Guidelines aim to streamline the dispute resolution process for domestic procurement by government and its entities and addressing unique challenges faced by government entities with respect to arbitration.

Arbitration

• Arbitration is a quasi-judicial process in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. 
• It is a type of Alternate Dispute Resolution (ADR), governed by Arbitration and Conciliation Act, 1996 (amended in 2021).

Key Points of the Guidelines

• Arbitration should not be automatically included in procurement contracts, especially in large contracts.
• Arbitration may be restricted to disputes valued below Rs. 10 crores.
• Where arbitration is used, institutional arbitration should be preferred.
• Mediation under Mediation Act, 2023, should be adopted where possible, in high-value matters.

Challenges faced by Government with respect to Arbitration

• Government officials’ transferable jobs may limit their deep knowledge, putting them at disadvantage against private parties in arbitration.
• Arbitrators often lack integrity and collude with private parties.
• Its informal and binding nature can lead to erroneous decisions and improper application of law.
• Many arbitration decisions are challenged in high courts, failing to reduce the burden on courts.