Back
Attorney General Urges Government to Revisit Norms at
India’s top law officer, Attorney General for India , has called upon the central government to take a fresh look at its current policy restricting government participation in high-stakes matters. Speaking at the Centre (GHAC) Week in GIFT City, the Attorney General emphasised that the existing (OM) issued by the in , which curtails for disputes under ₹10 crore and steers the government towards and , is not a rigid . His remarks signal a potential shift in the government’s approach to dispute resolution, particularly in commercial and infrastructure contracts involving public money.
The : A Restrictive Turn
In , the issued an that fundamentally altered the government’s engagement with . The OM categorised as time-consuming and financially draining, citing even after the passing of awards. It mandated that disputes involving amounts less than ₹10 crore should not be referred to , effectively channelling smaller claims into or . The memorandum also imposed a requirement for prior approval from higher authorities before initiating in larger matters, creating additional bureaucratic hurdles.
The stated rationale behind the OM was to reduce the burden on the exchequer and to expedite dispute resolution. However, legal experts and industry stakeholders have criticised the move as overly restrictive, arguing that it undermines the autonomy of government departments and discourages foreign investment. The Attorney General’s recent comments suggest that the government may be reconsidering this position.
AG Venkataramani’s Call for a “Relaxed Set of Norms”
During his address at the GHAC Week, Venkataramani explicitly acknowledged that the OM is not immutable. “I have been talking to the government as to have a second look at it so that we have more potential and possibilities of making it more a relaxed set of norms for the government to follow,” he stated. He further noted that the memorandum is not a law and can be altered or even recalled. “And perhaps government may also recall it. And I don't think it is like a that cannot be altered at all,” he added.
These remarks indicate that the government is actively engaging in internal discussions to recalibrate its policy. The Attorney General’s position carries significant weight, as he is the principal legal advisor to the and often shapes the government’s stance in litigation and dispute resolution. His push for a more flexible approach aligns with the broader judicial and legislative trend in India favouring as a preferred method of .
The Significance of the GHAC Week
The Centre, established to promote in the state, hosted the Week in GIFT City—India’s first International Financial Services Centre. The event brought together judges, arbitrators, lawyers, and policymakers to discuss reforms needed to make India a global hub. Venkataramani’s keynote address on “What changes must India bring into the regime?” was a highlight of the programme.
GIFT City has been positioned as a gateway for international , with the operating there. The choice of venue underscores the government’s ambition to attract cross-border disputes and reduce the dominance of foreign centres like Singapore and London. The Attorney General’s remarks, delivered in this context, are seen as a signal that the government is willing to refine its policies to support .
Legal and Economic Implications
The current OM has drawn criticism from practitioners who argue that it discourages government departments from adopting clauses in contracts. Many public sector undertakings (PSUs) and government agencies have historically been reluctant to arbitrate due to concerns over cost and accountability. The OM reinforced that reluctance, leading to an increase in litigation and delays in project completion.
If the government revisits the OM, it could unlock several benefits. First, it would restore confidence among private contractors and investors that disputes with the government will be resolved efficiently through , rather than through protracted court battles. Second, a more permissive policy could reduce the backlog in courts by diverting disputes to . Third, it would align India’s domestic framework with international best practices, where governments routinely participate in .
The Attorney General’s emphasis on “relaxed norms” suggests that the revised policy might remove the ₹10 crore threshold or replace it with a more nuanced approach based on the complexity and importance of the dispute rather than purely monetary value. It could also streamline the approval process for referring disputes to , empowering lower-level officers to decide without needing clearance from top bureaucrats.
Shift Towards and
While advocating for relaxed norms, Venkataramani also acknowledged the merits of mechanisms. The OM had explicitly favoured and over for smaller claims. The Attorney General did not criticise that preference but rather called for a balanced approach where remains an option for appropriate cases.
India has been actively promoting through the , which establishes a statutory framework for and institutional . The government’s push for is consistent with global trends, but it should not come at the expense of , especially in complex commercial disputes where are necessary. The Attorney General’s remarks indicate that the government is seeking to strike a balance rather than impose a one-size-fits-all solution.
Impact on Legal Practice and the Ecosystem
For law firms and practitioners, a revision of the OM would be a welcome development. It could lead to an increase in instructions from government departments and PSUs, which have been cautious in recent months. It would also encourage more domestic and international law firms to invest in practices in India.
Moreover, the Attorney General’s call for a “second look” may also prompt other government bodies, such as the and the , to revisit related policies. For instance, the ’s standard contract templates often include clauses with specific restrictions. A policy shift at the highest level could trickle down to all government contracts, creating a more -friendly environment.
The GHAC Week itself is a testament to the growing infrastructure in India. With the establishment of the , and the setting up of the IAMC in GIFT City, India is poised to become a competitive destination. However, policy coherence is essential. The OM was a step backward in that journey; the Attorney General’s intervention may help steer it back on course.
Conclusion
Attorney General ’s public appeal for a relaxed set of norms marks a significant moment in India’s evolving dispute resolution landscape. By acknowledging that the is not set in stone, he has opened the door for meaningful policy reform. The government’s willingness to reexamine its stance, as indicated by his ongoing discussions with the administration, suggests that a more balanced and -friendly approach may be on the horizon.
As India aspires to become a global hub for , aligning government participation policies with international standards is not just desirable but necessary. The legal community will be watching closely to see whether the issues a revised memorandum or withdraws the existing one. For now, the Attorney General’s words offer a glimmer of hope for those who believe that remains the most effective mechanism for resolving commercial disputes involving the state.
