The Finance Ministry High Value Arbitration Policy Justice Ujjal Bhuyan discussion took place at a symposium on arbitration reforms in India. The Law Forum organised the event under the title “Arbitration in India: Reform, Relevance & the Road Ahead”.
The panel included Delhi High Court Judge Justice C. Hari Shankar and former Himachal Pradesh High Court Chief Justice Rajiv Shakdher. Senior Advocate Amit Gupta moderated the discussion.
Executive Restrictions On High-Value Disputes
Justice Bhuyan focused on an Office Memorandum issued by the Union Ministry of Finance on June 3, 2024.
The memorandum advised government departments and public sector undertakings to avoid arbitration clauses in future public procurement contracts. The restriction applied to disputes involving claims above ₹10 crore.
The memorandum suggested mediation or court litigation as alternatives.
Justice Bhuyan described the policy shift as sudden and regressive. He noted that several state-owned entities later removed arbitration clauses from their commercial tenders.
These entities included Oil India Limited (OIL), Oil and Natural Gas Corporation (ONGC), and the Delhi Public Works Department (PWD).
Justice Bhuyan stressed that administrative notifications cannot contradict parliamentary policy or statutory frameworks.
Conflict With Broader Arbitration Policy
Justice Bhuyan compared the Finance Ministry’s circular with India’s broader policy statements on arbitration.
He recalled Prime Minister Narendra Modi’s 2016 address supporting institutional arbitration. That policy direction later contributed to the creation of the India International Arbitration Centre (IIAC).
He also referred to statements by External Affairs Minister S. Jaishankar in May 2024. Those statements highlighted institutional arbitration as important for economic reliability and the rule of law.
Justice Bhuyan questioned the policy of restricting domestic arbitration. He noted that public agencies still enter international loan agreements containing arbitration clauses.
He also stressed that mediation should complement arbitration. It should not automatically replace binding arbitration.
Impact Of The Supreme Court’s Delhi Metro Ruling
Justice Bhuyan linked the Finance Ministry’s policy shift to the Supreme Court’s Delhi Metro Rail Corporation (DMRC) curative petition ruling.
In April 2024, a three-judge Bench used its extraordinary powers under Article 142 of the Constitution.
The Bench set aside a high-value arbitral award several years after its original decision.
The award had already survived challenges under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996. It had also survived review proceedings.
Justice Bhuyan criticised the re-examination of evidence during curative proceedings.
He said such a review created uncertainty about the finality of arbitral awards. It also encouraged government agencies to view arbitration as an additional layer of litigation.
Concerns Over Judicial Intervention
Justice Bhuyan also discussed the Constitution Bench decision in Gayatri Balasamy v. ISG Novasoft Technologies Limited.
The case examined the extent of judicial power to modify arbitral awards.
Justice Bhuyan warned that wider modification powers could increase judicial intervention. He said such intervention could undermine the principle of minimal court interference.
He also discussed proposals for an Appellate Arbitral Tribunal.
According to Justice Bhuyan, a new appellate forum could create additional litigation instead of simplifying dispute resolution.
Call To Protect Arbitration Frameworks
The Finance Ministry High Value Arbitration Policy Justice Ujjal Bhuyan debate ended with a call to protect India’s statutory arbitration framework.
Justice Bhuyan said conferences and arbitration weeks cannot succeed if policy decisions weaken party autonomy.
He also stressed the importance of finality in arbitral awards.
He urged policymakers, lawyers, and judges to reconsider measures that could weaken arbitration.
According to him, India must preserve the credibility of its arbitration system to protect its commercial standing.
