Avoid arbitration, use mediation to settle contract disputes: FinMin
finance ministry has asked various ministries, departments and public sector enterprises to avoid the arbitration process in their future contract and use the mediation to settle any disputes. It has also advised various ministries and departments to form a high level committee consisting of a retired judge, a retired high ranking officer and a technical expert for mediation in case of ongoing contract dispute and settle the matter amicably.
The move is another attempt by the government to reduce insignificant litigation and to de-clog the Judiciary.
“Government departments/ entities/ agencies should avoid and/ or amicably settle as many disputes as possible using mechanisms available in the contract,” said a recently released guidelines issued by the department of expenditure regarding arbitration and mediation in contracts of domestic public procurement.
The decisions should be taken in “a pragmatic manner in overall long-term public interest, keeping legal and practical realities in view, without shirking or avoiding responsibility or denying genuine claims of the other party”, the guideline said, a copy of which has been sent to all the ministries and PSUs.
It added that the Arbitration as a method of dispute resolution “should not be routinely or automatically included in procurement contracts or tenders”, especially in the large contracts and restricted to disputes with a value less than Rs 10 crore.
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