Arbitration bill will settle rows faster

The amendments approved by the Union cabinet to the Arbitration and Conciliation Bill, 2015, will help faster resolution of commercial disputes in the country. The amended bill will replace the existing law of 1996 which has been found wanting in many respects. When the bill was formulated, it broke fresh ground because it recognised arbitration as a legal method of dispute resolution which provided an alternative to the tedious judicial process. But the working of the law has exposed its weaknesses and limitations. The Law Commission suggested a number of amendments to update the law in the light of experience. This is being attempted in the amended legislation and it should receive parliamentary approval to become law. It also seeks to bring the law in line with international law in this area. This is good because in a globalising environment many disputes are bound to be between entities with operations in many countries or presence within India and other countries.

The most important aim of the bill is to make dispute settlement faster and cost-effective. It has set a time limit of 12 months for the arbitrator to settle a dispute, which may be extended by another six months in certain situations. But delays beyond that have to be allowed by the courts. The bill also provides for incentives and disincentives for the speed or delay, as the case may be, in settling disputes. Fast-tracking of cases is vital because many disputes are stuck in courts interminably. More than 50 per cent of the civil disputes in the high courts are commercial cases. India’s low ranking with respect to ease of doing business has much to with its slow dispute settlement system. In the matter of enforcement of contracts it is ranked 186 among 189 countries.

A fast and efficient legal system, which comprises both courts and other forums like arbitration tribunals, will help address this problem. The new bill has also amended certain sections in the original act which were misused to avoid arbitration altogether. The appointment of arbitrators has sometimes been prevented through recourse to courts. Arbitration tribunals have also been given more powers. Their directives are also enforceable like judicial orders. The proposed amendments have been generally welcomed by industry and business circles. Some have even felt that its aims are too ambitious in the Indian milieu. In any case, along with the plan to set up commercial benches in high courts, the new arbitration bill has the potential to make an impact on the dispute resolution system.