Review of the Effectiveness of Arbitration

Abstract

Disputes are common and unavoidable in any construction project. These must be resolved in a timely manner lest they adversely affect time and cost aspects of the project and even affect its economic viability. Arbitration has been used as a means of dispute resolution as it is considered to be a speedier and more cost-effective way of conflict resolution than litigation. However, the arbitration process has often been marred by delays leading to time and cost escalation, thereby failing to meet the very purpose of relevant legislation. With the construction sector undertaking more complex projects, disputes will require an efficient redressal mechanism. The present study has been undertaken to understand and evaluate the effectiveness of the current arbitration procedure in India, specifically those under the public sector. An assessment has been done to determine its adequacy to meet the complexities and challenges of the contemporary construction sector. A total of 22 cases of arbitration from the Central Public Works Department (CPWD) have been considered for the present study. Total times for arbitration and durations between various stages of arbitration have been captured to bring out the fact that arbitration takes longer than desired. The study reveals that appointment of arbitrators and frequent changes in arbitrators are the main reasons for delays in the arbitration process. In addition, submission of claims and counterclaims coupled with an increased number of hearings also result in delays in overall process of arbitration. Recommendations that can assist in speeding up the settlement of issues are proposed on the basis of this limited study.