NEW DELHI (Reuters) - India plans to amend its arbitration law, setting time limits for courts and easing judicial rules to decide corporate disputes, as it seeks to attract more foreign investment, Law Minister Sadananda Gowda said on Tuesday.
Many domestic and foreign companies, such as British telecoms major Vodafone (VOD.L), prefer Singapore, Hong Kong and London as arbitration venues, since winning final settlements from Indian courts can take years.
The World Bank rates India 186th out of 189 countries for its enforcement of contracts. Prime Minister Narendra Modi has promised judicial reforms and other steps to lift India up the World Bank’s Doing Business Index.
“Billions of dollars are blocked in legal disputes in India,” Gowda told an industry event. “There is a need to establish a speedy, cost-effective and efficient disputes resolution mechanism.”
Parliament was expected to approve amendments to the arbitration law in the coming session, he added, which would help attract more investment and settle disputes.
The next parliament session begins on Feb. 23, with Finance Minister Arun Jaitley due to present his budget for the fiscal year ending in March 2016.
The government also plans to set up separate commercial courts to speed the resolution of corporate disputes, a move that could unlock billions of dollars in investments, Gowda said.
A government panel has suggested limiting courts’ authority to overrule arbitration awards and fixing time limits and fees to settle legal cases.
The government earlier deferred plans to issue an executive order to amend the law, as it wanted parliamentary approval, Gowda said.
Sums ranging in the billions of dollars are leaving India every year in arbitration costs headed overseas, industry chamber ASSOCHAM said in a report, with Singapore the most popular site for arbitration cases filed by Indians.
Scores of projects worth more than 4 trillion rupees ($64 billion) are under litigation in different courts and tribunals, the report said.
“Delay in the timely disposal of high-value cases is leading to a drop in GDP,” said D.S. Rawat, secretary general of ASSOCHAM. “If it could be tackled, it would expand economic activity and provide more avenues for jobs.”
Reporting by Manoj Kumar; Editing by Clarence Fernandez