new delhi, Feb. 6 -- Nearly seven years after pre-court mediation was made mandatory for commercial disputes, the numbers are startlingly thin. Data placed before the Rajya Sabha by the ministry of law and justice shows that only about 1.75% of the more than 270,000 applications routed through the process has been settled since 2018. Most disputes never progressed to actual mediation or ended without any settlement. Lawyers say its compulsory nature runs against the basic idea of pre-court mediation, weakening business confidence in the process. The process is widely treated as a procedural hurdle rather than a serious settlement effort, they said, with parties reluctant to engage early, especially with little certainty around enforcement. "In most commercial cases, mediation fails before it even begins," said Gauhar Mirza, partner at Saraf and Partners. "Often the other side simply does not show up. Even when they do, they lack authority or preparation. When genuine mediation happens, settlements do follow, but very few cases ever reach that stage." Pointing to less than 900 settlements came out of nearly 60,000 mediation applications in 2024-25, Shaneen Parikh, partner and head of international arbitration at Cyril Amarchand Mangaldas, said, "Parties clearly do not see value in the process and prefer to litigate or settle informally." According to Parikh, rather than reducing court congestion, mandatory mediation has added an extra procedural layer that businesses must navigate before their cases can proceed. The data presented in the Rajya Sabha shows that mediation applications have surged from 3,680 in FY19 to nearly 60,000 in FY25, while the settlement rates remain negligible. Between July 2018 and March 2019, only 25 cases were settled of the 3,680 applications. In FY20 and FY21, settlements were at 167 and 186, respectively, even though more than 18,000 applications were filed each year. And in FY22 and FY23, settlements remained low at 368 and 1,449 from filings of 32,335 and 46,412, respectively. The trend has only worsened in recent years, with just 1,139 settlements in FY24 and 877 in FY25, out of the nearly 60,000 applications. "There is a risk that repeated failures of pre-institution mediation may dampen business confidence in ADR (alternative dispute resolution), especially when such low settlement rates are seen as evidence that the process does not work," said Shiv Sapra, partner at Kochhar & Co. Mediation, which is part of ADR, also includes arbitration, conciliation, and negotiation. While mediation depends on voluntary settlement with help from a neutral mediator, arbitration results in a binding decision by an arbitrator. Pre-institution mediation was introduced in 2018 under the Commercial Courts Act to encourage early settlement of commercial disputes and reduce pressure on courts. Under Section 12A, parties involved in commercial disputes above Rs.3 lakh must attempt mediation before filing a lawsuit, unless an urgent interim relief is required. Experts say reforms are needed to make the framework effective. These include penalties for refusing to engage in mediation, requiring parties with decision-making authority to attend, and closer oversight by courts. From an investor perspective, Parikh said quicker enforcement of mediated settlements and India's ratification of the Singapore Convention on Mediation could help restore confidence by allowing cross-border enforcement of settlement agreements. India had signed the Singapore Convention on Mediation, a UN treaty that allows international commercial mediation settlements to be enforced directly across borders, on 7 August 2019, but has not ratified it yet. For investors, this is crucial as settlements reached through mediation can be enforced without starting fresh court cases or arbitration. An IndiaCorpLaw analysis notes that under Indian law, mediation settlements are often treated as private contracts, making enforcement slow and uncertain. Ratifying the Singapore convention would close this gap, make mediation more reliable for cross-border business, reduce legal costs, and boost investor confidence in India's dispute-resolution system....