A salesman looks at a TV screen during the live telecast of the Union Budget 2023 by Finance Minister Nirmala Sitharaman, in Ahmedabad on Wednesday. , Photo credit: Vijay Soniji
The Union Budget highlighted the seriousness of pending cases in courts and the need for speedy dispute resolution by announcing a “Voluntary Resolution Scheme with Standard Terms” to amicably end commercial/contractual disputes relating to public undertakings, including Arbitral decisions are subject to challenge.
The announcement, which came under ‘Vivad se Vishwas II’, said, “Introducing a voluntary resolution scheme with standardized terms to settle contractual disputes of government and government undertakings, in which arbitration awards are under challenge in a court of law.” This will be done by offering graded settlement terms depending on the pendency level of the dispute”.
“Perhaps considering that the government is the most prolific litigant in the country, a welcome measure is the establishment of a standard voluntary settlement scheme for government entities where an arbitral award is under challenge. Such settlements will provide much-needed relief to government entities as well as private organizations, who would otherwise be stuck in long-drawn and costly litigation,” said Shanin Parikh, Partner and Head – International Arbitration, Cyril Amarchand Mangaldas, said in a statement.
The announcement in the budget comes after the Supreme Court remarked that the pendency relating to arbitration proceedings showed a “very sorry state of affairs”.
A division bench headed by Justice MR Shah… Chopra Fabricators & Manufacturers Ltd Vs Bharat Pumps & Compressors Ltd, had raised the issue of how long pending challenges to arbitration awards hurt the ease of doing business. The court had said, “It is very unfortunate that even after a period of 30 years, the party in whose favor the judgment has been passed is not in a position to take advantage of the litigation/award.”
The court had said that unless an arbitration award is executed at the earliest, it would defeat the object and purpose of the Arbitration Act as well as the Commercial Courts Act.
The court had said, “Even as per the new Commercial Courts Act, 2015 commercial disputes need to be decided and settled at the earliest and within the stipulated time provided under the Act, that is, within one year. ”
Supreme Court judge Justice BR Gavai had said that “a speedy dispute resolution mechanism would go a long way in attracting foreign investors”.
Another major step envisaged in the budget to “enhance the ease of doing business” is reduction in over 39,000 legal compliances and decriminalization of over 3,400 legal provisions.
“To take forward faith-based governance, we have introduced Jan Vishwas Bill to amend 42 Central Acts. This budget proposes several measures to unleash the potential of our economy,” said the Finance Minister in the budget speech.