ADR and MSME Dispute Resolution by Beam
MSMEs constitute the bulk of India’s exports to the tune of about 60% and contribute to the economic and social development of India. Therefore, it is paramount to ensure ease of doing by robust dispute resolution mechanism. BEAM ADR assists in providing affordable dispute resolution to the MSMEs, especially in the rural areas of India.
The Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) provides a mechanism for resolving disputes between MSMEs and other parties.
The process is as follows:
Facilitation Council
The dispute is referred to the Micro and Small Enterprises Facilitation Council, which is responsible for conducting conciliation. The Council can act as the conciliator itself or appoint an institution to do so.
Conciliation
The Council attempts to settle the dispute through conciliation. If the parties are unable to reach a settlement, the Council can act as the arbitrator.
Arbitration
If the dispute is not settled through conciliation, the Council can refer it to an institution or center for arbitration. The Arbitration and Conciliation Act, 1996 applies to the dispute. The arbitrator must resolve the dispute within 90 days of the referral.
Other aspects of dispute resolution for MSMEs include:
Arbitration clauses
Contracts between MSMEs and larger entities may include arbitration clauses.
Enforcement
Contracts between MSMEs and larger entities may include arbitration clauses.
Capacity Building
Awareness campaigns and capacity-building initiatives can help MSMEs navigate the dispute resolution process.
BEAM ADR always educates and campaign for awareness and diligent mechanisms for dispute resolution. The author has personally played key roles in MSME dispute resolution.
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