Twenty corporate entities have signed a pledge committing to use commercial mediation as their primary means of resolving disputes, as Sri Lanka contends with a backlog of 1.2 million cases pending in the courts.

The initiative was organised by the International ADR Center (IADRC) at Port City Colombo, with the aim of settling disputes out of court, protecting corporate value and avoiding long delays in litigation.

It follows the rollout of the Mediation in Civil and Commercial Disputes Act No. 13 of 2026, which took effect on June 30. The Act gives mediated settlement agreements binding and enforceable status, treating them as valid contracts, and allows judges to refer suitable cases to mediation.

IADRC chairman Dr. K. Kanag-Isvaran PC said long-delayed corporate conflicts are better handled as business management problems than as court battles. “The pledge is one that commits to making smart decisions about resolving disputes in the best interests of the company, thereby protecting corporate value and brand,” he said. He added that Sri Lanka’s private sector and legal community had built a framework capable of supporting modern business needs: “We are not merely a service provider; we are thought leaders in the field.”

Unlike litigation or arbitration, where an outside party imposes a decision, mediation lets both sides negotiate their own terms, keep proceedings confidential and preserve business relationships.

Siong Koon Sim, a director of the Singapore International Mediation Centre, said international data shows more than 90 per cent of commercial mediations settle within a single day, with success rates of 65 to 70 per cent across sectors including supply chain, construction and crypto assets.

“When you have an arbitration and litigation, there is usually only one winner. When you have a mediation, if it works, you have a settlement, you have two winners,” Sim said. He said building a healthy alternative dispute system requires collaboration between businesses, lawyers and the legal framework.

The event was supported by The Asia Foundation, with Port City Colombo as venue partner. Organisers said they expect the mediation system to lower the cost of delayed justice and make Sri Lanka more attractive to foreign investors.

EconomyNext did not name the twenty signatory companies.

Sources: EconomyNext.