Given a separate judicial window for resolution of commercial cases has been a long-standing need, the Law Commission has done well by suggesting a robust commercial court set up within the existing judicial system. What the Commission thinks its recommendations could achieve will come as music to the ears of the NDA government, especially finance minister Arun Jaitley, ahead of the government’s first full budget being presented later this month. The Commission says, “…This will further economic growth, increase foreign investment, and make India an attractive place to do business.” The absence of a robust dispute resolution mechanism is not just a hurdle for the companies operating in India, but also poses a formidable challenge to the government’s efforts to attract foreign investment The existing dispute resolution environment is beset with problems, and these have forced companies to take the foreign arbitration route. The two chief concerns are the huge pendency of cases at all levels of the judiciary, and the lack of specialists handling commercial disputes. Of the total of 32,656 civil suits pending at the five high courts with original jurisdiction in India, 16,884 (or 51.7%) are commercial disputes. It is not surprising, therefore, that India is placed 186th among 189 nations on the count of “enforcing contracts”, as per the World Bank’s Ease of Doing Business 2014 report.
The Commission suggests that the government remodel the Commercial Division of High Courts Bill 2010 as the Commercial Division and Commercial Appellate Division of High Courts and Commercial Courts Bill 2015, to create commercial divisions and commercial appellate divisions in high courts and commercial courts for adjudicating commercial disputes. To ensure that the judgments are timely and effective, the commission calls for the creation of trained judicial manpower and fixes a time-frame for completing hearing and pronouncement of judgment—within 90 days of the completion of the arguments. And to ensure fairness, the judgments of the commercial wings could be challenged in the associated appellate body and a final outcome delivered within six months. This structure, the Commission says, is ultimately “intended to serve as a pilot project in the larger goal of reforming the civil justice system in India”. Considering the Commission’s efforts to establish commercial divisions in high courts dates back to 2003, the government needs to act on it fast.