NEW DELHI: The Government has ramped up efforts to ensure swift resolution of arbitration and legal disputes pertaining to road development projects, aiming to curb mounting losses to the exchequer caused by prolonged litigation and delayed decision-making.
The ministry of road transport and highways (MoRTH) has issued five-point directives for settlement of disputes through pre-conciliation scheme --Vivad se Vishwas III (VsV-III)-- and streamline conduct of arbitration proceedings.
The move comes amidst concerns that inefficiencies and delay in handling legal matters, especially legacy cases have led to avoidable financial liabilities including penalties and interest payments.
All central and state agencies involving infrastructure development such as public work departments (PWDs) and Border Roads Organisation (BRO) have been directed to create an aware Vivad se Vishwas III initiative among the contractors or consultants and discuss the benefits of settlement of disputes under the scheme.
The ministry said that small-value cases--claims are upto Rs 100 crore and cases upto Rs 200 crore decided in the district courts but pending in High Courts-- might be dealt on priority.
The Vivad se Vishwas (from dispute to trust) scheme was introduced by the Department of Expenditure of the ministry of finance to deal with contractual disputes.
The ministry also directed that the pre-conciliation mechanism be actively utilised to facilitate settlement of disputes. “Awards exceeding Rs 100 crore and those less than Rs 5 crore shall be specifically scrutinized to explore the possibility of immediate settlement,” read the internal communication note.
The officials said that the ministry’s directives followed a review of pending arbitration and court cases related to projects entrusted to state PWDs, road construction departments (RCDs), and the Border Roads Organisation (BRO), which was held last month.
The MoRTH has also instructed concerned officials to ensure strict adherence to the Arbitration Standard Operating Procedure (SoP) issued in July, with a view to easing interest liabilities on the exchequer.
The SoP on Arbitration was to streamline disputes related to highway construction contracts.
According to the directives, the regional officers (ROs) of the ministry must be involved at each stage of disputes, arbitration, and court matters. It was observed that several arbitration matters are pursued by state agencies without the consultation or knowledge of the ministry's ROS.
“Any arbitration or legal proceeding pursued without the explicit involvement of the RO shall be viewed adversely and consequences may lead to recovery of financial losses from the defaulting officials or agencies in such cases,” the official note stated.
ROs have been asked to maintain a close watch on ongoing disputes and ensure the timely nomination of arbitrators as per the SoP to prevent the loss of the ministry's right to appoint a nominee Arbitrator.
ROs will also ensure that proposals for the extension of the Arbitral Tribunal are submitted at least 45 days prior to expiry for necessary approval.
The arbitration proceedings are automatically terminated as on the occasions, the term of the tribunal expires without reaching a resolution, which ultimately leads to additional financial burden.