Retired Supreme Court judge Justice Sanjay Kishan Kaul Today (Aug 24) took exception to the recent memorandum issued by the Union Finance Ministry which advised government and its entities or agencies not to resort to arbitration in disputes involving a sum of more than Rs 10 crores.
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NEW DELHI: Retired Supreme Court judge Justice Sanjay Kishan Kaul voiced strong criticism on Saturday against a recent memorandum issued by the Union Finance Ministry. The memorandum advised government entities and agencies to avoid arbitration in disputes involving sums greater than Rs 10 crores.
Justice Kaul expressed that this approach is contrary to what should have been pursued.
“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 … Challenges we are still facing is how far we go on this,” Justice Kaul remarked. He highlighted ongoing debates among arbitrators, particularly in the context of the curative jurisdiction. “The signals in the arbitration circle is that should arbitration be there at all if one party is government? This is the signal. This cannot be so. Spot arbitration is important and mediation is also very important,”
-he added.
Justice Kaul made these remarks at the launch event for the book ‘Commercial Dispute Resolution – State of the Law in India’, authored by Anirudh Krishnan.
The event was graced by Supreme Court judge Justice KV Viswanathan as the chief guest.
The memorandum in question, issued by the Union Finance Ministry on June 3, also recommended that arbitration clauses in public procurement contracts involving the government should not be routinely included. The Ministry justified the guidelines by citing ‘unsatisfactory experience with arbitration’ in cases where the government was a party. However, it clarified that these guidelines are flexible and permit arbitration in high-value disputes if the concerned body applies its mind to the situation.
This memorandum has sparked concern within the arbitration community. The Arbitration Bar of India (ABI) and the Indian Arbitration Forum have argued that the guidelines could undermine the government’s efforts to build a robust arbitration ecosystem in India.
In his speech, Justice Kaul also addressed the issue of delays in resolving commercial disputes within the country. He stressed that tribunals handling such disputes should be staffed with experts rather than becoming hubs for retired judges.
“Somewhere down the line, the institutions are not able to handle the workload. The appointment process including for tribunals should take into consideration the knowledge of the judge in subjects he will deal with,”
-Justice Kaul noted.
He emphasized that if commercial disputes are to be resolved more efficiently, experts must be encouraged to take up such roles.
“The tribunals should not be a refuge for retired lawyers or judges but be a place for the experts,”
-he said.
Justice Kaul further emphasized that not every commercial dispute should turn into a prolonged trial.
“It is said a lawyer not trained in economics and finance is a public enemy. A lot needs to be done in terms of implementation. In foreign countries, only three to four percent of cases in the commercial domain go to trial and here 99 percent cases go to trial and numerous levels of trial and I believe only two levels of scrutiny is enough,”
-he concluded.
Justice KV Viswanathan, while speaking at the event, praised Anirudh Krishnan’s book, acknowledging its relevance, particularly in the context of evolving technologies like Artificial Intelligence (AI).
“AI cannot be ruled out as inventor of patents and the role it plays and this aspect has been touched upon in the book as well,”
-Justice Viswanathan noted, underscoring the significance of understanding these emerging challenges.
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