“Govt Decision To Avoid Arbitration In High Stakes Matters Undesirable”: Justice Sanjay Kishan Kaul

Retired Supreme Court judge Justice Sanjay Kishan Kaul has voiced concerns over a recent memorandum from the Union Finance Ministry advising government bodies to avoid arbitration in disputes exceeding ₹10 crores.

Speaking at the launch of Commercial Dispute Resolution – State of the Law in India, Justice Kaul stated, “I came across a circular recently where the government says let us not go for arbitration in high profile cases. This is just the opposite.”

Justice Kaul emphasized the importance of arbitration and mediation, particularly in high-profile cases, warning that the Ministry’s stance sends a troubling signal about the future of arbitration involving government parties. He highlighted the need for faster resolution of commercial disputes, urging that tribunals be staffed by experts rather than becoming “retired judges’ hubs.”

The June 3 guidelines from the Finance Ministry also discouraged routine inclusion of arbitration clauses in public procurement contracts, citing “unsatisfactory experience with arbitration” involving the government. However, the guidelines allow for arbitration in high-value disputes with careful consideration.

The Arbitration Bar of India (ABI) and Indian Arbitration Forum have expressed concerns that the memorandum could undermine efforts to build a robust arbitration ecosystem in India. Justice Kaul also called for reforms in the appointment process for tribunals, stressing the need for specialized knowledge to handle complex commercial disputes efficiently.

Justice KV Viswanathan, who was the chief guest at the event, praised the relevance of the book, particularly in the context of Artificial Intelligence’s growing role in legal matters.

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