Sri Lanka’s Mediation (Civil and Commercial Disputes) Act, No. 13 of 2026 introduces a new legal framework for resolving civil and commercial disputes through mediation.
The Act applies where mediation takes place under a written mediation agreement, voluntarily without a prior agreement, or following a referral by a court.
Is this the same as the Mediation Boards system?
No. The Act does not replace the existing Mediation Boards framework. Disputes governed by the Mediation Boards Act, No. 72 of 1988 or the Mediation (Special Categories of Disputes) Act, No. 21 of 2003 must continue under those laws.
What kinds of disputes can be mediated?
The Act applies broadly to civil and commercial disputes legally capable of settlement through mediation. These may include contractual payments, supply of goods or services, construction, business arrangements, partnerships, shareholder relationships, leases and other commercial relationships.
Are any disputes excluded?
Certain disputes cannot be finally settled through mediation where the requested result can take effect only through a judgment, decree or order of court.
The Schedule identifies disputes concerning divorce and nullity, minors and persons of unsound mind, guardians and receivers, adoption, registration of births and deaths, partition to obtain rights in rem, probate and letters of administration, insolvency, certain admiralty rights in rem and alleged breaches of fundamental rights.
Matters relevant to such disputes may nevertheless be mediated so that agreed terms can be presented to court for possible incorporation into its judgment, decree or order in accordance with applicable law.
Is mediation compulsory?
The Act does not make mediation automatically compulsory for every civil or commercial dispute. However, where the parties have a mediation agreement, or mediation proceedings have commenced under the Act even without one, court proceedings concerning the same dispute generally cannot be instituted or entertained unless a certificate of non-settlement is produced.
This restriction does not prevent a party from seeking a provisional remedy under Part V of the Civil Procedure Code or another law.
What is a mediation agreement?
It is a written agreement to refer an existing or future dispute arising from a defined legal relationship to mediation. It may be a clause in a contract or a separate agreement. It may identify the Mediation Service Provider, applicable rules and the time allowed for mediation.
Can parties mediate without an existing clause?
Yes. The parties may jointly refer the dispute to an agreed Mediation Service Provider, or one party may invite the other in writing and nominate a provider. If the invitation is not accepted within 30 days, or another stated period, it may be treated as rejected.
When does mediation commence?
Under the Act, mediation commences on the date the mediator is appointed. This is important when calculating prescription.
What happens to prescription?
When calculating prescription, the period between commencement of mediation and the date of the Settlement Agreement or certificate of non-settlement is excluded. Parties should still seek timely advice because the protected period begins with the appointment of the mediator, not merely when mediation is suggested.
Can a court refer an existing case?
Yes. A court may refer a dispute or part of it to mediation administered by a Mediation Service Provider selected by the parties. The provider must appoint a mediator and have the mediation concluded within 60 days of receiving the order. If settlement prospects remain, the parties may request a specified extension.
Can a party unreasonably refuse mediation?
When awarding costs, a court must consider whether a party unreasonably refused to participate in mediation. Not every refusal will necessarily be unreasonable, but an invitation should be considered seriously.
What are the roles of parties and lawyers?
A party must engage directly throughout the mediation. A party may nevertheless be accompanied by an Attorney-at-Law or another person who can assist. A company, statutory body, government department or other legal entity must be represented by an officer with written authority to speak and settle on its behalf.
What is the mediator’s role?
The mediator must explain the process, remain fair, impartial and neutral, avoid imposing a solution, disclose conflicts of interest, preserve confidentiality and comply with the applicable code and agreed rules. The mediator may meet the parties jointly or separately.
Are mediation discussions confidential?
Yes. Statements, opinions, settlement proposals, willingness to participate or accept proposals, and documents prepared primarily for mediation are generally confidential and without prejudice. They cannot ordinarily be introduced in court, arbitration or another process.
Limited exceptions apply where disclosure is required by law or necessary to implement or enforce the Settlement Agreement. Independently admissible evidence does not become inadmissible merely because it was used in mediation. Audio and video recording of mediation is prohibited, whether conducted physically or virtually.
What happens when mediation succeeds?
The terms must be recorded in a written Settlement Agreement signed by the parties. The mediator must be satisfied that they understand the terms and obligations. The agreement must be attested by the mediator or an authorized official of the Mediation Service Provider, and each party must receive an original.
Is the Settlement Agreement binding?
Yes. It is binding between the parties and enforceable as a valid contract, but cannot affect the rights of non-parties. A court has no jurisdiction to determine a matter already settled under the agreement.
Can the settlement become a decree of court?
A party may apply to the relevant High Court within 12 months to have the settlement entered as a decree. The High Court may refuse only on the statutory grounds, including incapacity, lack of finality, unclear obligations, serious mediator misconduct, material non-disclosure of conflict, public policy, or a subject that cannot legally be mediated.
If no ground is established, judgment and decree must be entered according to the agreement, and the decree may be enforced under the Civil Procedure Code.
What happens when mediation fails?
The mediator issues each party a certificate of non-settlement. It briefly identifies the dispute and confirms that settlement was not reached. If mediation could not proceed because of a party’s absence despite notice, that must also be recorded. The certificate is final and conclusive evidence that mediation was attempted without settlement.
What does the new law mean in practice?
The Act gives individuals and businesses a structured alternative to immediately pursuing full litigation. It may be useful where relationships should continue, confidentiality matters, a commercially workable solution is needed, or litigation would be disproportionate in cost and delay.
Mediation will not suit every dispute. Its usefulness will depend on informed participation, suitable mediators, reliable Mediation Service Providers and a genuine willingness to engage with settlement.
Primary source: Mediation (Civil and Commercial Disputes) Act, No. 13 of 2026, certified on 30 June 2026.
Related mediation guides
What Is Mediation, and When Can It Help Resolve a Dispute?
Preparing for Mediation: What to Do and What Not to Do
Legal basis: Mediation (Civil and Commercial Disputes) Act, No. 13 of 2026.
Note: This article provides general legal information and does not constitute legal advice. Advice appropriate to the circumstances of the particular dispute should be obtained where necessary.
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