Public contracts: speedy dispute resolution mechanism on anvil
Business Line, June 25, 2015
Disputes relating to
construction and infrastructure contracts, including
public-private partnerships, will be resolved within six months
if the new draft Public Contracts (Resolution of Disputes) Bill,
2015 becomes a reality.
Such a dispute-resolution mechanism assumes significance as
Prime Minister Narendra Modi has expressed dismay over delays
plaguing vital infrastructure projects due to repeated and
The Centre has sought comments on the Bill from all stakeholders
by June 30. After that, the draft will be finalised, taken to
the Cabinet, and introduced in Parliament during the Monsoon
Session, starting July 21.
The draft suggests setting up a tribunal for public contracts
with a chairperson, vice-chairpersons and members. The tribunal
will have four key functions to discharge: adjudicate upon
disputes and differences; refer disputes and differences to
arbitration and adjudicate upon awards arising from such
proceedings; adjudicate upon disputes involving a public
authority, service provider or contractor; and exercise
supervisory control over the arbitral proceedings.
The jurisdiction of the dispute-resolution tribunal will include
disputes arising from a public contract that has been executed
or entered into by the Centre, State, any local or other
statutory authority, any corporation, society or trust owned or
controlled by the Centre/State, or by any entity in which such a
government is a joint signatory. It will extend to any dispute
arising from a public contract, including execution, specific
performance of terms of the contract, termination, cancellation,
repudiation, and claims for damages for breach of contract.
It will also extend to disputes that involve an amount of ₹5
crore or more, or any lower amount in respect of any class or
category of cases, as prescribed.
Timeline for resolution
The draft prescribes a timeline for the tribunal to discharge
cases. It may refer the case to an arbitrator. The draft Bill
has proposed a 120-day limit for completion of the arbitration
process and announcement of award. In exceptional cases
additional time will be given.
Parties will be encouraged to arrive at a settlement during
arbitration. Once the arbitration is final, the matter will be
placed before the tribunal and if both parties agree, a final
order will be passed.
There is also a time limit of 180 days (which can be extended by
a maximum of 15 days) for the tribunal to complete the
proceeding and issue an order.
An appeal against this order can be made only in the Supreme
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