Law Ministry proposes body to help government departments in arbitration cases

NEW DELHI: As government eyes major investments in infrastructure, Law Ministry has proposed to develop a panel of bodies to provide institutional arbitration and advise central departments and public enterprises on ways to include arbitration clause in their contracts.

The proposal to help government departments and PSUs settle commercial disputes was put forth by Law Minister D V Sadananda Gowda before the Construction Industry Arbitration Council.

The Ministry of Road Transport, NHAI, NBCC and similar such organisations engaged in infrastructure development and upgradation would benefit from it.

The proposal assumes significance as the Narendra Modi government eyes big ticket investments in the infrastructure sector.

While there is a general perception that settling commercial disputes in India is a painstaking affair, government proposes to amend the Arbitration Act to signal that settling cases in the country will no longer be time consuming.

Addressing the United Nations Commission on International Trade Law workshop here yesterday, Gowda told the Council members that the Ministry can develop a panel of bodies providing institutional arbitration. The panel can also advise government departments and public enterprises to include institutional arbitration clause in their contracts.

While inviting the Construction Industry Arbitration Council to work with his Ministry, he emphasised the need for resorting to institutional arbitration instead of ad-hoc mode of arbitration. He also stressed that there should be a quick post award settlement.

Gowda also spoke about resorting to online dispute resolution as India plans smart cities.

The Law Minister stressed upon the need to train a strong cadre of specialists as arbitrators as well as mediation and conciliation experts if India wants to compete with international arbitration hubs like London and Singapore.

Based on the recommendations of the Law Commission and suggestions made by Attorney General Mukul Rohatgi and some other legal experts, the Union Cabinet had in December cleared an ordinance to amend the Arbitration and Conciliation Act, 1996. But the idea to bring an ordinance was dropped and it was not sent to the President for his approval.

The amendments proposed in the ordinance made it mandatory for a judge presiding over commercial disputes to settle cases within nine months. It has also proposed a systematic fee structure where it will not be charged on 'per hearing' basis.

The government will now bring a bill to amend the Act in the Budget session beginning February 23.