Mandatory pre-litigation mediation: The Yamini Manohar paradigm shift

The landscape of commercial dispute resolution in India stands at a crucial crossroads. While the Himachal Pradesh High Court's recent decision in Novenco Building and Industry A/S v. Xero Energy Engineering Solutions reinforced the mandatory nature of pre-litigation mediation under Section 12A of the Commercial Courts Act, 2015 (CCA), the Supreme Court's approach in Johnson Paints Pvt Ltd v. Johnson Paints Co presents a contrasting perspective.

The apex court's decision not to intervene when compliance with Section 12A was waived - despite a significant seven-month delay between suit filing and interim relief application - raises fundamental questions about the efficacy of mandatory mediation provisions. This judicial dichotomy, particularly pronounced in intellectual property disputes, sets the stage for examining the transformative impact of the judgment in Yamini Manohar v. TKD Keerthi on India's commercial dispute resolution framework.

A Constitutional crossroads

The Supreme Court's landmark judgment in Yamini Manohar v. TKD Keerthi attempted to resolve a critical interpretational conflict surrounding Section 12A, addressing the fundamental tension between mandatory mediation and urgent judicial intervention in commercial disputes. Through its analysis, which transcended simple statutory interpretation of the word 'shall' in Section 12A, the Court established that plaintiffs cannot exercise absolute discretion to circumvent mediation requirements, effectively constructing a robust framework that balances access to justice with efficient dispute resolution.

The Court emphasised checking "camouflage and guise to bypass the statutory mandate when deception and falsity is apparent." This reveals its pragmatic understanding of litigation tactics. Recognising the rampant misuse of the ‘unfettered and absolute choice’ lying in the hands of plaintiffs, the Supreme Court held that courts must examine cases beyond mere pleadings. They must scrutinise the antecedent conduct of parties, including previous attempts at resolution, the timeline between cause of action and legal proceedings, and evidence of genuine urgency.

Critics arguing that mandatory mediation contradicts voluntariness misapprehend the judgment's nuanced approach. The Court ingeniously distinguishes between mandating entry 'into' mediation versus participation or agreement 'within' it. This preserves mediation's voluntary essence while ensuring its attempted utilisation. The judgment maintains mediation's voluntary nature while making initiation mandatory.

The Court's approach in Yamini acknowledges a practical reality: without some element of compulsion, many parties might never experience mediation's benefits. This "forced first step" could catalyse a broader cultural shift towards embracing alternative dispute resolution (ADR) methods, particularly in in personam commercial disputes, where time and cost efficiencies are paramount.

This distinction represents a sophisticated resolution to the seemingly paradoxical concept of mandatory mediation. It is particularly vital given India's unique challenges with case pendency and limited awareness of ADR mechanisms.

Structural gaps and implementation framework

While transformative, the judgment leaves the concept of "urgent interim relief" indeterminate, hence producing divergence, especially in intellectual property disputes which almost always involve a continuing cause of action. The Madras High Court's attempt to establish crucial parameters in K Varathan v. Prakash Babu Nakhundi Reddy highlights this oversight in the Supreme Court's judgment. K. Varathan provides a concrete conceptualisation of “urgent interim relief” through specific parameters, which can provide requisite guidance even in intellectual property disputes, in spite of a continuing cause of action:

• Examining whether the prayer emerges from profound deliberation;

• Assessing if bypassing mediation would lead to irreversible consequences;

• Verifying whether urgency is self-created by plaintiff's delay.

These parameters, coupled with the analysis of antecedent conduct, maintain high thresholds for establishing genuine urgency, and ensuring that the plaintiff stands on fair ground. This further sits well with the defense of acquiescence, which is an established defense against interim relief in intellectual property disputes, in spite of them generally having a continuing cause of action.

The proposal in the Draft Commercial Courts (Amendment) Bill, 2024 for post-urgent relief mediation appears misaligned with the judgment's objectives. This approach might inadvertently incentivise more parties to claim urgent interim relief, undermining the judgment's aim of reducing procedural manipulation. A more effective amendment would establish clear criteria for urgent interim relief while maintaining pre-litigation mediation as the primary mechanism.

Analytical framework for courts

The Supreme Court’s judgment necessitates a comprehensive approach by commercial courts. A thorough examination must encompass:

• The plaintiff's previous attempts at amicable resolution.

• Careful consideration of the timeline between cause of action and legal filing.

• Distinction between genuine urgency and tactical pleading.

• Scrutiny of whether delay in approaching the court is self-created.

• Evaluation if immediate intervention is genuinely warranted and would lead to irreversible harm

• Analysis of antecedent conduct of parties.

Successful implementation of this framework requires a multi-faceted approach. The development of clear judicial guidelines for evaluating urgent relief claims must be prioritised to ensure consistency across jurisdictions. This must be coupled with substantial strengthening of the institutional mediation infrastructure and evolving from adversarial litigation to collaborative problem-solving - a target that the Mediation Act of 2023 (yet to fully come in force) seeks to achieve.

Future implications

The transformative potential of the Supreme Court’s ruling extends beyond immediate procedural changes. It establishes a crucial precedent for balancing mandatory ADR mechanisms with legitimate urgent judicial intervention.

The comprehensive framework combines stringent scrutiny requirements with a conduct analysis to distinguish genuine urgency from tactical maneuvers. Taking a leaf out of the Madras High Court's conceptualisation of "urgent interim relief" and its evaluative parameters would help courts complement and operationalise the Supreme Court's ruling.

The Yamini Manohar judgment marks a pivotal moment in India's journey toward efficient commercial dispute resolution. While challenges remain, particularly in IP disputes with continuing causes of action, the decision's emphasis on genuine urgency and procedural integrity provides a robust framework for courts to balance mandatory mediation with legitimate urgent relief. Its success will depend on careful implementation of the analytical framework outlined above, coupled with legislative reforms that align with its objectives.

Disha Thakkar is an advocate practicing before the Bombay High Court.