New Delhi: The Union Cabinet Thursday paved the way for the country's emergence as a prestigious hub for out-of-court settlement of international commercial disputes between various governments and non-government parties.

It decided to set up in New Delhi a regional bench of the Hague-based Permanent Court of Arbitration (PCA). A similar facility in the region is available only in Singapore.

In its meeting, chaired by Prime Minister Manmohan Singh, the Cabinet also decided to ratify India's agreement, known as 'Host Country Agreement' with PCA. The agreement was signed earlier to establish a regional facility of PCA in New Delhi.

The Cabinet also decided to issue a notification to grant various United Nations-endorsed privileges and immunities to the officials from the countries who would be working for the New Delhi-based PCA regional chapter.

With establishments of a regional facility for international commercial arbitration in New Delhi, a huge chunk of arbitration cases from Singapore are likely to get diverted to India owing to lesser costs involved here, said a law ministry official.

Besides Singapore, the Hague-based PCA has benches only in Costa Rica, Lebanon and South Africa.

The New Delhi-based regional facility of PCA would provide a forum for international arbitrations in India for disputes arising in India and in the region, both among various countries and between a country a non-State entity, such as foreign companies which have made investments in the region, said an official press release.

The government said the costs of international arbitration in India would be considerably reduced which would also encourage various parties to take more frequent recourse to arbitration here as a means of settling disputes.

The regional bench of PCA in New Delhi would also enable more legal experts from India to participate in arbitrations conducted here and help them acquire expertise in the field which would have a beneficial effect on domestic arbitrations, the release said.

It added that the parties to a dispute will have opportunity for selecting the persons of their own choice as arbitrators for the amicable settlement of the dispute.