LS passes Bill for speedy disposal of arbitration cases

A bill aimed to provide speedy disposal of arbitration cases and improve the 'ease of doing business' was passed by the Lok Sabha today.
"The bill will give a new dimension to the legal system in the country ... And make India a centre of international commercial arbitration," Law Minister D V Sadananda Gowda said while moving the Arbitration and Conciliation (Amendment) Bill, 2015 for passage.
The bill was approved by voice vote after the House rejected certain amendments moved by N K Premachandran (RSP) and Saugata Roy (Trinamool Congress). However, an official amendment, envisaging that the new law would not apply to the ongoing cases until and unless both parties agreed, was accepted.

The amendment bill, Gowda said, seeks to reduce the cost of litigation, improve India's ranking in 'ease of doing business' index of the World Bank and promote 'Make in India' campaign of Prime Minister Narendra Modi.
On the applicability of the provisions, he said it can take retrospective effect "if the parties agree". Otherwise, it would have prospective effect, the Minister said.
He said the changes in the Arbitration and Conciliation Act 1996, which were introduced after extensive consultation, will make arbitration "user friendly" in addition to reducing its cost.

The bill, which will replace an ordinance promulgated in October, is aimed at speedy settlement of high value business disputes through arbitration.

Under the amendments, an arbitrator will have to settle a case within 18 months. However, after the completion of 12 months, certain restrictions would be put in place to ensure that the arbitration cases do not linger on.
The Bill also has a provision for fast-track procedure for conducting arbitration if the parties to the dispute so desire. Award in such cases could be given in six months.
As regards the cost of arbitration, Gowda said, the fee
structure was being prescribed in the Bill with a provision of extra reward as also penalty for ensuring timely completion of arbitration proceedings.

The government, he further said would also consider the suggestions of members to set up a panel of eligible arbitrators and open more arbitration centres in the country.
Responding to criticism by Premachandran that courts will have no jurisdiction on the foreign awards, Gowda said, no purpose would be served if all arbitration awards landed in courts for scrutiny.
"If all cases go to court, the bill will have no value, it will become infructuous", he added.
He, however, admitted that enactment of certain legislations like the Electricity Act, Negotiable Instruments (Amendment) Act and laws to prevent of domestic violence have resulted in spurt of legal cases.

He hoped that with the amendments to the Arbitration Act, the number of court cases would also come down.
Most of the members during the debate appreciated the bill but urged the governemnt to take steps to reduce the number of pending litigations in various courts.
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Participating in a debate on the Bill, Premachandran expressed the apprehension that Indian courts would have no jurisdiction on the foreign arbitral awards even if they were not in order or erroneous.
He also accused the government of doing everything for the rich and nothing for poor people.
Tathagata Satpathy (BJD) said when the Centre has set a time frame for settling of dispute under this Act, why cannot they do the same for the pending criminal cases.

He suggested that instead of appointing retired judges, the Government should set up a training center in which young arbitrators can be trained.
Arpita Ghosh (TMC) welcomed the Bill saying it will be user-friendly and cost-effective and disposal of cases will be faster. "When we want to attract foreign investment, we need to pass the Bill faster," she added.
B Senguttuvan (AIADMK) said the time limit provided for concluding arbitration at 12 months is a "counter productive" measures and should be extended to 24 months.
A P Jithender Reddy (TRS) said the amendments will help in instilling sense of confidence among foreign investor as the resolution can be achieved in cost effective manner.

Raising concern over the time frame of 12 months, he said it is short period of resolving cases which runs in multi-million and involving many parties.
Kesineni Srinivas (TDP) said the changes in the Arbitration and Conciliation Act, 1996 will make the arbitration system cost-effective.
Highlighting that one of the impediments in attracting foreign investment is inordinate delay in resolution of dispute, Raja Mohan Reddy (YSRCP) said the amendment proposes to settle the arbitration within a timeframe.
Joice George (Ind) said if conducive atmosphere is created, India can become hub of international arbitration.
Suggesting that international treaty should be signed after concurrence from stakeholders and state governments, he said at the moment it is just a bureaucratic exercise.

Expressing that India has potential to overtake US and China Rattan Lal Kataria (BJP) said India is improving its position in 'ease of doing business' ranking and the image of India in the world have significantly improved under the leadership of Prime Minister Modi.
Taking a dig at Congress, he said when an important bill is being discussed Congress is not in the House. The party cannot digest development of the country, he alleged.
Other members who participated in the discussion included, Shrirang Barne (Shiv Sena), Arun Kumar (RLSP), Kaushalendra Kumar (JD(U), Jay Prakash Narayan Yadav (RJD), Varaprasad Rao Velagapalli (YSRCP), Vinod Kumar Boianapalli (TRS), Narasimham Thota (TDP) and Ajay Misra, Bhola Singh, Gopal Chinayya Shetty and Bhairon Prasad Misra (all BJP).