India aims to be global arbitration hub. And cut costs for its biggest litigant.
Arbitration pros resist govt.'s advisory favouring mediation over arbitration The law ministry’s efforts to expedite the enforcement of arbitral awards are expected to significantly benefit the government, which is included as a party in a considerable number of arbitration proceedings. Law minister Arjun Ram Meghwal initiated thenational litigation policy in June soon after taking office.
This policy, which is a survey of the Union government’s exposure to litigation, is the first step in reducing legal costs for the government, asMint reported. The Union government has issued an advisory to all arms of central and state administrations and public sector enterprises to avoid arbitration in procurement contracts where the disputed amount is over ₹10 crore.
This advisory, which has receivedpushback from arbitration professionals, was aimed at reducing the government’s costs in enforcement of contracts since arbitration is too expensive and time-consuming. Another challenge in expediting the execution of arbitral awards in India lies in the quality and availability of assets tagged in the proceedings.
“While the arbitration proceedings can take place anywhere in the world, the assets involved in the process are located in specific countries. Indian assets are often tied up in other litigation, which can often delay the execution of the arbitral award," said Gauhar Mirza, partner, Cyril Amarchand Mangaldas, a tier-1 Indian law firm.
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