Authored By: Harshit Tiwari
Army Institute of Law, Mohali
Introduction
Would you invest Rs. 62,146 crore every year in a system that could take 9 years to deliver a verdict.?[i][ii] Corporate India faces a harsh reality: litigation often destroys more value than it recovers. A typical Rs. 10 crore dispute consumes Rs. 2 crores in legal fees, 500+ hours of management time, and damages business relationships worth Rs. 50 crores in future opportunities[iii]. Resolution time? Three to ten years on average—in a judiciary already grappling with 53 million pending cases[iv].
In 2025, corporate spending on litigation and legal compliance hit Rs. 62,146 crores, an 11% jump from the previous year. Meanwhile, over 4 crore cases sat pending[v].
The Mediation Act, 2023 offers an alternative. Coupled with mandatory pre-litigation mediation under Section 12A of the Commercial Courts Act (for disputes above Rs. 3 lakhs), it promises resolution within 120 days at 70-90% lower costs while preserving business relationships[vi]. Early estimates suggest it could reduce court backlogs by 25-35%[vii].
Background and Intent for creation and enactment of Mediation Act, 2023
By 2022, the scale of India’s judicial backlog had become impossible to ignore. District Courts alone carried 4.28 crores pending cases—over 85% of the national total[viii]. High Courts held another 58 lakhs, while the Supreme Court sat on nearly 70,000[ix]. The burden was not evenly spread, it crushed the lower courts where most commercial disputes begin and where ordinary businesses seek justice.
The data told Parliament a clear story: about the system which was not just slow—it was structurally broken. Commercial disputes were taking 4-7 years to resolve on average, and each passing year drained businesses of resources, confidence, and competitive edge[x]. Traditional litigation had become less about justice and more about attrition—whoever could afford to wait longer, won.
Beyond domestic concerns, India had a larger ambition. The government wanted to position India as a global hub for Alternative Dispute Resolution. Singapore, London, and Hong Kong had already built reputations as go-to destinations for resolving international commercial disputes efficiently[xi]. India, with its massive economy and growing role in global trade, had the potential to compete – but not while its courts were drowning. For India to attract foreign investment and international arbitration, it needed to demonstrate that disputes could be resolved swiftly and fairly on Indian soil.
This recognition shaped the Mediation Act, 2023. Rather than treating mediation as a last resort after litigation failed, Parliament positioned it as the first step—a preferred mechanism that could handle the bulk of commercial conflicts before they ever reached a courtroom.
Why is Mediation more efficient and effective than traditional litigation
Mediation is more efficient and effective than traditional litigation because of its time-bound process and enforceability, as given under Section 18 of the Mediation Act, 2023, mediation should be completed within 120 days from the date of the first appearance before the mediator, extendable by 60 days by the consent of both the parties[xii]. Critically, Mediated Settlement Agreements (MSAs) are treated as court decrees under Section 19, not merely as contracts[xiii]. This means they can be challenged only on narrow grounds of fraud, corruption, impersonation, or subject matter unsuitable for mediation. After 90 days, if unchallenged, MSAs become immediately enforceable.
Key advantages of mediation for corporate India:
Mediation offers corporate disputes something litigation cannot: creative solutions tailored to business realities. Courts are bound by legal remedies—typically monetary damages or injunctions. Mediation, by contrast, allows parties to craft arrangements that preserve or even enhance commercial relationships. For example, two technology firms locked in an IP dispute might agree to cross-licensing arrangements, joint ventures, or staggered royalty payments outcomes no court could impose. A supplier-client conflict could resolve through extended payment terms, volume commitments, or service upgrades rather than a simple cash judgment.
Confidentiality matters more than most realize. Court proceedings are public—filings, arguments, and judgments become accessible records. For corporates, this means competitors can scrutinize internal business practices, pricing strategies, and operational weaknesses. Mediation operates under strict confidentiality. Discussions are “without prejudice,” meaning nothing said during mediation can be used as evidence if the dispute later proceeds to court. For businesses protecting trade secrets, reputation, or competitive intelligence, this privacy is invaluable.
Importantly, mediation carries no downside risk. If parties cannot agree, litigation remains fully available. The attempt at mediation doesn’t waive any legal rights or defenses — it simply offers a chance to resolve the matter without the collateral damage of a courtroom battle.
Challenges and Implementation Gaps for Mediation in Corporate India:
The Mediation Act, 2023 meets sobering ground realities. In 2023, the Supreme Court Mediation Centre handled 1,095 cases—five times the pre-pandemic number[xiv]. Yet the settlement rate remained just 23.7%[xv]. This suggests parties attend mediation because Section 12A mandates it, not because they trust the process.
Infrastructure gaps persist. India has few accredited mediation centres, mostly in metro cities. Tier-2 and Tier-3 cities lack dedicated facilities—soundproofed rooms, case managers, administrative support. Parties often travel to Delhi or Mumbai, adding cost and inconvenience, or conduct mediation in makeshift settings that undermine credibility.
Mediator quality varies widely. Training programs remain inconsistent, and many mediators lack commercial expertise. A poorly trained mediator can derail the process, waste time and reinforcing doubts.
Perhaps the toughest barrier is economic: many litigation lawyers view mediation as a threat. A case resolved in 120 days generates far lower fees than one stretched over five years. Some lawyers actively discourage clients from good-faith participation, undermining the Act’s intent.
Recommendations for current problems and future trajectory:
With the current surge in the number of cases in the courts all over the country, the burden on courts is increasing exponentially and managing this growing caseload while ensuring timely delivery of judgements presents a formidable challenge. So, it is time to realise the transformative potential of the Mediation Act. Some steps which can create significant impact are as follows:
First, the government needs to get serious about training. There should be a national system where mediators are actually certified—maybe a basic level for everyday stuff and an advanced level for the heavy-duty commercial cases. Government could team up with law and business schools to create courses that don’t just teach theory, but actually dive into the weeds of industries like banking, construction, and IP.
Second, there is a need for specialized center. A “one-size-fits-all” approach doesn’t work because every industry has its own headaches. We should have hubs where the mediators actually know the business—like having a retired bank executive handle a financial dispute or a builder handle real estate. It’s much easier to trust a mediator who actually understands the mess you’re in.
Finally, big companies need to step up. If giants like Tata or Reliance started writing “mediation-first” rules into their contracts, everyone else would follow. It shows that trying to settle things reasonably isn’t weak — it’s just being smart with time and money.
If we actually pull this off, we could finally clear out the court backlogs and make India a place where people actually want to do business, right up there with Singapore or London.
Conclusion:
Today, India stands at a critical juncture in its legal evolution. The Mediation Act, 2023 is not merely for window-dressing, it represents an acknowledgement that “justice delayed is justice denied”. As corporate India struggles with the sky-high litigation costs exceeding Rs. 62,146 crores annually, mediation offers a lifeline. With settlement agreements enforceable as court decrees and resolution achievable within 120 days rather than 3-10 years, businesses can now resolve disputes without mounting costs or severing profitable relationships. While there are problems like settlement rates which hovers around 24-28%, the persisting infrastructure gaps and many more, with the establishment of mediator training programs, internal dispute resolution mechanisms in corporate firms and the government backing such type of initiatives, can give a boost to Mediation process in India. Especially for Corporate India, the choice is clear: continue pouring billions into an overburdened judiciary, or embrace mediation as a resolution. The Mediation Act, 2023, transforms dispute resolution by providing a shift that not just gives faster and cheaper outcomes, but also relationships preserving business decisions. India’s way to become a global ADR hub has begun.
Reference(S):
[i] India Inc Legal Expenditure FY25 (Rs. 62,146 crore figure) ‘Indian Corporates Spend ₹62,100 Crore on Legal Costs in FY25’ Voice LaPass (19 September 2025) <https://voice.lapaas.com/indian-corporate-legal-costs-rs-62100-crore-fy25/> accessed 31 January 2026.
[ii] Analysis of Mediation in India ‘Analysis: Mediation in India’ India Corporate Law (31 October 2022) <https://corporate.cyrilamarchandblogs.com/2022/10/analysis-mediation-in-india/> accessed 31 January 2026.
[iii] India Inc Legal Expenditure FY24 ‘INR 52,568 Crore Spent in FY24 for Indian Corporate Legal Expenditure’ Entrepreneur India (5 September 2024) <https://www.entrepreneur.com/en-in/news-and-trends/inr-52568-crore-spent-in-fy24-for-indian-corporate-legal/479407> accessed 31 January 2026.
[iv] National Judicial Data Grid (NJDG) – Pending Cases Data 2022 National Judicial Data Grid, ‘Pending Cases Statistics’ (e-Committee, Supreme Court of India 2022) <https://njdg.ecourts.gov.in/> accessed 31 January 2026.
[v] India Inc Legal Expenditure FY25 (Rs. 62,146 crore figure) ‘Indian Corporates Spend ₹62,100 Crore on Legal Costs in FY25’ Voice LaPass (19 September 2025) <https://voice.lapaas.com/indian-corporate-legal-costs-rs-62100-crore-fy25/> accessed 31 January 2026.
[vi] The Commercial Courts Act 2015, Section 12A; The Mediation Act 2023, Section 18.
[vii] Analysis of Mediation in India ‘Analysis: Mediation in India’ India Corporate Law (31 October 2022) <https://corporate.cyrilamarchandblogs.com/2022/10/analysis-mediation-in-india/> accessed 31 January 2026
[viii] National Judicial Data Grid, ‘District and Taluka Courts Pending Dashboard’ (e-Committee, Supreme Court of India). <https://njdg.ecourts.gov.in/njdgnew/?p=main/pend_dashboard> accessed 31 January 2026.
[ix] National Judicial Data Grid, ‘High Courts Pending Cases’ (e-Committee, Supreme Court of India) <https://njdg.ecourts.gov.in/hcnjdg_v2/> accessed 31 January 2026; National Judicial Data Grid (NJDG) – Supreme Court – National Judicial Data Grid, ‘Supreme Court of India Dashboard’ (e-Committee, Supreme Court of India) <https://scdg.sci.gov.in/scnjdg/> accessed 31 January 2026
[x] Global Legal Insights, ‘Litigation & Dispute Resolution Laws 2025 | India’ (27 August 2025) <https://www.globallegalinsights.com/practice-areas/litigation-and-dispute-resolution-laws-and-regulations/india/> accessed 31 January 2026
[xi] Global Legal Insights, ‘Litigation & Dispute Resolution Laws 2025 | India’ (27 August 2025) <https://www.globallegalinsights.com/practice-areas/litigation-and-dispute-resolution-laws-and-regulations/india/> accessed 31 January 2026
[xii] The Mediation Act 2023, Section 18.
[xiii] The Mediation Act 2023, Section 19.
[xiv] Aksha Sulakhe, ‘Data Analysis of Reports of Supreme Court Mediation Centre (SCMC), Reports by Mediation And Conciliation Project Committee (MCPC)’ Jurists’ Junction (27 May 2024) <https://juristsjunction.wordpress.com/2024/05/28/data-analysis-of-reports-of-supreme-court-mediation-centre-scmc-reports-by-mediation-and-conciliation-project-committee-mcpc/> accessed 31 January 2026.
[xv] Aksha Sulakhe, ‘Data Analysis of Reports of Supreme Court Mediation Centre (SCMC), Reports by Mediation And Conciliation Project Committee (MCPC)’ Jurists’ Junction (27 May 2024) <https://juristsjunction.wordpress.com/2024/05/28/data-analysis-of-reports-of-supreme-court-mediation-centre-scmc-reports-by-mediation-and-conciliation-project-committee-mcpc/> accessed 31 January 2026.
