Bills on commercial courts, arbitration passed by Parliament

December 23, 2015 04:07 pm | Updated December 04, 2021 11:34 pm IST - New Delhi

Two bills aimed at creating commercial benches in select high courts and amending a law on arbitration for speedy settlement of high value business disputes were cleared by Parliament on Wednesday.

The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill, 2015 and the Arbitration and Conciliation Act (Amendment) Bill, 2015 were passed by the Rajya Sabha without debate. They were cleared by the Lok Sabha last week.

The two bills have now replaced two separate ordinances promulgated on October 23.

For speedy settlement of commercial disputes, the Cabinet had in August cleared the bill to amend the Arbitration and Conciliation Act, 1996 to fix a timeline for arbitrators to resolve cases.

Under the amendments to the Arbitration and Conciliation Act, 1996, an arbitrator will have to settle a case within 18 months. After the completion of 12 months, certain restrictions will be put in place to ensure that the arbitration case does not linger on.

An official amendment moved by Law Minister D.V. Sadananda Gowda in Lok Sabha last week had made it clear that the law will not have any bearing on ongoing arbitration cases and will apply to such cases only if the two parties agree.

The Cabinet had on December 29 last 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 which had been given three extensions to give its report on the bill when an ordinance was issued.

With the ordinance on the bill coming into force, all pending suits and applications relating to commercial disputes involving a claim of Rs. 1 crore and above in high courts and civil courts stood transferred to the relevant Commercial Division or Courts. To replace the ordinance, a fresh Bill was brought in the Lower House.

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.

“Both Bills reflect commitment of the government to improve investment climate and spur economic growth,” the Law Minister said later.

Law Secretary P.K. Malhotra, who had been pushing the two measures, said “now India can seek our place as the new arbitration hub of the world after London and Singapore.”

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