Commercial Disputes: A Guide for Businesses

Introduction

In today's competitive business environment, disputes are almost inevitable. Whether it is a disagreement over a supply contract, recovery of dues, partnership issues, or shareholder conflicts, commercial disputes can disrupt business operations and damage relationships. In India, commercial disputes are governed by a mix of contract law, company law, arbitration statutes, and sector-specific regulations. With the establishment of Commercial Courts under the Commercial Courts Act, 2015, high-value business disputes in Karnataka, especially in Bengaluru, are now dealt with in a specialised and time-bound manner. For businesses and entrepreneurs, it is essential to understand the nature of commercial disputes, the legal forums available, and the strategies to resolve them effectively.

What Are Commercial Disputes

A commercial dispute broadly refers to any disagreement that arises in the course of trade or business. These include breach of contracts, non-payment for goods or services, disputes between shareholders and partners, joint venture disagreements, franchise and distribution conflicts, real estate and infrastructure disputes, and issues relating to intellectual property such as trademarks and copyrights. In Karnataka, the Commercial Courts and Commercial Divisions of High Courts have jurisdiction over disputes of a commercial nature involving a specified monetary threshold, currently ₹3 lakh and above.

Forums for Resolution

Commercial disputes can be resolved in multiple forums depending on the agreement between parties and the nature of the dispute. The Commercial Courts handle cases filed directly under the Commercial Courts Act, with a focus on efficiency and adherence to strict timelines. Many contracts include arbitration clauses, which means disputes are referred to arbitration instead of regular courts, with awards enforceable under the Arbitration and Conciliation Act, 1996. Additionally, mediation is increasingly encouraged as a pre-litigation step, allowing parties to settle matters amicably before resorting to trial. In Bengaluru, the dedicated Commercial Courts located near the City Civil Court Complex are the primary forum for such disputes.

Common Types of Commercial Disputes

Businesses in Karnataka frequently encounter disputes in several key areas. Contract disputes are the most common, often arising from breach, delay, or defective performance. Corporate disputes include shareholder disagreements, oppression and mismanagement claims, and governance issues. Real estate and construction disputes are also prevalent, involving delays, defects, or termination of large-scale projects. Intellectual property disputes have grown significantly, particularly in Bengaluru's start-up and technology sectors, where trademark and copyright issues affect branding and product development. Finally, disputes related to banking, finance, and recovery of dues also form a significant portion of commercial litigation.

Practical Approach to Handling Commercial Disputes

For businesses, the key to handling disputes lies in a strategic approach. The first step is often to attempt negotiation and settlement, preserving commercial relationships wherever possible. When litigation is unavoidable, ensuring that contracts contain clear jurisdiction and dispute resolution clauses can reduce procedural challenges. Document management is critical—maintaining invoices, correspondence, minutes of meetings, and agreements strengthens the case. Businesses should also consider the cost-benefit ratio, as commercial litigation can be expensive and time-consuming. Engaging experienced commercial litigators helps in evaluating risks, preparing strategies, and achieving effective outcomes in court or arbitration.

Timelines and Procedures

The Commercial Courts Act mandates strict timelines to ensure speedy disposal. Pleadings, disclosure of documents, and filing of written statements are tightly regulated, with delays often penalised. Pre-institution mediation is mandatory in certain cases unless urgent relief is sought. Trials are conducted with case management hearings, where courts set strict schedules. Appeals from Commercial Court decisions lie to the Commercial Appellate Division of the High Court. This framework is designed to ensure that business disputes do not drag on indefinitely, giving parties quicker clarity.

Conclusion

Commercial disputes are an unavoidable part of doing business, but they can be managed efficiently with the right strategy and legal support. Karnataka's specialised Commercial Courts, coupled with arbitration and mediation mechanisms, provide multiple avenues for resolution. For entrepreneurs, start-ups, and established companies, proactive contract drafting and timely legal action are crucial. At LNN Legal, we advise and represent clients in commercial litigation, arbitration, and mediation before the Commercial Courts in Bengaluru and the High Court of Karnataka, ensuring disputes are resolved with precision, efficiency, and a focus on protecting business interests.