Ease of doing business: Govt clears 2 ordinances for speedy settlement of commercial disputes

October 23, 2015 0 Comment
NEW DELHI: The government today cleared two ordinances for speedy settlement of commercial disputes in the country, giving a fresh impetus to ease of doing business.

The Union Cabinet, chaired by Prime Minister Narendra Modi, cleared ordinances to amend the Arbitration and Conciliation Act and bring into force the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill, 2015 pending before a Parliamentary standing committee, official sources said.

The Cabinet had in December last year given a nod to an ordinance to amend the Arbitration Act but it was never sent to the President for approval.

For speedy settlement of commercial disputes, the Cabinet had in August cleared a bill to amend the Arbitration Act to fix a timeline for arbitrators to resolve cases. The bill was not introduced in Parliament.

Under the proposed amendments to the Arbitration and Conciliation Act, 1996, an arbitrator will have to settle a case within 18 months.

However, after the completion of 12 months, certain restrictions will be put in place to ensure that the arbitration case does not linger on, the sources said.

In the initial ordinance approved by the Cabinet in December last year, the timeline was fixed at nine months.

The formulation was changed after inter-ministerial discussions.

The amendments to the law come amidst keenness of the government to attract the greater foreign investment.

Certain foreign companies were said to be hesitant to do business in India because of the long-drawn litigations.

Another amendment to the law puts a cap on the fee of an arbitrator.

The arbitrator will now also have to spell out if there is a conflict of interest in a case he or she is taking up.

The Prime Minister has been stressing on steps to promote ease of doing business in India.

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

The Cabinet Committee on Parliamentary Affairs, which also met today, decided to take a call on convening the Winter Session of Parliament on October 26. Once the session, likely to commence after November 19, starts, the government will have to seek Parliament’s approval for the ordinances within 42 days/six weeks or else these will lapse.

The department related standing committee on Law and Personnel was to table its report in Parliament on the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill, 2015 by end of July. But it was granted a month’s extension till August 30. The panel has sought a fresh extension till November 30.

The Bill has been pending. After being referred to a Rajya Sabha Select Committee during UPA’s tenure, it was sent to the Law Commission. Based on the law panel’s recommendations, the NDA government re-drafted the bill as part of its ease of doing business.

The government will now have to take a call on bringing into force a law which will allow the Delhi High Court to transfer thousands of cases, mostly related to property disputes, to the district courts of the capital. The law will enhance the pecuniary jurisdiction of civil courts from the existing Rs 20 lakh to Rs 2 crore.

The Delhi High Court (Amendment) Act, 2015, has received the approval of the President but is yet to be brought into force.

Pecuniary jurisdiction refers to the jurisdiction of a court over a suit based on the amount or value of its subject matter. According to an estimate put before the Parliamentary committee which examined the bill, there are over 12,000 cases which will stand transferred to the lower courts.