Parliament Passes Two New Bills for Easy Arbitration Settlement


The Parliament today has passed two bills that would create commercial benches in select high courts and amending a law on arbitration for speedy settlement of high value business disputes. The Bills, the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill, 2015 and the Arbitration and Conciliation Act (Amendment) Bill, 2015, were cleared last week by the Lok Sabha.

The amendments to the Arbitration and Conciliation Act, 1996 mandate an arbitrator to settle a case within 18 months. And after completion of 12 months, some restrictions will be put in place to ensure that the arbitration case does not hang back. The law however will not have any bearing on the ongoing cases and will apply to such cases only if two parties agree. Though the Cabinet had given approval for an ordinance to amend the bill last year, it was not sent to the President.

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. This was aimed at the speedy settlement of commercial disputes. It is considered that both of these amendments are intended to promote the easy of doing business in India, and the PM has been stressing on such steps.

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. Now after the amendments today, 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.

These courts 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. These will be equivalent to district courts and are to be set up in states and Union Territories where the High Courts do not have ordinary original civil jurisdiction.