In a bid to ensure that arbitration is the preferred means of dispute resolution for government entities, and in an effort to portray Mumbai as a proposed hub for international commercial arbitration, the Department of Law and Judiciary of the Government of Maharashtra (GoM) has vide circular dated 28 February 2017 certified the Mumbai Centre for International Arbitration (MCIA) as recognised arbitral institute for the purposes of its ‘Policy for Arbitration as a preferred mode of dispute resolution’ that was released by a government resolution dated 13 October 2016 (Resolution).
This move by the GoM comes pursuant to several other ease of doing business initiatives undertaken in the state of Maharashtra.
Annexure A of the Resolution, inter-alia, states that ‘it has been noticed in most of the government contracts, the arbitration clauses are in the realm of ad-hoc arbitration and there is no uniformity in either of the covenants of dispute resolution or the appointment of arbitrators. Now, the Government of Maharashtra, therefore, proposes to formulate a policy to promote, propagate and patronize institutional arbitration as preferred mode of dispute resolution, a vital part of the ease of enforcement of contracts and reduce the litigation, and institutional arbitration as the game changer and thereby give a fillip to establishment of International Financial Centre at Mumbai.’
Setting out the policy initiatives sought to be pursued by the GoM, the Resolution, inter-alia, states:
• The GoM proposes to promote institutional arbitration as a matter of its stated policy;
• All government contracts where the commercial value of the contract is INR 50,000,000 (Indian Rupees fifty million) and above shall have a recommended standard institutional arbitration clause to the effect that the dispute shall be referred to a recognised ‘Indian Arbitration Institute’;
• Existing government contracts may be suitably amended with the consent of both parties as regard the dispute resolution clause to provide that the dispute can be referred to the recognised ‘Indian Arbitration Institutes’, utilising the recommended arbitration clause instead of the current clause;
• Even in cases where the arbitration has commenced or is about to commence, the parties shall have the option to move over to the proposed arbitration mechanism.
Additionally, the Resolution also sets out a model clause in Annexure ‘A-1’ thereto. This clause, titled the MCIA Model Clause reads as follows, ‘Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration in accordance with the Arbitration Rules of the Mumbai Centre for International Arbitration (“MCIA Rules”), which rules are deemed to be incorporated by reference in this clause. The seat of arbitration shall be ______. The Tribunal shall consist of [one/three] arbitrator(s). The language of the arbitration shall be English. The law of this arbitration agreement shall be _____. The Law Governing the contract shall be ____.’
Accordingly, the MCIA will now be recognised as arbitral institute for arbitrations involving GoM companies and other bodies.
The full text of the Resolution may be accessed at the following link:
https://www.maharashtra.gov.in/Site/Upload/Government%20Resolutions/English/201610131731404912…..pdf