Ease of doing business:Amendment in Arbitration Act

Govt.  amended Arbitration and Conciliation Act ,1996 through ordinance sending a positive signal to corporates.

About Arbitration and Conciliation Act ,1996:
This Act is based on 1985 UNCITRAL(United Nations Commission on International Trade) Model Law on International Commercial Arbitration and the UNCITRAL Arbitration Rules 1976.With an objective to provide fair and efficient arbitration it aims to cover international and commercial arbitration and conciliation as also domestic arbitration and conciliation.

Background:

• It has been found that foreign investor were hesitant to invest in India owing to Indian “long drawn arbitration” process.
• Arbitration proceedings are unduly prolonged since mostly retired judges are appointed as arbitrators and they view arbitration just like a case in court.
• Moreover arbitration process in some cases become “extremely expensive” as costs in some arbitrations with three retired judges of the high court or Supreme Court often run into crores of rupees.

New changes:

So to improve investor’s sentiment and to ensure retired judges don’t delay arbitration proceedings Govt has included following changes.

• It empowers parties to a dispute to incentivise arbitrators in case they finalise the arbitral award before the fixed time of 12 months.It will encourage judges to finalise proceedings within time.Further an extention of 6 months is also provided.
• Moreover there is a clause of penalty if arbitrators fail to complete proceedings within time period without any valid reason.

Impact:

• With this India will strive towards as a favourable investment destination spot.
• It will also improve domestic investment which is much needed at present time(as public investment is not able to fulfil all requirements).
• Will improve ease of doing business and will helpful for India to become for favoured destination for international arbitration(which is often recommended by Law Commission).

Another ordinance for ease of doing business:

• Apart from it govt. has also cleared an ordinance for constitution of Commercial Courts, Commercial Division and Commercial Appellate Division in the High Courts for adjudicating commercial disputes of specified value.
• With this ordinance all pending suits and applications relating to commercial disputes involving a claim of Rs 1 crore and above in high courts and civil courts will be transferred to the relevant Commercial Division or Commercial Courts.
• These Commercial Courts which will be equivalent to district courts, are to be set up in states and Union Territories where the HCs(high court) do not have ordinary original civil jurisdiction.

Source:Indian Express,wiki