Arbitration law: Govt not to go for stringent timeline

In the face of stiff opposition, the Law Ministry is learnt to have eased the stringent timeline for the settling of commercial disputes proposed in the amendments to the arbitration law.

PTI| Updated: Aug 04, 2015, 21:39 PM IST

New Delhi: In the face of stiff opposition, the Law Ministry is learnt to have eased the stringent timeline for the settling of commercial disputes proposed in the amendments to the arbitration law.

The Union Cabinet will on Wednesday take a call on the amendments to the Arbitration and Conciliation Act, 1996. Last month, too, the issue was on the agenda of the Union Cabinet, but the matter was deferred.

Amidst its keenness to attract the maximum foreign investment, the government had decided to amend the Arbitration Act to make it mandatory for a judge presiding over commercial disputes to settle such cases within nine months.

Sources in the government said the timeline has now been set at 18 months as a section of retired judges who are into arbitration had opposed the stringent timeline that had been proposed.

According to earlier amendments, an arbitrator deciding on a commercial dispute would have to clear the case within a nine month time-frame. The arbitrator will be free to seek an extension from high court. But in case of further delays, high court will be free to debar the arbitrator from taking up fresh cases for a certain period.

That was a crucial amendment to the arbitration law as many foreign companies were said to be hesitant to do business in India because of the long-drawn litigations.

Another amendment puts a cap on the fees of an arbitrator. The arbitrator will also have to spell out if there is a conflict of interest in the case he or she is taking up.

Sources in the government said some former judges who are into arbitration were opposed to the strict timeline and the clause putting a cap on the fee.

The government wanted to promulgate an ordinance on the arbitration law and the same was cleared by the Cabinet on December 29, 2014, but it was never sent to the President for his approval.

The move to amend the law comes amidst the government's bid to attract maximum foreign investment by promoting 'ease of doing business' in India, which is being highlighted by Prime Minister Narendra Modi.

In its report submitted last year, the Law Commission had also supported amendment of the arbitration law to help India become a favoured destination, after Singapore and London, for international arbitration.