Law panel defines public policy for arbitration amendment bill

Seeking to avoid any ambiguity over the definition of 'public policy', a bill to amend the Arbitration Act is likely to carry an explanation of the term as recommended by the Law Commission.
The law panel has sent a supplementary report to the Law Ministry based on two recent Supreme Court judgements. The judgements came after the Commission submitted its report on the amendments to the Act in August last year.
"Unless the amendment to the Commission's proposed Section 34(2)(b)(ii) is incorporated, 'public policy' will continue to be widely construed...," the panel said in its latest report.
The Commission has recommended that the proposed Section 34(2)(b)(ii) be replaced with a fresh clause saying the award will be treated as in conflict with 'public policy' only if "the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 of Section 81; or if it is in contravention with the fundamental policy of Indian law; or it is in conflict with the most basic notions of morality or justice".

A senior Law Ministry official said the definition as recommended by the Commission is likely to be included in the bill when it is sent to Cabinet for approval.
Based on the recommendations of the Commission and suggestions made by Attorney General Mukul Rohatgi and some other legal experts, the Union Cabinet had in December cleared an ordinance to amend the Arbitration and Conciliation Act, 1996.

But the idea to bring an ordinance was dropped and it was not sent to the President for his approval.
The amendments proposed in the ordinance made 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 Act in the Budget session beginning February 23.
The official said the bill have "almost all" the features of the ordinance.
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.