Govt drops plans to bring Ordinance on Arbitration Law

Even after clearance by the Cabinet, the government has dropped plans to bring an Ordinance to amend the Arbitration Act to make it mandatory for a judge presiding over commercial disputes to settle cases within nine months.
The government will now bring a bill to amend the Arbitration and Conciliation Act, 1996 in the Budget session beginning February 23, the sources said.
The Ordinance to amend the law was cleared by the Union Cabinet on December 29 but it was not sent to the President for his approval, the sources said.
The development assumes significance as President Pranab Mukherjee on Monday voiced his objection to the use of 'Ordinance route' to bring laws and cautioned it against it.

The amendments to the Act are aimed at giving a message to the international business community that settling commercial disputes in India will no longer be a time-consuming affair.
The government had decided to take the Ordinance route as it wanted the amendments to be put in place at the earliest.

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

This is a crucial amendment to the Arbitration law as many foreign companies are said to be hesitant to do business in India because of long-drawn litigations.
The government is moving to amend the law amidst its keenness to attract maximum foreign inestment by projecting the 'ease of doing business' in India which is being highlighted by Prime Minister Narendra Modi.
Another amendment puts a cap on fee of 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.
"Most of the recommendations of the Law Commission have been accepted. While some have been incorporated in the law itself, some of the recommendations will be used while framing rules," the official said.