The Union Cabinet will tomorrow once again take a call on amending the arbitration law which seeks to ensure faster settlement of commercial disputes and setting timeline for arbitrators to resolve cases.
While on August 4, the Cabinet had given in principle approval to amendments to the Arbitration and Conciliation Act, 1996, it had asked the Law Ministry to recast the provisions on timelines for arbitrators.
Tomorrow will be the third time the proposed amendments will be placed before the Cabinet.
Sources in the government said a 12 month timeline has been given to the arbitrators to settle the dispute. Another six months of 'grace period' can also be given, but certain penalties will be imposed on the arbitrator for going beyond the 12 month period.
The Cabinet will take a final call on the issue.
The amendments to the law comes amidst government's keenness to attract the maximum foreign investment. But foreign companies were said to be hesitant to do business in India because of the long-drawn litigations.
Another amendment puts a cap on the fees of an 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.
The move to amend the law comes amid the government's move to promote 'ease of doing business' in India, which is being highlighted by Prime Minister Narendra Modi.
Meanwhile, addressing a gathering at the of Society of Indian Law Firms, Finance Minister Arun Jaitley said today that the dangers of intervention and the speed has actually prevented India from becoming arbitration hub. "This has actually hurt Indian corporates," he said.
He said a timeframe has now been suggested to speed up arbitration proceedings. "There is a suggestion now to cap fee of an arbitrator. With the cap on fee, there will be an incentive to finish faster. There is suggestion to fast track arbitration procedure. If both parties agree, they can choose one arbitrator and without a provision for extension...The arbitrator will be bound by the contract," he said.