Construction & Infrastructure Arbitrations in India
In India Construction and infrastructure arbitrations are increasing day by day because of the
increased infrastructure related activities by the Government and Private sector. But it considered to
be one of the types of arbitrations which consume excess time because of the complex nature.
Arbitration Clause: Arbitration is a private commercial dispute resolution mechanism. In arbitration
frame work parties have the supremacy, to decide the procedure of the arbitration, arise out of a
contract between parties. Hence while drafting the main contract, parties should draft an arbitration
clause which specifically excludes all the possible delays and ensure timely conclusion.
Avoiding Three Arbitrator Panel: In a construction/ infrastructure contract, parties normally go for
arbitration clauses with a three-member tribunal. One arbitrator will be appointed by each of the
parties and the chairman shall be chosen by both of them. The parties should realise the fact that
once three member panel is selected by the parties, the cost of arbitration increases up by a
minimum of three times and the time consumption also increases proportionately because, the
tribunal has to keep the hearings on the dates which are suitable to all the three arbitrators as well
as the parties. Normally the clauses which provides for a panel of three arbitrators gives right of
parties to appoint/ nominate one arbitrator and both of the arbitrators will choose the third one.
{In such cases the appointment of arbitrators itself takes away more than 6 months’ time. In high
value contracts parties can go for two or more options of different sub-clauses on the basis of the
dispute amount, one providing a sole-arbitrator and the other providing a three-member arbitration
panel. These days finding dates of popular arbitrators is difficult and hence having a clause with a
single arbitrator will surely help to expedite the conclusion of the arbitration.}
Choosing Institutional Arbitration: There are many professionally managed institutional arbitration
centres in India, which help the parties to conclude the arbitration within a reasonable time by
closely monitoring and managing the proceedings. (For example IDAC India, which is an arbitral
Institution based out of Vadodara offers not only world class infrastructure but also timely
conclusion of arbitrations) For doing so parties should choose an arbitral institution and incorporate
its name and address in the arbitration clause itself, with a consent to acceptance of the rules of the
arbitral institution. But even today many parties do not specifically incorporate, the name and
details of an arbitral institution and get referred to ad-hoc arbitrations. Choosing an Ad-hoc
arbitration not only delays the conclusion of the proceedings because the control over adjournments
and hearings in long intervals but also makes it very expensive. Normally in ad-hoc arbitrations, the
arbitrators decide both their fee as well as the hearing dates.
Engage Full Time Arbitration Lawyers and Appoint Full Time Arbitrators: Even though in India
arbitration has become the most preferred mechanism in resolving commercial disputes, many
lawyers and arbitrators treat arbitration like a weekend activity. Hence they insist for Saturday
hearings, don’t stick to dates, seek adjournments often and delay the arbitration proceedings. If
parties choose lawyers who are full time arbitration lawyers than choosing part-time arbitration
lawyers, then the delay can be reduced substantially. In the same way part time arbitrators also
contribute to the delay of the proceedings. Hence one of the most important reasons for the delay in
construction arbitrations can be avoided if the part- time arbitration lawyers and part- time
arbitrators are not engaged by parties.
Saturday Hearings: Many lawyers and arbitrators handle arbitration only on Saturdays because of
the non-availability of time for lawyers and arbitrators in week days. This is an anti-arbitration
practice which requires to be discouraged by the parties. Parties should not agree for Saturday
hearings and insist for week day hearings from the beginning of the proceedings to avoid delay in
arbitration matters.
Preparation & Filing of The Claim: The claimants are the parties who initiate arbitration proceedings
since they are an aggrieved by the other party. In such a situation they should always try to complete
the arbitration proceedings faster. But it is unfortunate in India, that most of the claimants seek for
long time for preparing and filing the claim statement, on the first pre-arbitration hearing after the
appointment of arbitrators. In many countries claimant sends the claim along with the notice for
arbitration. The claimant is well aware that arbitration will start and hence they should be ready with
their claim petition and supporting documents on the first hearing itself and file the same on the
very same day. Such a pro-active act of the claimant will save a minimum of three months’ time.
Document Management & Infrastructure Contract: Normally in a construction & infrastructure
contracts the damages are claimed by parties on the basis of delays attributable to the other party,
variations to the main contract, quality of the executed work etc., These issues can be effectively
proved from the emails exchanged and other communications. Hence the parties should start
collecting all communications, indexed date wise right from the beginning of the negotiation, which
will be of great help in the later stage. Some infrastructure companies always mark all copies of the
mails to one dedicated email ID for each project they handle, which help them to take out all the
communications without a big search for documents. A claimant which has a properly managed
documents need not delay the process by fling the documents in a later stage of the arbitration
(along with chief examination of witnesses) and all documents filed in support of the claim petition
must be filed either in claim stage or latest in the rejoinder stage, not later than that. Filing of all the
supporting documents along with the claim will help the opposite party to respond effectively and
consequentially arbitrator will understand the matter better. Hence normally arbitrators also give
more weightage to the documents brought on record in the starting of the case.
Selected Filing of Documents: In construction and infrastructure arbitrations parties normally dump
huge number of documents, knowingly many of them are not necessary to either prove or disprove
the claims and counter claims raised by the parties. For example, all the plan drawings, approvals of
those drawings, shop drawings, cash vouchers, registers maintained in the work front, bills, copies of
sub contracts, copy of the main contract etc., are brought on record. Parties should file only
documents which are relevant to the claim and counter claim and file the other documents required
by the other party, if ordered by the tribunal.
Examination of Neutral Technical Witnesses: If arbitrators are from non technical back ground, they
can appoint technical witnesses and rely on their opinion to pass awards. But they should appoint a
neutral technical/ expert witness rather than relying on the party appointed expert witnesses, who
need not be neutral. Moreover, examination and cross examination of party appointed witnesses
take longer time than a neutral witness. It is important that a neutral expert witness is independent
and reliable than a party appointed expert witness.
Cross Examination by Parties: The importance cross examination of witnesses in construction and
infrastructure disputes are very limited, because facts are proved through documents only. In
construction arbitrations cross examination are done on the issues which are stated in the affidavit
by way of evidence filed by that particular witness. In addition, cross examination can be used to
disprove certain claims, counter claims and allegations of the party examining that witness. But the
relevance of such cross examinations have come down in a big way because arbitrators give more
weightage to documents than oral witnesses. Hence the arbitrators should discourage lengthy cross
examination of witnesses in order to conclude the construction arbitrations with in time.
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Infrastructure Development and Arbitration
Introduction
Infrastructure development is the backbone of economic growth in any country. In India,
sectors like roads, railways, airports, power, ports, and urban infrastructure have seen
significant investment from both the public and private sectors. However, such large-scale
projects often face legal, financial, and technical disputes. To resolve these disputes
efficiently and ensure uninterrupted development, arbitration has become a vital mechanism.
Arbitration in infrastructure projects ensures faster resolution, reduces the burden on courts,
and builds investor confidence.
Importance of Arbitration in Infrastructure Development
1. Encourages Investment and Participation
o Infrastructure projects require huge capital investments, often from foreign
and private investors.
o Arbitration clauses in contracts provide confidence to investors that their
disputes will be handled fairly and efficiently, without long delays in court.
o It also aligns with global best practices, promoting ease of doing business in
India.
2. Faster and Flexible Dispute Resolution
o Infrastructure projects are time-bound and any delay leads to cost escalation.
o Arbitration is a time-bound alternative dispute resolution (ADR) method that
avoids lengthy court processes.
o It is also flexible, allowing parties to decide procedures, location, and
language of arbitration.
3. Specialized and Technical Decision Making
o Infrastructure disputes involve complex technical and engineering issues.
o Arbitration allows appointment of experts or technical arbitrators who can
better understand and resolve such matters.
o It leads to more accurate and fair decisions.
Challenges in Infrastructure Arbitrations
1. Delays Despite Arbitration
o Though arbitration is faster than courts, many construction arbitrations in
India are still delayed due to poor planning, lengthy cross-examinations, and
part-time arbitrators/lawyers.
2. High Costs
o Infrastructure disputes often involve three-member tribunals, making the
process more expensive.
o Ad-hoc arbitrations (not managed by institutions) result in uncontrolled fees
and irregular schedules.
3. Lack of Institutional Arbitration
o Institutional arbitration (managed by a professional body) ensures discipline,
timelines, and cost control.
o Many Indian parties still prefer ad-hoc arbitration, which contributes to
inefficiency.
4. Ineffective Drafting of Arbitration Clauses
o Poorly worded clauses in contracts lead to jurisdictional disputes and
procedural confusion later on.
o Parties often copy standard templates without customizing them for
infrastructure needs.
Suggestions for Improvement
1. Well-Drafted Arbitration Clauses
o Contracts should clearly mention arbitration procedure, timeline, and whether
to use sole or multi-member tribunals.
o Waivers like avoiding oral witness examination can reduce delays.
2. Preference for Sole Arbitrator
o Especially in medium-value contracts, choosing a sole arbitrator helps reduce
cost and time.
3. Choose Institutional Arbitration
o Institutions like IDAC India, MCIA, ICA, and SIAC provide fixed
timelines, transparent fee structure, and professional management of
arbitration.
4. Use of Full-Time Arbitrators and Lawyers
o Appointing full-time professionals avoids delays from weekend-only hearings
and frequent adjournments.
5. Early and Complete Filing of Claims and Documents
o Claimants should file complete documents at the beginning of arbitration to
avoid unnecessary delays.
6. Avoiding Unnecessary Cross-Examinations
o Since infrastructure disputes are mostly document-based, arbitrators should
discourage lengthy oral testimonies.
7. Appointment of Neutral Technical Experts
o A neutral expert witness, not hired by either party, ensures unbiased
technical opinion and saves time in examination.
Conclusion
In a country like India, where rapid infrastructure development is essential, arbitration plays a
crucial role in enabling smooth execution of projects. Despite the challenges, arbitration can
be made effective and time-bound through proper planning, institutional support, and
commitment by parties. With reforms and better practices, arbitration will continue to support
India’s infrastructure growth by resolving disputes efficiently and promoting confidence
among investors and developers.
