Arbitration Procedure in Indian Construction Contracts: Understanding the Applicable Law

In today`s fast-paced world, construction projects are becoming increasingly complex and involve multiple stakeholders. As a result, disputes are bound to arise, and resolving them through court proceedings may not always be the most efficient or practical solution. This is where arbitration comes in – it is a voluntary and confidential process for resolving disputes outside of court, with the assistance of a neutral third-party arbitrator or arbitral tribunal.

In India, the law governing arbitration is the Arbitration and Conciliation Act, 1996. This act provides the legal framework for conducting arbitrations, enforcing arbitral awards, and challenging them in court. The act is divided into four parts, each of which deals with a different aspect of the arbitration process.

When it comes to construction contracts, the arbitration procedure is governed by Part I of the Arbitration and Conciliation Act, 1996. This part deals with the scope and applicability of the act, and it imposes certain mandatory requirements for conducting arbitrations in India.

Under section 2(1)(f) of the act, a construction contract is defined as a contract for the construction of buildings, bridges, roads, and other similar structures. This means that any dispute arising out of or in connection with a construction contract in India can be resolved through arbitration, provided that the parties have agreed to do so in writing.

Section 7 of the act provides for the appointment of an arbitrator or arbitral tribunal. In the case of a construction contract, the parties may agree on a sole arbitrator or a panel of three arbitrators. The arbitrator or arbitral tribunal is responsible for conducting the arbitration proceedings, hearing the evidence presented by the parties, and issuing a final award.

Section 34 of the act provides for the setting aside of an arbitral award. This means that if a party is dissatisfied with the award, they can challenge it in court on certain grounds, such as the arbitrator being biased or the award being contrary to public policy.

In conclusion, the arbitration procedure in Indian construction contracts is governed by Part I of the Arbitration and Conciliation Act, 1996. This act provides the legal framework for conducting arbitrations, enforcing arbitral awards, and challenging them in court. If you are a construction professional or a party to a construction contract, it is essential to be aware of the applicable law and the arbitration process to ensure that any disputes are resolved smoothly and efficiently.