'Legal reforms imperative for higher economic growth'

Monday, 05 May 2003, 19:30 IST
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NEW DELHI: Legal reforms and speedy amendment of legislation governing arbitration and reconciliation are imperative for higher economic growth, a judge of India's apex court said here Saturday. "The Arbitration & Reconciliation Act 1996 was a hurriedly drafted one and the sooner it is amended the better it is for the industry," said Supreme Court judge R.C. Lahoti while addressing a conference organised by the Confederation of Indian Industry (CII) and the Bar Association of India. Lahoti lamented that in India arbitration was tantamount to solicitation and individual arbitrators were beyond the control of the judiciary. Indian arbitrators, he said, "are nothing more than free-lancers who, for every sitting, charge almost the same amount as the monthly salary of an average Indian judge. In addition, there exists no ceiling on the number of sittings for the arbitrators." India's judiciary is currently facing an acute shortage of judges with only 10.5 judges against a requirement of 100.5 for every million Indians. Lahoti opined that Indian judges are not equipped to handle alternative dispute settlement mechanisms and are instead "far better qualified to settle corporate disputes". Concurring with Lahoti's views, the Bar Association of India president Fali Nariman said, "foreign investors are absolutely scared of India's Arbitration Act". Calling for simplifying laws and legal procedures, Nariman cautioned that policies could go awry with poor governance, poor implementation and poor interpretation. Citing the fast pace of technological development in the communications industry, Nariman said that amendments in laws cannot at times keep pace with technological development. "While other countries have also faced this problem, they have experienced success stories through proper self-regulation," he said. The presence of far too many complicated laws and legal procedures act as a major deterrent for potential investors, said Ajit Gulabchand, chairman and managing director of India's largest private sector company, Hindustan Construction Company (HCC) Ltd. Gulabchand said the process of conversion of a bill into an act takes a lot of time in India. Presently the corporate world is waiting for the enactment of several such bills such as the Convergence Bill 2001 and the Electricity Bill 2001. "The most important legislation which is pending is the Fiscal Responsibility Bill, which when enacted would go a long way in bringing in a culture of fiscal prudence," Gulabchand said, adding that the framing of relevant and contemporary legislation should be done involving all stakeholders.
Source: IANS