Construction and infrastructure contracts generate disputes for structural reasons rather than bad faith. Work is priced years before it is executed, site conditions differ from what was assumed, scope changes mid-project, and payment depends on certification by a party with its own commercial interest. When those pressures accumulate, the dispute resolution clause decides everything that follows.
Arbitration remains the default mechanism in this sector. This article is published for general information and awareness, and outlines how arbitration services in India operate in practice, what the current timelines require, and which recent developments have changed the landscape.
Why These Disputes Go to Arbitration
Three features push these claims towards arbitration. The subject matter is technical, and a tribunal can include members who understand delay analysis and measurement. The disputes turn on site records, correspondence and progress certificates rather than oral testimony. And the parties usually need to keep working together while the dispute runs, which a confidential process accommodates better than public litigation.
The recurring claim types are familiar: extension of time and prolongation costs, variations and change orders, withheld payments, defective work allegations, price escalation, and disputes over termination or encashment of bank guarantees.
The Statutory Framework
The Arbitration and Conciliation Act, 1996, as amended in 2015, 2019 and 2021, governs the process. A few provisions do most of the work in practice:
- Section 8 requires a court to refer parties to arbitration where a valid agreement exists.
- Section 9 allows a court to grant interim measures before or during arbitration; Section 17 gives the tribunal comparable powers once constituted.
- Section 11 provides for court appointment of an arbitrator where the agreed mechanism fails.
- Section 34 sets out the narrow grounds for setting aside an award.
- Section 36 makes an award enforceable as a decree of court, with a stay requiring a separate application rather than following automatically.
Interim relief matters disproportionately here, because the practical dispute is often about whether a bank guarantee may be invoked or a site handed over while the merits are decided.
The Timelines That Now Apply
The 2015 and 2019 amendments imposed a structure that changed how these matters are run.
Statements of claim and defence must be completed within six months of the arbitrators receiving notice of their appointment. The award must then be made within twelve months of the completion of pleadings. Parties may extend that by consent for a further six months, and any extension beyond that requires the court. For international commercial arbitration, the twelve-month period operates as an endeavour rather than a hard limit.
For a large construction claim with volumes of records and expert evidence, these periods are demanding. Meeting them depends on preparation done before the notice of arbitration is issued — which is where the difference between well-organised and reactive arbitration services in India becomes visible.
Recent Developments Worth Noting
Unilateral appointment has been curtailed. A five-judge bench of the Supreme Court held in late 2024 that clauses requiring one party to select an arbitrator from a panel curated by the other are inconsistent with equal treatment. This affects a very large number of public sector construction contracts, where panel-based appointment was standard practice.
Courts cannot rewrite awards. A five-judge bench confirmed in 2025 that the power under Sections 34 and 37 does not extend to modifying an award beyond the correction of limited or clerical errors. A challenge therefore succeeds or fails as a whole; it is not an opportunity to have the quantum revisited.
Government contracting policy has shifted. Guidelines issued by the Ministry of Finance in June 2024 for domestic public procurement advise against routinely including arbitration clauses, and provide that arbitration in disputes above ₹10 crore requires approval at a senior level. Mediation under the Mediation Act, 2023, or recourse to the courts, is encouraged instead. For contractors dealing with government entities and public sector undertakings, the dispute clause can no longer be assumed.
The position continues to develop, and the current law should be confirmed before acting on any of the above.
What Makes Construction Arbitration Different
The outcome is usually decided by records rather than argument. Daily progress reports, hindrance registers, minutes of site meetings, notices issued under the contract within the stipulated period, measurement books and correspondence on variations carry more weight than any later reconstruction of events.
Two failures recur. The first is a failure to serve contractual notices within the time the contract prescribes, which can bar an otherwise sound claim. The second is quantum presented as a lump sum without a demonstrable link between the delay event, the period claimed and the cost incurred. Tribunals routinely reduce claims not because liability is absent but because causation is not established.
Challenge and Enforcement
An application to set aside must be made within three months of receipt of the award, with a further thirty days available at the court’s discretion and no power to condone beyond that. The grounds are limited — they do not include an error of fact or a different view of the evidence.
An award that survives challenge is enforced as a decree. Because a stay is no longer automatic, an award-holder is in a considerably stronger position than under the pre-2015 regime — the single biggest practical improvement in arbitration services in India over the last decade.
Where Professional Advice Fits
Most of the value in arbitration services in India is delivered before the tribunal is constituted: drafting a workable dispute clause, preserving contemporaneous records, serving notices on time, and assessing honestly whether a claim is worth pursuing against its cost and timeline. A taxation legal advisor practice handling commercial disputes is generally engaged at those points as much as at the hearing.
The clause signed at the start of a project determines the seat, the governing rules, the number of arbitrators and the method of appointment. It is drafted in an hour and governs a dispute that may run for years.
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