Dedicated courts will speed up resolution of disputes

Disputing parties are often advised, even by lawyers themselves, to settle matter and stay away from litigation. Not because the matter lacks merit but enforcing contracts in India could be very arduous. The latest World Bank rankings on doing business substantiate this point. Globally, for ease of enforcing contracts, India is languishing at 178 out of 189 countries. According to the report, contract enforcement could take four years, costing 39.6 per cent of the value of the claim in cities like Delhi and Mumbai. The report factored in three indicators to measure ease of contract enforcement - "time", "cost" and "quality of judicial processes index." India's dismal ranking proves that it fails on all indicators.

One factor in the report to determine the quality of judicial processes where India scored 'Nil' is presence of court or a division of a court solely to hear commercial cases. This position could probably change now with the enactment of Commercial Courts, Commercial Division and Commercial Appellate Division of the High Court Ordinance, 2015 that provides for speedy resolution of "commercial disputes" by setting dedicated commercial courts, commercial division and commercial appellate division. Commercial disputes cover transactions from export and import, sale and purchase to transactions in aviation, infrastructure, real estate, oil and gas and insurance industries and also joint venture and shareholders' agreement, provided the value of these transaction exceeds Rs 1 crore. The ordinance provides that commercial appellate division should endeavour to timely dispose appeals in six months.

At the same time, through another ordinance, the Arbitration and Conciliation Act, 1996 has been amended, to provide for passing an award within 12 months or maximum 18 months with disputing parties' consent, anything beyond that will require court's consent. Parties can opt for fast-track proceeding where award will be passed within six months. Timely disposal will lead to cost effectiveness of contract enforcement. If these measures are implemented purposively, enforcing contracts would become timely and cost effective, leading to improvement in India's ranking next year.

(The author is a partner with J Sagar Associates. Views are personal)