Author: Ayushman Shrivastava

BY ARNAV ROY, THIRD YEAR STUDENT AT Nlu, DELHI

INTRODUCTION

The Commercial Courts Act, 2015 was enacted to expedite the resolution of commercial disputes and establish India as an investor-friendly jurisdiction. Among its significant provisions is section 12A, which mandates compulsory pre-institution mediation for commercial disputes unless urgent interim relief is sought. However, section 12A presents an ambiguity regarding territorial jurisdiction, specifically whether mediation must occur within the territorial limits where the subsequent suit is filed. This paper aims firstly to explore the statutory interpretation of section 12A, secondly to discuss judicial clarifications on territorial jurisdiction with specific reference to Ganga Taro Vazirani v. Deepak Rahej, and finally to critically analyse whether substantial compliance suffices to resolve territorial ambiguities.

UNDERSTANDING SECTION 12A OF THE COMMERCIAL COURTS ACT

Section 12A requires plaintiffs to exhaust pre-institution mediation, except in urgent interim relief cases. The legislative intent is to promote amicable settlement, reducing judicial burden and enhancing procedural efficiency.

However, the absence of explicit territorial jurisdiction provisions under section 12A creates ambiguity. Unlike the Civil Procedure Code, 1908, which clearly defines territorial jurisdiction[i], section 12A of the Commercial Courts Act remains silent on this aspect, raising procedural uncertainties.

MANDATORY NATURE OF PRE-LITIGATION MEDIATION

Indian courts have reaffirmed the mandatory nature of pre-institution mediation. In Patil Automation (P) Ltd v. Rakheja Engineers, the Supreme Court categorically established the procedural mandatory character of section 12A. Likewise, in Ganga Taro Vazirani v. Deepak Raheja, the Bombay High Court emphasized the necessity for efficient dispute resolution and judicial backlog reduction, underlining the importance of pre-litigation mediation.

CLARIFYING TERRITORIAL AMBIGUITY: GANGA TARO VAZIRANI JUDGMENT

The Bombay High Court’s decision in Ganga Taro Vazirani v Deepak Raheja provides crucial guidance on the territorial scope of section 12A’s pre-litigation mediation requirement. In that case, a commercial suit was filed without any urgent relief, raising the question of whether mediation had to occur within the same jurisdiction as the suit. A single judge of the High Court treated section 12A as a procedural provision subject to the doctrine of substantial compliance, rather than an inflexible jurisdictional mandate.

The court noted that when parties had already made genuine attempts to resolve their dispute, it would be “futile to compel the parties to engage in pre-institution mediation again, merely to satisfy territorial compliance. Such an interpretation would defeat the very purpose for which the Commercial Courts Act, 2015 was brought into force.”  This purposive reading underscored that the objective of section 12A – expeditious settlement of disputes – should not be thwarted by rigid insistence on where the mediation is conducted.

Substantial compliance over technicality: The High Court emphasized that conducting pre-suit mediation in good faith, even if outside the territorial limits of the court where the suit is later filed, could constitute substantial compliance with section 12A’s mandate. In other words, a bona fide mediation attempt (for example, in a different city or through a private mediator) satisfies the law’s intent, so long as the effort to settle was genuine. This approach prioritizes substantive justice over procedural form – minor deviations in the location or forum of mediation should not invalidate the proceedings, provided the core requirement (attempting amicable resolution) is met.

Avoidance of redundancy and waiver: By privileging substantial compliance, the High Court avoided redundant procedural cycles. It would serve no purpose to force parties to re-mediate in the court’s locale if they had already mediated elsewhere with no success. Indeed, the judgment warned that insisting on a second mediation solely for territorial alignment would simply cause delay – an outcome contrary to the Act’s intent of swift dispute resolution². In Ganga Taro, the plaintiff’s initiation of mediation (albeit not in the suit forum) combined with the defendant’s stance meant the court was satisfied that the spirit of section 12A had been honored. This pragmatic stance ensured that procedural rules serve as a means to justice rather than a trap.

COMPARATIVE ANALYSIS: INTERNATIONAL APPROACHES TO MANDATORY PRE-LITIGATION ADR AND TERRITORIAL SCOPE

Jurisdictions worldwide have adopted varied stances on mandatory pre-filing alternative dispute resolution (ADR), with differing implications for territorial jurisdiction. A brief survey of select jurisdictions illustrates how the balance between procedural mandate and territorial constraints is struck elsewhere:

United Kingdom: In England and Wales, there is no equivalent statutory mandate requiring mediation before a civil commercial suit. Instead, the Civil Procedure Rules (CPR) and court practice encourage ADR through pre-action protocols and cost sanctions. The leading case of Halsey v Milton Keynes General NHS Trust established that courts cannot compel unwilling parties to mediate. Still, unreasonable refusal to even attempt mediation can result in adverse cost consequences. This policy has effectively made ADR a de facto expected step in the litigation process. Notably, because mediation in the UK remains voluntary rather than jurisdictionally required, there is no rigid territorial prescription for where it must occur. Parties are free to choose mediation forums anywhere, or even mediate online, as long as it is reasonable and accessible. Recent developments signal a cautious shift toward targeted mandatory mediation , but these initiatives define the process in a way integrated with the court’s system. In all cases, the emphasis is on the fact of engaging in settlement efforts rather than the physical location. Thus, English practice sidesteps territorial disputes by focusing on compliance in substance – if the parties have reasonably engaged with mediation or other ADR, the courts are satisfied, regardless of where or how the mediation took place. This flexible approach aligns with a broader common-law trend of encouraging mediation through incentives and case management, rather than imposing hard territorial rules.

United States: In the U.S., the approach to pre-litigation mediation varies widely depending on the jurisdiction and subject matter. There’s no blanket federal rule requiring commercial litigants to mediate before filing a lawsuit. However, many states have their own rules mandating ADR in specific contexts. For example, Florida requires pre-suit mediation for certain disputes involving homeowners’ associations. Under Chapter 720 of the Florida Statutes, an aggrieved party must serve a “Statutory Offer to Participate in Pre-suit Mediation” and go through the process as per court rules. Skipping this step can lead to dismissal or a stay of the case.

Because these requirements are grounded in state law, the mediation is typically localized—it must happen within the state, often with court-approved mediators. A party can’t simply mediate elsewhere or ignore the process; compliance with state-specific procedures is mandatory, much like India’s section 12A requirement for commercial suits. That said, U.S. courts sometimes show flexibility. If the parties have genuinely attempted an ADR process outlined in their contract, courts may still allow the case to proceed, even if the exact statutory steps weren’t followed.

At the federal level, while there’s no pre-filing mediation rule, many district courts require mediation or settlement conferences after the suit is filed, usually through local rules tied to Federal Rule of Civil Procedure 16. Overall, the U.S. model is decentralized: mandatory pre-litigation mediation exists in certain pockets, usually tied to state jurisdiction or specific areas of law, and when it does apply, parties must follow the local process to move forward in that state’s courts.

Singapore: Singapore encourages mediation but does not mandate it before filing commercial suits. Instead, court rules like the Rules of Court 2021 require parties to consider ADR and report efforts to the court. Unreasonable refusal to mediate may lead to cost penalties.

Being a single-jurisdiction city-state, mediation typically takes place locally, often through the Singapore Mediation Centre or court-linked programs. For cross-border disputes, the Singapore International Commercial Court allows cases to pause for mediation under the Litigation Mediation Litigation protocol, though this is voluntary.

Mandatory pre-litigation mediation exists in community disputes. Under the 2015 Community Dispute Resolution Act, neighbors must mediate before filing claims, or risk dismissal and penalties. While not compulsory for commercial matters, Singapore’s legal framework supports mediation, reinforced by its adoption of the 2019 Singapore Convention on Mediation.

Comparative Insight: Internationally, the handling of territorial jurisdiction in mandatory pre-filing mediation regimes tends to follow the underlying nature of the mandate. In jurisdictions like the UK, where mediation is encouraged but not explicitly compelled, territorial jurisdiction questions scarcely arise since parties have the freedom to mediate wherever it makes sense. By contrast, in jurisdictions with formal mandatory mediation requirements, the law usually designates or implies a forum or procedure tied to the court’s territory. The Ganga Taro principle of substantial compliance finds echoes in these systems as well, as courts internationally are inclined to excuse technical lapses if the claimant can demonstrate a sincere attempt at pre-litigation ADR. Ultimately, the comparative lesson is that mandatory pre-litigation mediation, as a growing global trend, must be implemented with an eye on practicality. This may be through flexible interpretation, as seen in India, cost-shifting incentives in the UK, or clear but reasonable procedural preconditions in the US and Singapore. Each model seeks to balance the promotion of settlement with the parties’ right of access to courts, navigating territorial concerns by either formalizing the required forum or, conversely, remaining silent on the forum to allow flexibility.

CONCLUSION: BALANCING EFFICIENCY AND PROCEDURAL COMPLIANCE

The judgment in Ganga Taro Vazirani clarifies section 12A’s territorial ambiguity effectively. While promoting efficiency, the ruling balances procedural compliance with practical objectives.

While section 12A requires pre-litigation mediation, judicial interpretation, notably in Ganga Taro Vazirani v. Deepak Raheja, affirms that mediation conducted outside territorial jurisdiction constitutes substantial compliance. Nevertheless, substantial compliance does not supersede explicit jurisdictional requirements under procedural laws such as the CPC. Mediation outside territorial limits is sufficient for compliance provided it does not conflict with jurisdictional rules. A purposive interpretation balancing procedural adherence with practical efficiency ensures that the legislative intent of expedient dispute resolution is maintained without undermining jurisdictional integrity.

Requiring repeated mediation merely for territorial compliance would defeat the very purpose of the Commercial Courts Act, which aims to ensure the swift resolution of commercial disputes. As the Bombay High Court rightly observed, procedural provisions should facilitate justice rather than obstruct it.

Therefore, if mediation has already taken place outside the jurisdiction where the action is pending, it should be deemed proper compliance with section 12A. Insisting on strict territorial compliance would only cause unnecessary delays and frustrate the objectives of the Act.

Thus, the law must balance procedural compliance with practical efficiency. A purposive interpretation of section 12A aligns with legislative intent, ensuring that commercial disputes are resolved swiftly without being entangled in unnecessary technicalities.

[i] Civil Procedure Code 1908, ss 15-20.