Public contracts: speedy dispute resolution mechanism on anvil

The Hindu 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 prolonged litigation.

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 Court.

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