Government clears two ordinances for speedy settlement of commercial disputes

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Economic Times, October 22, 2015

The government has decided to promulgate two ordinances that will help in speedy settlement of commercial disputes in the country, a measure on which India scores very poorly and has been flagged as a big concern by investors.

The Union Cabinet on Wednesday issued an ordinance to amend the Arbitration and Conciliation Act and another to bring into force the provisions of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill, 2015, pending before a Parliamentary standing committee.

A government official privy to the developments confirmed the cabinet endorsement to the two emergency laws.

The Cabinet had in August decided to bring a bill to amend the Arbitration Act to set a fixed timeline to clear arbitration cases, but the bill was not introduced in the Monsoon session of Parliament. The ordinance will give force to the provisions of the bill that provides for time-bound settlement of cases.

India is placed at 186 in a ranking of 189 countries on ‘Enforcing Contracts’ in the World Bank’s ‘Ease of Doing Business’ ranking. India is looking for a substantial improvement in its overall ranking of 142.

Under the proposed amendments to the Arbitration and Conciliation Act, 1996, cleared by the cabinet in August, arbitrators will have to make an award within 12 months, extendable another six months only.

After this, only courts can extend the period.

The law provides for incentive for arbitrators to settle the cases early and provides for a six-month fast track mechanism if parties agree. It also introduces a provision that courts clear the challenge of award in one year. India has been the top recipient of greenfield FDI in the first six months of the year and the government is keen to keep the momentum.

In its report submitted last year, the Law Commission had also backed changes in the arbitration law to make India a preferred destination for international arbitration. Currently, Singapore and London are hubs of international arbitration.

The ordinance will give force to the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill, 2015.

The bill is with the standing committee on Law and Personnel that will now submit its report by November 30, after two extensions. It will allow the Delhi High Court to transfer thousands of cases, mostly related to property disputes, to the district courts of the capital, helping settle them faster and improve ease of doing business.

PARLIAMENT SESSION

The Cabinet Committee on Parliamentary Affairs that also met on Wednesday pushed back the decision on Winter Session of Parliament to October 26. The session is likely to start after November 19.

BONUS CEILING

The Cabinet has approved a proposal to double the wage ceiling for calculating bonus to Rs 7,000 per month for factory workers and establishments with 20 or more workers.

The higher limit is proposed to be effective from April 1, 2015 and a relevant bill to amend the Payment of Bonus Act, 1965, will be tabled in Parliament for approval.

The limit was last revised in 2006. The revision was one of the demands of the trade unions that went on strike on September 2. Under the current law, even if the salary or wage of an employee exceeds Rs 3,500 per month, the bonus payable to the employee is calculated at Rs 3,500 per month.

The higher limit will mean a higher bonus for employees.

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