Arbitration Act needs an insight: Attorney General Venkataramani

New Delhi: The Arbitration and Conciliation Act, one of the country's key out-of-court dispute resolution laws, needs “more insight”, attorney general R. Venkataramani said on Thursday, indicating possible amendments in the near future.

Sked update:

Arbitration Act needs an insight: Attorney General Venkataramani

The Arbitration and Conciliation Act, one of the country's key out-of-court dispute resolution laws, needs more insight, attorney general R Venkataramani said, indicating possible amendments in the near future.

When asked on the sidelines of an event organized by Consumer Unity & Trust Society (CUTS International), about whether the Arbitration Act, which has been amended by the union government at least thrice till date, needs an overhaul, attorney general Venkataramani said, "I will not call it an overhaul, but it needs an insight."

India's out-of-court dispute resolution laws, which include the Arbitration and Conciliation Act, the Mediation Act, and the Commercial Courts Act, among others, are instrumental in increasing ease of doing business in the world's fastest growing economy by reducing pendency of lawsuits.

Manas filing, 500 words, which has been amended by the Union government at least thrice till date, needs an overhaul, Venkataramani said, "I will not call it an overhaul, but it needs an insight."

India's out-of-court dispute resolution laws, which include the Arbitration and Conciliation Act, the Mediation Act, and the Commercial Courts Act, among others are instrumental in increasing ease of doing business in the world's fastest growing economy by reducing pendency of lawsuits.

The attorney general's statement came after a controversial finance ministry advisory asking central and state governments as well as public sector enterprises to avoid engaging in arbitration if the disputed amount was over ₹10 crore.

Also read | Expert committee submits final report on arbitration reforms

The 3 July advisory asked government litigants to try mediation instead, due to high costs and longer disposal times in arbitration. 

Currently, pendency of lawsuits is a major issue in Indian courts, thus creating a conducive atmosphere for alternative dispute resolution (ADR) mechanisms like arbitration and mediation to become a panacea.

“There are over 50 million pending cases in Indian courts, and the government is a litigant in 70% of these cases,” said Lalit Bhasin, president, Society of Indian Law Firms on Thursday. Bhasin's statements are in consonance with data from the National Judicial Data Grid (NJDG), a government website indicating the pendency of lawsuits in various courts in the country. 

Also read | Law minister Meghwal kicks off work on new national litigation policy

The union government kicked off a new national litigation policy earlier this year to assess the status of pending lawsuits where the central government was a party, and create a road map to reduce costs. 

The attorney general's views align with the law minister's vision to make India an arbitration hub. Parties who want to resolve disputes using arbitration and mediation prefer going to London and Singapore, law minister Arjun Ram Meghwal had explained in his inaugural address after taking office in June this year. "Why should they go there when they can do it here?" he had said in the address. 

Legal reforms linked to Economic growth

Reducing pendency and roping in corporate participation by increasing ease of doing business in the country was the law ministry's primary agenda, Meghwal had said. 

Having ease of doing business is a key indicator of economic development, as per the now-discontinued Doing Business Report (DBR) by the World Bank, which was last published in 2020.

The DBR ranked countries according to the ease of doing business score, of which some weight was on efficiency in enforcement of contracts within an economy. In essence, if disputes are resolved faster, a country is likely to have higher ease of doing business.

Also read | Arbitration pros resist govt.'s advisory favouring mediation over arbitration

Speaking at an event about the impact of supreme court judgments on the economy in the national capital on Thursday, Venkataramani said there is a need for an institute focused on the intersection of law and economy. 

“There should be a national institute of law and economics, which will be a central institution,” he said. 

This institute would help law better the condition of the economy and propel the country towards becoming a developed nation, Venkataramani said.