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A Commercial Dispute is a Disagreement between two or more Parties in relation to a Business Transaction. To resolve such Commercial Disputes special courts called Commercial Courts that are established in every city.
What are the Categories of Disputes ?
Commercial Disputes can be broadly classified in the below categories, such disputes can be withing the country or international too. It can involve one party or more than one institution:
- Partnerships
- Contractual Agreements
- Employee – Employer Disputes
- Customer Disputes
- Shareholder Disputes
Note: From a Valuation stand point, any dispute arising between two parties from a conflicting business transaction where the value of the subject matter or goods or services etc… is valued more than INR 3,00,000 (Rupees Three Lakhs Only) shall be dealt in a Commercial Court.
Definition of Commercial Dispute as defined under section 2(C) of the Commercial Courts Act, 2015.
Following transactions that of the traders, merchants, bankers, financiers, partners, small and medium businesses, commercial enterprise units, industries etc… are admissible as Commercial Disputes. Such disputes arising due to
- Export – Import of Goods and Services
- Admiralty and Marine Law Issues
- Aviation Sector Related Transactions – Sales, Leasing, and Financing
- Carriage of Goods
- Tenders and Contracts connected to Building and Infrastructure
- Agreements for the Use of Immovable Property in Trade
- Agreements for Franchising
- Agreements regarding Distribution and Licensing
- Agreements for Management and Consulting
- Agreements forming a Joint Venture
- Agreements between Shareholders
- Agreements relating to Subscriptions and Investments in the Services Business, such as Outsourcing and Financial Services
- Transactions related to Mercantile Agency and Mercantile Use
- Partnership Agreements
- Agreements on Technological Advancements
- Disputes related to Intellectual Property Rights: Trademarks, Copyright, Patents, Domain Names, Geographical Indications, Semiconductor Integrated Circuits, AI and Emerging Technology Frameworks etc…
- Contracts for the Sale of Products or the Rendering of Services
- The Exploitation of Natural Resources such as Oil and Gas deposits, as well as the Electromagnetic Spectrum
- Insurance and Reinsurance disputes
- Any dispute arising from a transaction covered by an agency contract.
- Business conflicts that the Central Government has been made aware of
What should I do when I am a victim of such Commercial Dispute
If your rights are infringed and if your transactions fall under any of the above category, you are facing a dispute where the subject matter is be valued more than INR 3,00,000 (Rupees Three Lakhs Only) you can approach the Best Lawyers in Bangalore for Commercial Dispute and seek legal advice followed with action.
The Very first step will be to qualify your case and understand the cause of action, once you and your Commercial Dispute Lawyer agree on the cause of action, subject matter and qualify your dispute carries merits as defined in the Commercial Courts Act, you need to issue a Legal Notice to the Opposite Party.
Based on the Reply of the Legal Notice, one of the best steps as defined in the Commercial Courts Act is “Pre-Institution Mediation and Settlement”. This is a very crucial step that helps in resolving the matter amicably. Failure from the parties to resolve the dispute escalates to the Commercial Court for next stage and the counsels from both sides present their arguments, evidences and cross the opposite party to bring the truth in front of the court to decide the outcome. There is always a right to appeal in case the outcome is not favourable to either party.
What is Pre-Institution Mediation and Settlement?
Section 12A of the Commercial Courts Act, mandates pre-institution mediation. This is mandatory step for the parties who have filed the suit to undergo mediation and try to settle the dispute amicably.
Before the mediation commences, the disputing parties are required to pay mediation fee, this is one-time mediation fees that is paid by the parties. The mediation fee depends upon the quantum of the claim.
Section 12A(1) provides an exception to the Pre-Institution Mediation and Settlement Procedure. A suit, which does not contemplate any urgent relief under this Act, shall not be instituted unless the Plaintiff exhausts the remedy of Pre-Institution mediation in accordance of such manner and procedure as laid down by the rules made by Central Government.
There are three possible outcomes of mediation
- The dispute is resolved between the parties
If the Dispute is resolved, the settlement will be reduced to writing, the agreement will be signed by the parties and the mediator. This settlement will be considered as an arbitral award or agreed-on award as per Arbitration and Conciliation Act as defined under Section 30(4).
Note: In the case of a settlement, appeal is not permissible as a remedy. Section 96(3) of the Code of Civil Procedure, 1908 clearly calls out that a decree passed with the consent of the parties is non-appealable
- The disputes stay unresolved between the parties
In case the Dispute is unresolved, there is no settlement and the status quo continues as is, a report will be submitted from the mediation to the court. The matter progresses and the respective counsels / parties will battle out their versions in the court. The outcome will be decided by the court after hearing both parties, their evidences, arguments etc…
The arbitral award can be challenged on any of the grounds as mentioned in Section 34 of the Arbitration Act if either party is not satisfied with the outcome.
- One of the Parties does not participate in the mediation process
In case one party, say for example a plaintiff appears and the defendant does not appear, or vice versa, then a Non-Starter Report will be issued by the mediation center. Non-Starter or sometimes called as Failure occurs when the Notice for mediation is Unacknowledged, the opposite party refuses to participate, or absents without a valid reason on the mediation date.
Interestingly, a study published that between July 2018 and March 2020, 926 applications were made under Section 12A of the Commercial Courts Act in the State of Karnataka for initiation of Pre-Institution Mediation and Settlement process. Out of these, a “non-starter” report was filed for 498, which is more than fifty percent of all applications.
India takes a lenient view with respect to the Non-Starter of the Pre-Institution Mediation and Settlement. One of the suggestions is to amend the act picking the best practice from the Federal Court of Australia which has the power to Fine and impose penalty to the party who does not participate in the Pre-Institution Mediation and Settlement Process, such was held in Superior IP International Pty Ltd v. Ahearn Fox Patent and Trade Mark Attorneys.
The Limitation Period for Mediation is 3 Months and can extend by two more months as per the situation at hand.
How can I appeal against the Order of Commercial Court?
Any person aggrieved by the judgement or the order of the Commercial Court, below the level of a District Judge, may appeal to the Commercial Appellate Court within a period of 60 Days.
Any person aggrieved by the judgement or the order of the Commercial Court, at the level of a District Judge exercising Original Civil Jurisdiction or as the case may be, Commercial Division of the High Court, may appeal to the Commercial Appellate division of that High Court within a period of 60 Days.
The Commercial Appellate Court and the Commercial Appellate Division shall endeavour to dispose of such appeals filed before it within a period of 6 months.
Conclusion :
Commercial disputes can quickly escalate and become costly in terms of time and expense. A good lawyer by your side will help review what was agreed and identify gaps, helps assess the losses you have suffered, helps gather the right evidence, stand for you to negotiate an amicable resolution. Very importantly, guides and advices you by assessing if your case / dispute is strong enough to fight out or negotiate a win-win and considers how far the compromise can be in your best interests and guard your legal rights.
Business lawyers are not one-size-fits-all. It’s important to make sure you’re professionally compatible. Take your time in finding the right representation for your specific business needs. At Sonia and Partners, we have a team of best Commercial Lawyers in Bangalore to advice on all the commercial dispute and represent you in Commercial matters. Our key strength is Negotiation and Mediations, Our expertise in Pre-Institution Mediation Settlements will help you sail through your disputes seamlessly. You may wish to call at +91 9845944896 or write to us at mail@lawyersonia.com to block time for consultation if you wish to discuss your matter.
