Highway developers cry foul over move to end arbitration, call for time-bound dispute resolution mechanisms

New Delhi: Highway developers have pushed back against the government's proposed move to end arbitration in large road projects, saying the absence of a time-bound adjudication mechanism could prolong disputes and drive up claims via mounting interest costs.

In a representation to road transport and highways secretary V Umashankar and the National Highways Authority of India (NHAI), the National Highway Builders Federation (NHBF) , the umbrella body representing highway builders, said scrapping arbitration without an effective alternative risks delaying dispute resolution.

The body has instead proposed structured settlements, time-bound closure of disputes, stronger financial and evidentiary discipline, and improved techno-legal capacity within the authority.


Citing past cases, it said original claims of ₹50-100 crore often swell to ₹150-300 crore or more over 10 to 15 years, largely due to interest accrual. Courts have consistently awarded interest where delays are attributable to the authority, in some instances pushing interest payouts beyond the principal amount.

The road transport ministry last month proposed eliminating arbitration for highway disputes exceeding ₹10 crore, recommending mandatory conciliation or mediation followed by recourse to civil courts through amendments to standard contract agreements.

The move was said to be aimed at curbing alleged malpractices, undue influence and prolonged arbitration timelines, while also limiting large awards that frequently translate into liabilities for the exchequer. "Eliminating arbitration will help the government regain control over outcomes in large disputes, as many arbitration awards have either been challenged or have gone against the government," a senior official said.

The government expects a structured conciliation framework to help speed up settlements.

Internal estimates show that between 2015 and 2025, the highways sector saw nearly 2,600 arbitration awards, with developers raising claims of about ₹90,000 crore and arbitral awards exceeding ₹30,000 crore.