Finance Ministry caps dispute value at Rs. 10 crore for resolving cases through arbitration

In order to streamline the arbitration process to resolve commercial dispute with the government or PSE as one party, the Finance Ministry has set an upper limit of Rs. 10 crore for cases. It has also said that the arbitration clause should not be automatically included in large contracts.

Arbitration as a remedy is based on an explicit provision in a contract and is not a judicial process. Arbitration cover a whole range of contractual matters, including disputes between private sector parties where the Government or a public sector undertaking is not involved.

ln recent decades, arbitration is being increasingly resorted to as a means of alternative dispute resolution with a view to reducing litigation and achieving quick and efficient settlement of contractual disputes.

However, keeping in mind various practical difficulties, the Ministry has come out with detailed guidelines for contracts of domestic procurement by the Government and by its entities and agencies.