Twenty major Sri Lankan corporations have committed to using commercial mediation as their primary dispute resolution method, following the government's enactment of new legislation aimed at reducing court backlogs and protecting business interests.
A significant shift toward out-of-court dispute resolution is underway in Sri Lanka's corporate sector, with twenty leading companies pledging to embrace commercial mediation as their preferred method for resolving conflicts. The commitment came during an event organized by the International ADR Center (IADRC) at Port City Colombo, where corporate leaders agreed to prioritize smart decision-making that protects company value and brand reputation. According to Dr K. Kanag-Isvaran PC, chairman of the IADRC, this approach represents a departure from traditional litigation that often results in prolonged delays and damaged business relationships.
The initiative follows the recent implementation of the Mediation in Civil and Commercial Disputes Act No. 13 of 2026, which took effect on June 30, 2026. The new legislation grants legal binding status to mediated settlement agreements, treating them as enforceable contracts while empowering judges to refer suitable cases to mediation. This framework addresses a critical challenge facing Sri Lanka's justice system—a backlog of 1.2 million pending cases in courts.
Mediation offers distinct advantages over traditional litigation and arbitration, as it allows disputing parties to negotiate their own terms, maintain confidentiality, and preserve business relationships. International data presented at the event showed that over 90 percent of commercial mediations reach settlement within a single day, with success rates between 65 and 70 percent across sectors including supply chain, construction, and crypto assets. Siong Koon Sim, director of the Singapore International Mediation Centre, noted that mediation produces "two winners" through settlement, contrasting with litigation's winner-take-all outcome.
Organizers expect the expanded mediation ecosystem to reduce costs associated with delayed justice while enhancing Sri Lanka's appeal to foreign investors. The initiative received support from The Asia Foundation, with Port City Colombo serving as venue partner.
