PSUs yet to alter arbitration clause despite govt nudge

Finance ministry had advised all government entities last year to cut exposure to arbitration

- Manas Pimpalkhare

State-run NHPC Ltd, NTPC Ltd and Engineers India Ltd (EIL) are yet to alter their contractual provisions related to arbitration in spite of a finance ministry advisory, according to two people familiar with the matter.

The finance ministry had advised all government entities last year to reduce their exposure to arbitration and try and resolve public procurement disputes using mediation or litigation instead.

The department of expenditure, in its June 2024 advisory, had said arbitration was expensive and time-consuming compared with mediation and litigation.

At the same time, India nurses hopes of becoming an international arbitration hub.

The government focus appears to be to free the arbitration ecosystem from the stranglehold of government participation in the process, given that the government is widely known as the biggest disputant in the country.