Sri Lanka’s effort to make commercial mediation a mainstream business practice could become more than a justice-sector reform. It may also emerge as an important factor in determining whether the country can offer investors a faster, less costly and more predictable environment for resolving commercial disputes.
Twenty corporate entities have signed a pledge to make commercial mediation a primary dispute-resolution mechanism, under an initiative led by the International ADR Center (IADRC) at Port City Colombo.
The move comes against the backdrop of an estimated 1.2 million cases pending in Sri Lankan courts, raising questions about how effectively traditional litigation can serve businesses operating in an increasingly competitive economy.
For investors, the issue is not simply whether disputes can eventually be resolved. The time, cost and uncertainty surrounding a dispute can influence investment decisions, commercial relationships and the value of an enterprise.
Sri Lanka’s new legal framework seeks to address part of that problem. The Mediation in Civil and Commercial Disputes Act No. 13 of 2026, effective from June 30, provides mediated settlement agreements with binding and enforceable status. The legislation also permits judges to refer appropriate cases to mediation.
That legal recognition could give companies greater confidence in choosing mediation before disputes become entrenched in lengthy litigation.
The commercial logic is straightforward. Unlike litigation or arbitration, mediation does not place the final outcome entirely in the hands of a judge or arbitrator. The parties themselves negotiate the terms of settlement. This creates the possibility of resolving a disagreement while protecting confidentiality and preserving relationships that may remain commercially important.
Siong Koon Sim (IGN), Director of the Singapore International Mediation Centre, pointed to Singapore’s experience as evidence that mediation can become an integral part of sophisticated commercial ecosystems. He said major international corporations and multinational companies have adopted mediation to control litigation costs and resolve conflicts more quickly.
International figures cited at the event indicate that more than 90 percent of commercial mediations are settled within a single day, with success rates of approximately 65 to 70 percent across sectors such as construction, supply chains and crypto assets.
But Sri Lanka faces an important implementation challenge: changing corporate culture.
A law can create the mechanism, but businesses and lawyers must be willing to use it. The judiciary must also identify cases where mediation can deliver better commercial outcomes than prolonged litigation.
IADRC Chairman Dr K. Kanag-Isvaran PC argued that companies should view dispute resolution as a business-management decision aimed at protecting corporate value and brand reputation.
The participation of 20 companies is therefore an early indicator of private-sector interest. Whether that commitment develops into widespread practice will determine the initiative’s broader impact.
If mediation becomes embedded in corporate decision-making, Sri Lanka could potentially reduce the economic cost of delayed justice while strengthening its proposition as a destination for domestic and foreign investment.
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