Context: 

• The Union Cabinet has approved promulgation of an Ordinance for establishing the New Delhi International Arbitration Centre (NDIAC) for the purpose of creating an independent and autonomous regime for institutionalised arbitration.

Benefits:

• The benefits of institutionalized arbitration will accrue to Government and its agency and to the parties to a dispute.
• This shall be to the advantage of the public and the public institutions in terms of quality of expertise and costs incurred and will facilitate India becoming a hub for Institutional Arbitration.

Salient Features:

In order to facilitate the setting up of NDIAC, the Ordinance envisages the transfer and vesting of the undertakings of the ICADR in the Central Government. The Central Government will subsequently vest the undertakings in NDIAC.

1. New Delhi International Arbitration Centre (NDIAC) will be headed by a chairperson who has been a Judge of the Supreme Court or a Judge of a High Court or an eminent person, having special knowledge and experience in the conduct or administration of arbitration law or management, to be appointed by the Central Government in consultation with the Chief Justice of India.
2. There will be two Full time or Part time Members from amongst eminent persons having substantial knowledge and experience in institutional arbitration, both domestic and international.
3. Also, one representative of a recognised body of commerce and industry shall be chosen on rotational basis as Part time Member.
4. Secretary, Department of Legal Affairs, Financial Adviser nominated by the Department of Expenditure and Chief Executive Officer, NDIAC shall be ex-officio Members.

What is Arbitration?

• Arbitration is a settlement of dispute between two parties to a contract by a neutral third party i.e. the arbitrator without resorting to court action. The process can be tailored to suit parties’ particular needs.
• Arbitrators can be chosen for their expertise. It is confidential and can be speedier and cheaper than court. There are limited grounds of appeal. Arbitral awards are binding and enforceable through courts.

Significance of ADR:

• It is felt that a reliable and responsive alternative dispute resolution system is essential for rapidly developing countries like India.
• While business disputes need speedy resolution, litigation is the least favoured method for that.
• The Indian judicial system is marred by delays because of which businesses suffer as disputes are not resolved in a reasonable time period.
• Therefore, need for alternative dispute resolution processes like negotiation, mediation conciliation and arbitration is felt from time to time.

Source:PIB