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Informist, Monday, Jul 22, 2024

 

NEW DELHI – Pankaj Chaudhary, Minister of State for Finance, today said that the latest arbitration guidelines restricting clauses in government contracts to disputes with a value of less than 100 mln rupees are flexible and continue to permit arbitration for high-value disputes after "application of mind" by concerned ministries or undertaking. Chaudhary was replying to a question in the Lok Sabha today regarding the government's guidelines for arbitration and mediation in contracts of domestic public procurement. 

 

To a question on the mode of dispute resolution for contracts exceeding 100 mln rupees in value, Chaudhary said that government departments are encouraged to adopt mediation under the Mediation Act, 2023, or negotiate amicable settlements for resolution of disputes. Where these methods are not successful, the matter should be adjudicated by the competent courts, Chaudhary added.

 

Further, government cases with disputes of value less than 100 mln rupees, high-value disputes where ministries or undertakings choose to have arbitration beyond the norm, and disputes that do not involve the government will continue to be resolved through arbitration, said Chaudhary. "Hence these Guidelines will not adversely impact the arbitration infrastructure. Moreover, since a large number of high value disputes used to go to court after the arbitration, even before these guidelines were issued, the pending court cases are not likely to significantly increase," he added.

 

Last month, the government circulated a memorandum to ministries stating that arbitration as a method of dispute resolution should not be routinely or automatically included in procurement contracts or tenders, especially in large contracts. "The process of arbitration itself takes a long time and is not as quick as envisaged, besides being very expensive, too. The reduced formality, combined with the binding nature of decisions, has often led to wrong decisions on facts and improper application of the law," the memorandum had said.  End

 

Reported by Surya Tripathi

Edited by

 

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