SETTLEMENT OF DISPUTES THROUGH

ARBITRATION:
AN OVERVIEW OF ARBITRATION AND
CONCILIATION ACT

AJAY KUMAR ARORA, DY. GM (LAW)

PIYUSH MANOCHA, MANAGER (LAW)
ARBITRATION CELL
 OBJECT
The object of the presentation is:
 To apprise about the Fundamentals of Arbitration,

How the differences with the contractors lead to disputes;

How to Avoid the Disputes which lead to arbitrations;

Once the arbitration has commenced, how we can

effectively conduct our cases before the Arbitral Tribunals;

Scenario after passing of Arbitral Award by the Tribunal.

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 All the Contracts of Hydro Projects involve techno
financial aspects where financial stakes are very high.
 The implementation of the contractual provisions
during execution of the work results into lots of
differences on various issues with the contractors,
whether, it is H&M Contract, E&M or Civil Contract.
 To take care of such differences/disputes, there remain
provisions under the contract for the resolution of such
disputes.
 Besides in-house mechanism, we have Arbitration
Clauses, which provide a quasi-judicial mechanism in
shape of arbitration whereby the disputes are resolved
through adjudication by the Arbitral Tribunals.
 When the claims of one party arise during
the execution of the contract and the same
get rejected by the other party, it results in
dispute.

 The disputes can be resolved by the parties

through amicable settlement.

 In case, no amicable settlement is reached,

the dispute is referred for arbitration.
 The Parties to the disputes may agree for
the Sole Arbitrator, or

 Each party may nominate its Arbitrator and

both the nominated arbitrators select a third
Arbitrator called the Presiding Arbitrator.

 The multibody of Arbitrators is called

Arbitral Tribunal.
 The Arbitral Tribunal is not bound by the Code of
Civil Procedure and Evidence Act like Courts. It is
free to finalize its own procedure or the procedure
as mutually agreed by the Parties. The main steps
of procedure generally include:

 Pleadings – Statement of Claims (SOC), Statement

of Defence (SOD), Counter Claims, Rejoinder etc.
 Admission & Denial of Documents and Evidence
by the Parties.
 Arguments – Oral & Written Submissions.
 Arbitral Award.
 After the completion of pleadings the Arbitral
Tribunal has to dispose off the disputes within
18 months, however, the 6 months period may
be extended with the consent of parties. For
further extension, approval of the Court is
required.
 The final decision of AT on the disputes is
called Arbitral Award.
 The award has a legal binding force as good as
a decision of the Court.
 Any of the party may seek correction
(typographical, calculation, etc.) of the award,
if any, within 30 days of the Award.
 Aggrieved Party may challenge the award
before the appropriate Court on limited
grounds within 90 days of receipt of Award.
 During Challenging of the Arbitral Award, the
Party may obtain Stay on the Enforcement of
the Award.
 The Court while granting the stay may impose
conditions for deposition of some percentage of
award amount in court/ to party.
 Where the stay is not granted, the party in
whose favour the Award was passed, may file
an execution of the award.
 Appeal – Aggrieved from the decision of the
Court, any of the party may file an appeal.
 Section : 7 Arbitration Agreement, It provides
that for invoking the arbitrations there has to
be an agreement/clause with respect to the
arbitration between the parties.
 Section:11 Provides procedure for the
appointment of arbitrator/AT’s.
 Section: 12 Regarding Impartiality of the
Arbitrators. Schedules (v), (vi) & (vii)
 Section 17: It empowers the arbitrators/AT’s to
grant Interim Measures.
 Section 23: Procedures for filing of Pleadings i.e.
SOC/SOD etc..
 Section 29-A: Time limit for passing of Arbitral
Award
 Section 31-A: Cost and Expenses of Arbitration
(Schedule IV)
 Section 32: Termination of Proceedings with the
Passing of Award.
 Section 33: Correction & Interpretation of Award.
 Section 34 : Procedure for Challenging the Award
(Limited grounds)

 Section 36 : Enforcement of Awards.

It provides for Enforcement of Awards and
provision for making an Application for Stay of
Award during the pendency of the Petition under
Section 34.

 Section 37 : Appeal against the decision passed

under Section 34.
 Proper Documentation
 Timely Communication
 Knowledge of Contract Provisions
 Adherence to the Contract Provisions
 Timely Actions with respect to hindrances/
delays, if any.
 Timely decision on Extension of Time
 Disposal of Final Bill in a time bound manner.
 The Act also provides for the conciliation
mechanism whereby the parties to the disputes
may agree to resolve their differences by
resorting to conciliation.
 SUGGESTIONS
1) Maintaining contemporary records: Since
most of the disputes arise due to prolongation of
the work awarded under the contract and while
execution if any event occurs, to maintain the
evidence of that event contemporary records be
maintained.
2) The claim should be assessed expeditiously on
basis of records submitted and its admissibility
should be communicated to the Claimant within
the time line specified in the contract.

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 SUGGESTIONS
3) Change of methodology: If the contractor derogates from
the stipulated methodology, Engineer-In-charge should
immediately seek an undertaking from the contractor that he
has changed the methodology for his ease in execution of the
work and he would not raise any claim against it. Further,
where methodology has been changed on the instruction of
Engineer-In-charge, he should seek all the details from the
contractor and process the case file in terms of the contract
expeditiously.
4) The clauses of the tender documents must be consistent and
supplementing each other, any ambiguity and inconsistency
needs to be taken care of.
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 SUGGESTIONS
5) The Contract needs to have specific provisions to deal with
the employment of Project Affected People in line with the
R&R plans. Further it should be specifically mentioned that
Contractor would not be bound to accept names referred by
Engineer in charge or Employer for employment.
6) A provision can be made in Force Majeure clause for
reimbursement of certain percentage of cost to the contractor
against bandh / strike call given by political party, local
groups which are beyond the control of the parties.
7) If designated place for procurement of material is changed
due to unavoidable reasons, additional expenditure, if
incurred, in bringing material at site
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may be reimbursed.
Methodology for working out the compensation should be
incorporated in the Contract.
 SUGGESTIONS
8) Contract clauses should explicitly state that revised rate
would only be applicable on quantities beyond variation limit
prescribed in the BOQ.
9) Contract clause should provide for reimbursement of
expenses on extension of Bank Guarantee and CAR policy
beyond the initial stipulated contract period to minimize
disputes on this issue.
10) Contract clause should explicitly provide for the exclusion
of any payment against increase in minimum wages.
11) Before imposing Liquidated Damages a reasoned notice
containing the quantum of Liquidated Damages to be imposed
must be communicated to the Contractor.

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 SUGGESTIONS
12) The relevant clause with regard to Engineer-In-charge’s
power to change scope of work needs to specify the extent of
change in the scope of work and its consequences to
discourage the contractor from raising such claims.
13) The project / power station need to have proactive
approach on the occurrence of any hindrance at site. In this
regard the representative of both the parties may jointly prepare
a report with regard to loss and idling of manpower/material
etc., if any.
14) Any communication received from the contractor should be
acknowledged and replied timely.

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THANK YOU