Dispute
Settlement with Government available in Arbitration Cases
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GeM website to provide Infrastructure
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Government proposes quick settlement of
contractual disputes to promote ease of doing business as announced in Union Budget
2023-24
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Circulates scheme for graded settlement
terms for stakeholder consultation
The Ministry of
Finance today circulated a draft scheme for consultation with stakeholders. The scheme is aimed at bringing quick finality
to certain contractual disputes in which Government of India or its agencies is
a litigant. The draft scheme is available on the website of the Department of Expenditure
(https://static.pib.gov.in/WriteReadData/specificdocs/documents/2023/feb/doc202328158601.pdf) as well as on
the MyGov.in Portal.
The draft scheme
has been framed in accordance with the announcement made by the Union Finance Minister
in the Union Budget 2023-24. In Para 67 of
the Union Budget Speech, Smt. Nirmala Sitharaman had announced that:
To settle contractual
disputes of government and government undertakings, wherein arbitral award is under
challenge in a court, a voluntary settlement scheme with standardized terms will
be introduced. This will be done by offering graded settlement terms depending on
pendency level of the dispute.
The Government
has appreciated that special efforts are required to clear the backlog of old disputes
and litigation. Such cases are not only holding back fresh investment but are also
reducing the ease of doing business with the Government. Therefore, after due study
of the past cases, the government intends to bring one time settlement scheme called
“Vivad se Vishwas II (Contractual Disputes)” to effectively settle pending
disputes.
The salient features
of the proposed scheme are as under:
a.
The scheme will apply to disputes where one of the parties
is either the Government of India or its following bodies:
b.
All Autonomous Bodies of the Government of India;
c.
Public sector banks and public sector financial institutions;
d.
All Central Public Sector Enterprises;
e.
Union Territories, National Capital Territory of Delhi
and all agencies/ undertakings thereof; and
f.
All organisations, where Central Government like Metro
Corporations, where Government of India has shareholding of 50%; however, these
bodies can opt out of the scheme at their discretion, with approval of the Board
of Directors.
i.
Only disputes involving above entities where the claim
for proceedings (either to Court or for Arbitration or Conciliation) were submitted
by the contractor on or before 30.09.2022 and Arbitral Tribunal/ Committee for Conciliation
etc. for the specific case has been already notified by the procuring entity shall
be eligible for settlement through this scheme.
ii.
Disputes, where claims are raised against procuring
entities as above along with some other party (State Government or private party),
shall not be eligible under the scheme.
iii.
Disputes having only financial claims against the procuring
entities will be settled through this scheme.
iv.
The Scheme will be applicable to all contractors/ suppliers
who wish to participate. In case Central Public Sector Enterprises (CPSEs) etc.
are the contractors/ suppliers in a particular contract, they are also eligible
to submit their claims under the scheme.
v.
The Scheme proposes a graded settlement terms depending
on pendency level of the dispute.
vi.
It is proposed to cover only for
cases involving domestic arbitration and cases under international arbitration are
not eligible to be settled under this scheme.
The scheme will
be implemented through Government e-Marketplace (GeM), which shall provide an online
functionality for the same. The draft scheme document also provides a broad functionality
that the GeM portal shall provide to implement the scheme.
The draft scheme
also contains a draft settlement agreement between the litigating parties to bring
finality to the contractual dispute settlement.