Key Features of the Two New Ordinances in Commercial Dispute Resolution

Ritvik M. Kulkarni

President Pranab Mukherjee gave his assent on Friday (23rd October 2015) for the promulgation of an ordinance for the setting up Commercial Courts, Commercial Division and Commercial Appellate Division in High Courts and another for amending the Arbitration and Conciliation Act 1996. While members of the business community and the corporate sector still await the complete revamp of the Indian arbitration regime, these ordinances come as an early Diwali treat right from the Prime Minister’s Office.

The Arbitration Ordinance strictly requires arbitrators to settle disputes within a maximum period of 18 months. After a completion of 12 months certain restrictions will kick in. This ought to deter arbitrators from unnecessarily stretching the case too long. If effective, this requirement will drastically reduce the cost of arbitration in a time when retired judges have been charging exorbitant fees for their services. With the implementation of Commercial Courts, all appeals and applications from arbitral proceedings will hopefully be disposed faster and in a more efficient manner as well.

This move has also brought into force the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill, 2015 which was introduced in the Rajya Sabha on 29th April 2015 by Finance Minister (and noted attorney) Mr. Arun Jaitley. The Law Commission had made a proposal to the government in 2003 for setting up “Hi-tech Fast Track Commercial Divisions in High Courts” in its 188th report. Subsequently, it has dealt specifically with the Commercial Courts Bill in its 253rd Report which can be found here. Among other things the Bill provides for:

  1. Enumeration of transactions giving rise to commercial disputes and the specified value which shall not be less than Rs. 1 crore.
  1. Commercial Courts in districts and their constitution. These Courts shall have jurisdiction over a commercial dispute of a specified value which arises within its territorial jurisdiction.
  1. Commercial Division of High Courts which shall specifically deal with such commercial disputes including those which are transferred to High Courts under section 22 of the Designs Act, 2000 and under section 104 of the Patents Act, 1970.
  1. Bar against revision application against interlocutory order passed by a Commercial Court.
  1. Jurisdiction over appeals and applications filed in the HC arising out of International Commercial Arbitrations to the Commercial Appellate Division. For other disputes which fall under the jurisdiction of principal civil courts, the matters shall lie to the Commercial Courts.
  1. Appeals from Commercial Courts and Commercial Divisions of HCs shall lie to the Appellate Division; to be filed within 60 days. Appeals from the IPAB, SAT, TDSAT DRAT and COMPAT arising out of a commercial dispute shall lie to the Appellate Division.
  1. Transfer of all suits valued at and above Rs. 1 crore which are pending in the High Courts to their respective Commercial Divisions.

The Government will have to secure an approval from the Parliament within 42 days after the commencement of the Winter Session on 19th November 2015.

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