The Department of Expenditure under the Ministry of Finance released new guidelines for using arbitration and mediation in domestic public procurement contracts.
Key Points of the Guidelines:
Arbitration:
- The guidelines recommend avoiding the automatic inclusion of arbitration clauses in large contracts.
- Arbitration is now limited to disputes with a value cap of below Rs 10 crores.
Mediation Adoption:
- For high-value disputes, the new guidelines promote the use of mediation, as outlined in the Mediation Act of 2023.
- Institutional arbitration is advised when arbitration becomes necessary, to ensure a structured and formal process.
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