Recently, a member of the Prime Minister’s Economic Advisory Council (PMEAC), Sanjeev Sanyal, remarked that mandatory pre-institution mediation (MPIM) is counterproductive and merely adds another step to India’s already lengthy judicial process. His view, elaborated in a PMEAC working paper, ‘Why commercial mediation should be voluntary’, co-authored by Apurv Kumar Mishra, may make for an attractive soundbyte — but such an assertion is far from accurate. It reflects a narrow reading of the statutory scheme under the Commercial Courts Act (CCA).
Section 12A of the CCA, which the author specifically criticises, requires parties to attempt mediation before filing a commercial suit. If the mediation fails, only then does the dispute proceed to adjudication.
This legislative framework is not without precedent. Similar models have proven effective in other jurisdictions. Ontario, Canada, for instance, has long required pre-institution mediation, with a settlement rate of around 40 per cent. In practical terms, this means courts there deal with nearly 40 per cent fewer cases. Italy has reported comparable outcomes. It was precisely due to such positive international experience that India introduced Section 12A into the CCA in 2018.
In his paper, Sanyal reports that in 2020–21, nearly 99 per cent of MPIM cases were non-starters. A non-starter refers to a case where one party does not appear for mediation, preventing the process from going forward. At first glance, this may appear to signal failure. But this interpretation is superficial. Non-participation reveals more about weak infrastructure, poor public awareness, and information asymmetries than about the viability or desirability of mediation itself.
To conclude from this that mediation is counterproductive is akin to blaming the medicine without acknowledging that the patient never took it.
A pilot study conducted by this writer and Manaswini Rao, assistant professor of economics, Delaware University, illustrates why Sanyal’s conclusion is misplaced. The study began with a list of 776 SME bank loan defaulters identified from court cause-lists. Our field team attempted to contact each defaulter in person and by phone. Only about 20 per cent could be successfully reached; the rest were untraceable due to incorrect addresses, outdated contact details, or relocation. Common reasons like death accounted for only a small fraction of attrition. This finding is significant: any mediation scheme in India must first address the challenges of poor data hygiene and weak service delivery mechanisms.
From those we could trace, we built a sample of 276 defaulters. Of these, 192 were randomly assigned to receive a simplified information pamphlet and paralegal counselling on mediation and debt settlement with their bank. The remaining participants formed a control group.
The results were striking. Simplified information and counselling increased attendance at hearings by 9 percentage points. In other words, attendance rose from a negligible 2 per cent in the control group to nearly 11 per cent in the treatment group — a 400 per cent relative improvement. Moreover, about half of those who attended went on to reach a settlement with their banks. Since the treatment was randomly assigned, this is not anecdotal — it represents a causal effect. The implication is clear: Mediation works when litigants are properly informed and supported.
One must also consider the structural disincentives at play. From the judiciary’s perspective, a settled case is one fewer on the docket. But for many lawyers, it also means one less paying client — a built-in disincentive to encourage mediation. From the litigant’s perspective, our fieldwork showed that many remain wary of the court system, often fearful of engaging with it — even when it comes to mediation. This cultural reluctance cannot be addressed by scrapping MPIM. It requires systemic reform in how the justice system is presented to and experienced by the public.
It is also important to note that Section 12A mandates only an attempt at mediation. Participation in good faith is not enforceable. Parties can — and often do — simply wait out the prescribed mediation period to buy time. But this is a problem of litigation culture, not of statutory design. To abandon MPIM because parties exploit it would be to discard the tool rather than address its misuse.
Sanyal’s position is paradoxical. He calls for the removal of one of the more progressive provisions aimed at reducing judicial pendency, while failing to address the deeper systemic issues: India’s poor judge-to-population ratio, chronic judicial vacancies, and entrenched adjournment culture. Anyone familiar with the justice system knows these are the real sources of delay. To target Section 12A as the root cause is to misdiagnose the disease.
If anything, MPIM is one of the few statutory innovations that aligns India with global best practices while directly tackling the issue of pendency. Evidence from international experience — and from our own pilot study — shows that mediation has real potential when supported by accurate information, legal counselling, and institutional capacity.
To abandon MPIM now would be to discard one of the few forward-looking reforms in commercial dispute resolution. The path forward is not to dismantle it, but to strengthen and refine the mechanism.
The writer is an assistant professor at National Law University Delhi
Sanyal’s position is paradoxical. He calls for the removal of one of the more progressive provisions aimed at reducing judicial pendency, while failing to address the deeper systemic issues: India’s poor judge-to-population ratio, chronic judicial vacancies, and entrenched adjournment culture. 
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