By Legum Pacific Editorial ·
Suppose a supplier and a shopkeeper have a money dispute. The supplier thinks of filing a commercial suit. Before going to court, a formal mediation step exists under the rules.
What does the law say?
The Central Government made the Commercial Courts (Pre‑Institution Mediation and Settlement) Rules, 2018 under the Commercial Courts Act, 2015. The Government authorised the State Legal Services Authority and District Legal Services Authority to act as the Authority for pre‑institution mediation under section 12A of the Act (Notification dated 3 July 2018). The Rules set the procedure, time limits, fees and forms to be used for mediation before a suit is started.
How does pre‑institution mediation start?
If you are a party to a commercial dispute, you may make an application to the Authority using Form‑1 in Schedule‑I. The application can be filed online, by post or by hand and must be accompanied by a fee of one thousand rupees payable to the Authority (Rule 3(1)).
The Authority will, having regard to territorial and pecuniary jurisdiction and the nature of the dispute, issue a notice to the opposite party by registered or speed post and electronic means (including e‑mail). The notice asks the opposite party to appear and give consent to participate in mediation on a date not beyond ten days from the date of issue of the notice (Rule 3(2)).
If there is no response, the Authority issues a final notice in the same manner (Rule 3(3)). Where the final notice remains unacknowledged, or the opposite party refuses to participate, the Authority treats the mediation as a non‑starter and makes a Non‑Starter Report in Form‑3 and endorses it to both parties (Rule 3(4)).
If the opposite party seeks more time, the Authority may fix an alternate date not later than ten days from the request (Rule 3(5)). If the opposite party then fails to appear, the Authority treats the mediation as a non‑starter and files Form‑3 (Rule 3(6)).
When both parties appear and consent to mediation before the Authority, the Authority assigns the dispute to a Mediator and fixes a date for appearance before that Mediator (Rule 3(7)). The venue for mediation is the premises of the Authority (Rule 4).
What is the Mediator’s role and the procedure?
The Mediator facilitates voluntary resolution and assists the parties in reaching a settlement (Rule 5). A party may appear personally or through an authorised representative or Counsel (Rule 6).
At the start of mediation the Mediator explains the process (Rule 7(1)(i)). The date and time of each mediation sitting are fixed by the Mediator in consultation with the parties (Rule 7(1)(ii)). The Mediator may hold joint or separate meetings (Rule 7(1)(iii)).
A party may share settlement proposals with the Mediator in separate sittings and give instructions about what parts may be shared with the other party (Rule 7(1)(iv)). Parties can exchange proposals during mediation either orally or in writing (Rule 7(1)(v)). The Mediator must keep confidential what is said in separate sittings and may share only what a party permits (Rule 7(1)(vi)).
When the parties reach a settlement, the Mediator must reduce it to writing, have it signed by the parties and the Mediator in Form‑4, give the original to all parties and forward a signed copy to the Authority (Rule 7(1)(vii)–(viii)). If no settlement is reached within the time allowed or if the Mediator thinks settlement is not possible, the Mediator files a Failure Report with reasons in Form‑5 (Rule 7(1)(ix)).
The Authority or the Mediator must not retain hard or soft copies of documents exchanged or notes prepared by the Mediator beyond six months, except for the application, notice(s), the settlement agreement and the Failure Report (Rule 7(2)). Mediation sittings must not be audio, video or stenographically recorded; confidentiality is required (Rule 9).
How long does the process take and what are the fees?
The Authority shall ensure that the mediation process is completed within three months from the date of receipt of the application for pre‑institution mediation (Rule 3(8)). This period can be extended by a further two months only with the consent of both the applicant and the opposite party (Rule 3(8)).
Before mediation begins the parties must pay a one‑time mediation fee to the Authority, to be shared equally, as per the quantum of claim specified in Schedule‑II (Rule 11). The Schedule sets five slabs:
- Rs. 15,000 for claims from Rs. 3,00,000 to Rs. 10,00,000.
- Rs. 30,000 for claims from Rs. 10,00,000 to Rs. 50,00,000.
- Rs. 40,000 for claims from Rs. 50,00,000 to Rs. 1,00,00,000.
- Rs. 50,000 for claims from Rs. 1,00,00,000 to Rs. 3,00,00,000.
- Rs. 75,000 for claims above Rs. 3,00,00,000.
The application to the Authority requires a fee of one thousand rupees (Rule 3(1)).
Key points
- The State and District Legal Services Authorities are authorised as the Authority for pre‑institution mediation (Notification, 3 July 2018).
- File Form‑1 with Rs. 1,000 to start mediation; Authority will notify the opposite party and may treat a non‑response as a non‑starter (Rule 3(1)–(4)).
- Mediation must be completed within three months, extendable by two months with consent (Rule 3(8)).
- Mediator reduces any settlement to writing in Form‑4 and forwards it to the Authority (Rule 7(1)(vii)–(viii)).
- Mediation fee is fixed by claim slabs in Schedule‑II and shared equally (Rule 11 and Schedule‑II).
- Confidentiality is required and most documents/notes are retained only for limited items and time (Rules 7(2) and 9).
Laws referred to
- Commercial Courts Act, 2015 (4 of 2016) — sections 12A, 17 and 21A
- Notification authorising State and District Legal Services Authorities under sub‑section (2) of section 12A (Ministry of Law and Justice), 3 July 2018
- Commercial Courts (Pre‑Institution Mediation and Settlement) Rules, 2018 — Rules 1–12; Schedule‑I (Forms 1–6); Schedule‑II (mediation fee)
- Commercial Courts (Statistical Data) Rules, 2018 — Rule 3 and Schedule
Official sources
This guide explains what the law itself says. Court rulings interpreting these provisions can also affect how they apply in a particular case. It states the position under the official texts listed above, as at 2 November 2026.