What is Commercial Dispute?

Commercial dispute refers to a disagreement or conflict arising out of commercial transactions or relationships between parties engaged in trade, business, or commerce. It involves matters related to business dealings such as contracts, sales, financing, and other commercial activities.

Definition of commercial dispute under Commercial Court Act 2015

The section 2(c) (i-xxii) of the commercial court act 2015, defines “Commercial dispute” means a dispute arising out of:

• Ordinary transactions of merchants, bankers, financiers, and traders, including the enforcement and interpretation of mercantile documents.
• Export or import of merchandise or services.
• Issues relating to admiralty and maritime law.
• Transactions relating to aircraft, equipment, and helicopters, including sales, leasing, and financing.
• Carriage of goods
• Construction and infrastructure contracts (including tenders).
• Agreements about immovable property used exclusively in trade or commerce
• Franchise, distribution, licensing, management, consultancy, joint venture, and shareholders agreements.
• Subscription and investment agreements related to outsourcing or financial services.
• Mercantile agency and usage, partnership agreements.
• Technology development agreements.
• Intellectual property rights (registered/unregistered trademarks, copyrights, patents, designs, domain names, geographical indications, and semiconductor circuits).
• Sale of goods or provision of services agreements.
• Exploitation of natural resources (oil, gas, electromagnetic spectrum).
• Insurance and re-insurance contracts, agency contracts related to above.
• Any other commercial disputes notified by the Central Government

What is Commercial Suit ?

A commercial Suit is a lawsuit filed in a court to resolve a commercial dispute, which arise out of the transaction of a business, trade or commerce between the parties, due to the conflict or breach of contract or disagreement.

Difference between a Civil Suit and commercial Suit

Civil suit deals with the dispute arise from civil wrong, tort or personal injuries. Civil suit are the traditional form of civil litigation covering a wide array of dispute covering private rights. They may relate to family law, property disputes, torts, or breach of non-commercial contracts. The court adjudicating civil suits follow usual civil procedural laws (CPC, 1908) without specialized process or emphasis on commercial knowledge.

On the other hand, Commercial suits specifically deals with the commercial disputes, which are those arising out of trade, commerce, and business transactions. Example includes disputes over contracts for goods or services, intellectual property rights, maritime contracts, banking transactions, etc. The commercial suits adjudicate by the specialized court established under the Commercial Court Act 2015.

The Commercial Courts framework is designed to bring specialized knowledge, faster case disposal, and efficient management of proceedings. Judges are appointed based on their expertise in commercial matters, and procedures are tailored for swift resolution, including stricter timelines for pleadings, mandatory pre-institution mediation, case management hearings, summary judgments, and limitations on frivolous claims.

What are the criteria for filing the commercial suit under the commercial court Act, 2015

Under the commercial court Act, 2015the criteria for filing a suit as follow:

1. Nature of Dispute:

• The suit must involve a commercial dispute as defined in the Act. According to Section 2(c) of the Act, a commercial dispute includes disputes arising out of:

• Transactions of merchants, bankers, financiers, traders (including mercantile documents).
• Import/export of goods or services.
• Issues related to admiralty and maritime law.
• Contracts involving aircraft, shipping, construction, franchising, licensing, and management.
• Intellectual property rights including trademarks, patents, copyrights.
• Shareholder agreements, joint ventures, partnerships, technology development.
• Insurance and reinsurance disputes.
• Other notified commercial matters by the Central Government.

2. Specified Value Threshold

• The subject-matter of the dispute must meet or exceed the specified value as defined under Section 2(i) and detailed in Section 12 of the Act.
• Currently, the minimum value is set at 3 lakh.

  3. Jurisdictional Criteria

• The suit must be filed in a Commercial Court or Commercial Division of a High Court that has been constituted under the Act.

• Territorial jurisdiction is defined as per Section 6 of the Act, i.e., the Commercial Court has jurisdiction over the entire state over which it has been vested territorial jurisdiction.

• In case of arbitration-related matters involving commercial disputes of specified value, the suit or application can be filed in Commercial Courts as per Section 10.

  4. Compliance with Pre-institution Mediation

• According to under section 12A of the act, suits may require exhaustion of pre-institution mediation, before filing the suit.
• The exception can be made if there is an urgency to seek interim relief, the plaintiff can skip the pre-mediation unless otherwise.

5. Filing requisites and compliance

• The plaint and pleading must comply with the special procedural requirements prescribe under the Act and amendments of the CPC 1908.
• Verification of pleadings by affidavit “Statement of Truth”(under Order VI Rule 15A CPC).
• Declaration of all documents in possession or control along with plaint, relied upon and disclosure obligations (order XI of CPC).

Thus, only disputes involving commerce & trade and competing the monetary value threshold are eligible to be filed under the Commercial Courts Act.

Stages involved in the commercial suit under commercial court act 2015

The Commercial Courts Act, 2015, is an attempt to fast track the process of hearing and disposal of commercial suit. The stages involved in the commercial suit under the act are more streamlined and time-bound than traditional civil litigation.

Stages of commercial suit under commercial court act 2015:

Pre- Institution Mediation:

• Before filing a commercial Suit the plaintiff must initiate pre-institution mediation under section 12A.
• The exception only made under the urgency of interim relief is sought.
• In cases where the opposite party cannot be served with the notice for giving consent to participate in the mediation or in cases where, in spite of the service of such notice, the opposite party refuses to participate in the mediation, the LSA shall treat the mediation process to be a non-starter and make a report accordingly to the applicant and opposite party
• The mediation is  to be completed within Three months (extendable by two months with the consent of the parties)
• If the parties to the commercial dispute arrive at a settlement, the same shall be reduced into writing and shall be signed by the parties to the dispute and the mediator.

Filing the Commercial Suit:

• Plaint (the formal statement of claim) is filed in the commercial court, along with all the supporting documents and a mandatory “Statement of Truth” affidavit.
• Plaintiff must also disclose all documents in their power, possession, control, or custody related to the dispute (Order XI of the CPC).

Issue of Summons:

• Court scrutinize the plaint and issues summons to the defendant.

Written Statement by Defendant:

• Defendant must file a written statement within 30 days (further extension up to 90 days).
• Defendant also must disclose all documents along with the “Statement of Truth”.

Disclosure, Discovery and Inspection of Documents:

• Both the parties must complete disclosure and discovery of documents (Order XI).
• All parties shall complete inspection of all documents disclosed within 30 days of the date of filing of the written statement or written statement to the counterclaim, whichever is later. The Court may extend this time limit upon application at its discretion, but not beyond thirty days in any event.
• Admission or denials of documents are made with affidavits.

Admission and Denial of Documents:

• Parties submit statements regarding admitted and denied documents within 15 days of inspection being completed or any later date as fixed by the Court.

Case Management Hearing:

• The Court shall hold the first Case Management Hearing, not later than four weeks from the date of filing of affidavit of admission or denial of documents by all parties to the suit.
• During this hearing, the court:
  • Frame issues to be tried.
  • Fixes timeline for evidence, arguments, and other steps.
  • Lists witnesses.
• In fixing dates or setting time limits the Court shall ensure that the arguments are closed not later than six months from the date of the first Case Management Hearing.

Summary Judgment (If applicable):

• At any stage after service of summons and before framing of issues, either party may apply for a summary judgment if any party has no real prospect of success.
• Summary disposal may obviate a full trial.

Evidence and Final Arguments:

• Affidavits of evidence for all witnesses must be filed simultaneously, by dates set at the Case Management Hearing.
• Cross-examination is conducted by both the sides.
• Parties submit written arguments and make oral submissions as directed by the court, typically within set timeframes.

Pronouncement of Judgment:

• The court pronounce judgment within 90 days of conclusion of arguments.

Appeal:

• A party aggrieved by a commercial court judgment may file an appeal to the Commercial Appellate Division/Court within 60 days.

The commercial court trial is designed to specially deal and resolve the dispute arise with the commercial transaction, with efficiency and expeditiously.