorded in a vanishingly small fraction of these cases. For instance, fiscal year 2024-25 saw only 877 settlements from 59,568 applications, a success rate of approximately 1.47%. The preceding year, 2023-24, recorded 1,139 settlements out of 51,019 applications [cite: input]. A substantial proportion of these filings are classified as "non-starters," meaning parties did not even proceed to mediation after initiating the process [cite: input, 3, 10].
Analysis suggests several contributing factors to this widespread ineffectiveness. Infrastructure gaps, including a shortage of trained mediators and specialized commercial mediation cells, are frequently cited. Furthermore, the ambiguity surrounding the "urgent interim relief" clause provides an easy avenue for parties to circumvent mediation altogether, turning the mandatory step into a mere procedural formality. Experts, such as Sanjeev Sanyal, a member of the Economic Advisory Council to the Prime Minister, have argued that this mandatory step not only adds 3-5 months of delay and legal costs but often results in "farcical situations". The government also acknowledges it does not maintain consolidated data for ad hoc or private mediations, nor for cases exceeding the stipulated 180-day resolution period [cite: input].
Lok Adalats: The Unsung Workhorse
In stark contrast to the struggles of mandatory commercial mediation, Lok Adalats continue to demonstrate significant success in case disposal. Data from the National Legal Services Authority shows that National Lok Adalats resolved over 14.8 crore cases in 2025, a substantial increase from 1.27 crore cases in 2021 [cite: input]. These forums, operating under the Legal Services Authorities Act, 1987, offer an efficient, speedy, and cost-effective mechanism that fosters harmony and significantly reduces court backlogs. Awards passed by Lok Adalats are legally binding, akin to civil court decrees, with no provision for appeal. This established track record suggests that while the intent behind mandatory mediation was to ease judicial burden, the current execution falls far short of the effectiveness seen in other ADR models.
Structural Headwinds and Future Outlook
The broader landscape of dispute resolution in India faces further structural impediments. The Arbitration Council of India, mandated by the 2019 amendments to the Arbitration and Conciliation Act, has yet to be established, with no timeline or stated reasons for the delay [cite: input]. This institutional inertia affects the development of arbitration standards and oversight. Expert opinions are increasingly leaning towards making mediation voluntary, citing the current mandatory process as a hindrance rather than a help. The recent Mediation Act 2023's shift towards voluntary pre-litigation mediation reflects this evolving perspective. The persistent challenges in achieving meaningful settlements through mandatory mediation, combined with the delays in key institutional reforms like the Arbitration Council, raise critical questions about India's ability to deliver on its promise of efficient and accessible justice, impacting its attractiveness for foreign investment and overall ease of doing business. The current situation suggests a need for a comprehensive re-evaluation of ADR strategies, focusing on systemic improvements rather than solely on procedural mandates.