The Centre, on November 8, proposed amending the Commercial Courts Act of 2015, to make it easier to approach, institute, and resolve disputes through alternative dispute resolution mechanisms and mainstream dispute resolution systems.

Thus, through the amendment Bill, the Government of India seeks to “provide for the constitution of dedicated Commercial Courts exclusively for the purpose of exercising the jurisdiction and powers conferred under the Commercial Court Act, 2015 and Commercial Courts (Arbitration) and Commercial Divisions (Arbitration) exclusively for the purpose of exercising the jurisdiction and powers granted to the courts under the Arbitration and Conciliation Act, 2015 and to amend the proposed revisions aim to offer further impetus for faster and more specialised adjudication of commercial issues, as well as to simplify the appropriate procedure for commercial dispute resolution in courts.”

However, a closer look at the proposed modifications reveals that they do not support the government’s efforts thus far to institutionalise arbitration and attract commercial parties into the arbitration arena.

What is happening?

Two issues to address here are the government’s eagerness to institutionalise, license, and regulate arbitration in India. The Arbitration and Conciliation Act of 1996 was amended to create the Arbitration Council of India for that very purpose. High-level committees, including Justice Sri Krishna Committee and TK Viswanathan, have recommended amendments to the Arbitration and Conciliation Act, 1996. Another proposed amendment is set to be tabled. The Arbitration Council of India (ASI) is yet to be established and operationalised. So is the Mediation Council of India (MCI), which was proposed by the Mediation Act of 2023 to institutionalise, license, and regulate mediation institutions in India. It is unknown where the MCI was established and operationalised.

The proposed revisions include Online Dispute Resolution (ODR) in commercial courts. Referring matters for mediation even in cases where urgent interim relief is sought, the provision made in the amendment to section 12 A of the Commercial Courts Act, 2015 is to provide “that in case where an urgent interim relief was sought and granted or denied by the court, it shall thereafter, refer the parties to mediation and the procedure for pre-institution mediation shall apply mutatis mutandis”. This provision clearly promotes mediation for resolving commercial issues. However, the foundation of MCI will encourage, advocate for, license, and regulate mediation organisations.

In addition to recommending commercial cases for resolution in regular commercial courts, the amendments seek to establish designated arbitration courts within the commercial courts system while also empowering state governments to establish commercial courts at the district level with the permission of the high courts.

Hurdles ahead

Yet, we wonder if the government is serious about fostering institutional arbitration by establishing arbitration institutions in the private sector. On the 3rd of June 2024, the department of expenditure, via its letter number F. 11212024-PPD, informed all the government departments stating clearly that “Arbitration as a method of dispute resolution should not be routinely or automatically included in procurement contracts/tenders, especially in large contracts…”

On December 2, 2024, the Department of Legal Affairs, Ministry of Law, Government of India issued a public notice stating unequivocally that there is currently no procedure in place in the Department of Legal Affairs for recognising or grading institutions providing ODR services.

While repeatedly stating that judicial intervention in arbitration is discouraged, the proposed amendments to the Commercial Courts Act, 2015 require High Court approval for at least eight actions taken under the Act, such as the declaration of dedicated arbitration commercial courts, the establishment of new commercial courts at the district level, and so on. Will the revisions truly promote ease of doing business?

The writer is former international Senior Advisor to UNDP