Ordinances on arbitration, commercial benches promulgated

Two ordinances aimed at creating commercial benches in select high courts and amending a law on arbitration for speedy settlement of high value business disputes were promulgated today. Official sources in the Law Ministry said here that President Pranab Mukherjee has signed the ordinances to amend the Arbitration and Conciliation Act and bring into force the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill, 2015. For speedy settlement of commercial disputes, the Cabinet had in August cleared a bill to amend the Arbitration Act to fix a timeline for arbitrators to resolve cases.

The bill was not introduced in Parliament. Under the proposed amendments to the Arbitration and Conciliation Act, 1996, an arbitrator will have to settle a case within 18 months. However, after the completion of 12 months, certain restrictions will be put in place to ensure that the arbitration case does not linger on, the sources said.

The Cabinet had in December last year given a nod to an ordinance to amend the Arbitration Act but it was never sent to the President for approval. The amendments to the law come amid keenness of the government to attract the greater foreign investment. Certain foreign companies were said to be hesitant to do business in India because of the long-drawn litigations.

The Prime Minister has been stressing on steps to promote ease of doing business in India. The bill on creating commercial benches in select high courts was pending before a Parliamentary panel. With the ordinance on the bill coming into force, all pending suits and applications relating to commercial disputes involving a claim of Rs one crore and above in the high courts and civil courts will be transferred to the relevant Commercial Division or Commercial Courts as the case may be.

Commercial Divisions are to be set up in those high courts which are already exercising ordinary original civil jurisdiction such as Delhi, Bombay, Calcutta, Madras, and Himachal Pradesh high courts. Commercial Divisions will exercise jurisdiction over all cases and applications relating to commercial disputes. The Commercial Division shall have territorial jurisdiction over such area on which it has original jurisdiction.

Commercial Courts which will be equivalent to district courts are to be set up in states and Union Territories where the high courts do not have ordinary original civil jurisdiction. Once the Winter session, likely to commence after November 19, starts, the government will have to seek Parliament's approval for the ordinances within 42 days/six weeks or else these will lapse.