Understanding Mandatory Mediation under the Commercial Courts Ordinance

The Commercial Courts Commercial Division and Commercial Appellate Division of High Court (Amendment) Ordinance of 2018, dated May 03, 2018, has inserted section 12A to the Commercial Courts Act, 2015, contemplating pre-institution mediation and settlement, before the filing of any commercial disputes.

Section 12A (1) introduces an additional dispute resolution mechanism – mediation – to further speed up the process of finality in dispute management. As per its provisions, except for matters which require urgent interim reliefs, it is now mandatory to first exhaust the remedy of pre-institution mediation in accordance with prescribed procedure, before being eligible to institute a suit with regard to a commercial dispute.

This mandatory mediation meeting is an opportunity for parties and their legal counsels to meet with a professional neutral mediator at a neutral place to learn about the process and decide whether they would like to give themselves the opportunity to collaboratively settle the dispute.

The mode by which the Commercial Court Ordinance contemplates the conduct of pre-litigation Mediation is uncertain on whether it will create such an enabling environment. The law contemplates authorizing the authorities constituted under the Legal Services Authorities Act of 1987 for the purposes of pre-institution mediation under section 12A(2).

However, the Ministry of Law and Justice must recognise outside institutions such as mediation centres run by Bar Associations, Professional Associations, Chambers of Commerce and other recognised bodies to be able to effectively sustain such an initiative.