Over the past decades, India has seen arbitration grow in prominence as a preferred dispute resolution mechanism. Arbitration offers several advantages over litigation such as confidentiality, the ability to appoint decision-makers with the relevant technical expertise, and finality of awards. In a speech to the UK Supreme Court on 6 June 2024, the Chief Justice of India, DY Chandrachud, noted that arbitration had become the “preferred method of seeking commercial justice”.
Where the Government of India (“Government“) is party to a dispute, however, these advantages have not always materialised. In light of the Government’s accountability to Parliament, the confidentiality of an arbitration conversely transforms into a drawback. Tribunals may depart from judicial practice, leading to similarly situated disputants being treated differently merely because one disputant has chosen to arbitrate. Further, government decision-makers often elect to challenge adverse awards due to a perception that it is improper not to exhaust all judicial avenues, negating the intended finality of awards.
On 3 June 2024, the Government published the Guidelines for Arbitration and Mediation in Contracts of Domestic Public Procurement – reg (“Guidelines“). The Guidelines are a significant recalibration of the Government’s approach to arbitration in the context of public procurement contracts, placing new restrictions on the use of arbitration and promoting mediation as an alternative dispute resolution mechanism.
In this article, we provide an overview of the Guidelines and comment on the impact for parties seeking to enter public procurement contracts.
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