New Delhi: Seeking to ensure faster settlement of commercial disputes, Cabinet Wednesday cleared a proposal to amend the Arbitration Act which sets a fixed timeline for arbitrators to resolve cases.
Under the amendments to the Arbitration and Conciliation Act, 1996 cleared by the Union Cabinet, an arbitrator will have to settle the case within 18 months.
But after the completion of 12 months, certain restrictions have been put in place to ensure that the arbitration case does not linger on, sources said.
An ordinance cleared by the Cabinet in December last year, the timeline was fixed at nine months. But the formulation was changed after inter-ministerial discussions. The ordinance was cleared by the Cabinet but never sent to the President for his assent.
The amendments to the law comes amidst its keenness to attract the maximum foreign investment. But foreign companies were said to be hesitant to do business in India because of the long-drawn litigations.
Another amendment puts a cap on the fees of an arbitrator.
The arbitrator will also have to spell out if there is a conflict of interest in the case he or she is taking up.
The move to amend the law comes amid the government's move to promote 'ease of doing business' in India, which is being highlighted by Prime Minister Narendra Modi.
In its report submitted last year, the Law Commission had also supported amendment to the arbitration law to help India become a favoured destination, after Singapore and London, for international arbitration.
