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Complete Commercial Litigation Reforms before 2019 polls

MARCH 13, 2018

By TIOL Edit Team

MODI Government has done well to focus on commercial litigation reforms. They, if implemented as a package, can go a long way in improving ease of doing business (EoDB) and stimulating investments.

The focus is evident from the two Cabinet's decisions taken on 7th March 2018. These are approvals 1) The Arbitration and Conciliation (Amendment) Bill (ACAB), 2018 and the Commercial Courts, Commercial Division and Commercial Division of High Courts (Amendment) Bill, 2018.

These decisions were preceded by introduction of The New Delhi International Arbitration Centre (NDIAC) Bill 2018 in LokSabha during January 2018. NDIAC would create autonomous regime for institutionalized, international arbitration. NDIAC would be established by acquiring International Centre for Alternative Dispute, which was set up in 1995.

ACAB provides for creation of another independent body, the Arbitration Council of India(ACI). It will grade arbitral institution and accredit arbitrators and promote arbitration, conciliation, mediation and other Alternative Dispute Resolution (ADR) mechanism.

ACAB also seeks to exclude international arbitration from the bounds of timeline and to provide for delivery of arbitral award in other arbitrations within 12 months from the completion of pleadings by the parties.

Both NDIAC and ACAB have been mooted following the submission of report by High Level Committee to Review the Institutionalisation of Arbitration Mechanism in India in July 2017.

Chaired by Justice B. N. Srikrishna, retired Supreme Court Judge, HLC recommended a slew of initiatives. The Government has not yet disclosed whether it is going to implement all recommendations as a package.

The Government had amended The Arbitration and Conciliation Act, 1996 by enacting the Arbitration and Conciliation (Amendment)Act, 2015 to make arbitration process user friendly, cost effective and speedy.

The Commercial Courts amendment bill largely seeks to overcome limitations and difficulties noticed in implementation of Commercial Courts,Commercial Division and Commercial Appellate Division of High Courts Act, 2015.

It is, however, a matter of concern that the two laws, enacted in 2015, have to be amended so soon. Such amendments can be avoided by revisiting and improving the law making process.

Another worrisome factor is the remove inordinate delay in Government and regulatory authorities exercising restrain in reducing their contributions to litigation clutter. The inter-ministerial, inter-regulatory and inter-agency litigation should be avoided by all means. The differences within the Government and its creations should be resolved outside the courts. The system of Government appealing against unfavourable verdicts in higher rung of courts has to be also reviewed to reduce pendency of court cases.

For this, the country needs credible and effective National Litigation Policy (NLP). NDA Government has been busy for more than two years in framing new NLP. This would replace the unimplemented NLP, which was unveiled by UPA Government in June 2010.

The Government ought to disclose what was terribly wrong with NLP 2010 that it remained unimplemented. Did UPA also not implement it?

Completion of reforms should be watchwords for Modi Government in the run-up to the LokSabha polls. These, in normal course, should be held in April 2019. Experience shows that change of Government or even ministers in case of return of ruling alliance to power triggers reviews of all sorts. These cause avoidable delays.

Any slippages by present Government in completing and implementing proposed initiatives would harm the larger objective of improving EoDB and catalyzing investments for growth and jobs.

The Challenge before the Government is to seek cooperation of the Opposition in passage of three bills in Parliament and their enactment into laws in 2018 itself. And this should be followed up with gazette notifications announcing enforcement of the new laws and related rules.

It is a daunting task, if we factor in other pending and proposed bills. NDA, the ruling alliance, should show political maturity to focus on legislative business by accommodating the Opposition's demand on contentious issues. Ideally, it should not let contentious issues go out of control through mud-slinging.

Apart from these commercial disputes-related legislation, the Government should prioritize all proposed and pending bills from the standpoint of maintaining momentum of inclusive growth, which is key to peace and prosperity in Indian society.