Arbitration & Conciliation
● Source: Clauses 63 & 64 of GCC for Works, 2019 Click for GCC for Works, 2019
● What is Arbitration?
1. Use of an Arbitrator to settle a dispute between parties arising out of contract.
2. An inbuilt mechanism in Contracts.
3. Without going through the judiciary.
● Who is an Arbitrator ?
An Independent person or body officially appointed to settle a dispute.
● What is Conciliation ?
1. The action of mediating between two disputing people.
2. An alternative out of court dispute resolution instrument.
3. An alternative to Arbitration too.
4. The parties seek to reach an amicable dispute settlement.
5. The Conciliator, a neutral third party assists the conciliation process.
6. Voluntary proceedings. Both the parties are free to agree to it.
7. The process is flexible, allowing parties to define the time, structure and content of the conciliation proceedings.
8. The ultimate decision to agree on the settlement remains with the parties.
● Reasons for Arbitration cases
1. Site not handed over in time due to delayed land acquisition.
2. Non removal of Powerline crossings
3. Non availability of P.Way materials
4. Delay in obtaining clearances from Forest Dept, Environment ministry etc
5. Not preparing plans/drawings/designs in advance.
6. Inadequate delay in issuing instructions.
7. Frequent changes in Scope, Design, Plans of work during the tenure of contract.
8. Non finalization of variation statements
9. Delay in taking measurements and arranging passing of bills
10. Inadequate funds availability leads to delay in payments
11. Non attending grievances of contractor promptly
12. Improper fixation of completion of time leading to number of extensions.
● Excepted matters are not arbitrable. Clauses 8, 18, 22(5), 39, 43(2), 45(a), 55, 55-A(5), 57, 57A,61(1), 61(2) and 62(1) of Standard General Conditions of Contract or in any Clause (stated as excepted matter) of the Special Conditions of the Contract) - Decision of the Railway authority shall be final and binding on the Contractor.
1. Clause 8 - Assistance by Railway for the Stores to be obtained by the Contractor:
2. Clause 18 -Illegal Gratification, bribe, commission, gift or advantage provided by Contractor to the Railway Official.
3. Clause 22(5) - Specifications and Drawings
4. Clause 39 - Rates for extra items of work
5. Clause 43(2) - After signing “No Claim Certificate” by Contractor
6. Clause 55 - Provision of Payment of Wages Act
7. Clause 57 - Provision of Workmen Compensation Act
8. Clause 61(1) - Right of Railway to Determine the Contract
9. Clause 61(2) - Payment on Determination of Contract
10. Clause 62(1) - Determination of Contract owing to Default of Contractor
1. Notice of Dispute: By Contractor to Railways - Within 30 days from the date of issue of Completion Certificate by Chief Engineer.
2. Notify the name(s) of Conciliator(s) to the Contractor - Within 30 days from the date of receipt of “Notice of Dispute”
3. Conciliator(s) shall assist the parties to reach an amicable settlement in an independent and impartial manner within the terms of contract.
4. If parties reach an agreement due to above efforts of Conciliator - Draw up and Sign a Written Settlement Agreement by all parties and Conciliator and it is final and binding for all.
● Demand for Arbitration:
1. 120 days to 180 days from the Contractors representation date.
2. In Writing
3. Specify the matters and claims
4. Within 30 days from the date of appointing Arbitral tribunal - Claimant shall submit his/her claims with supportive documents.
5. Railway’s counterclaim - 60 days from the date of appointing Arbitral tribunal.
● If the Contractor is not claimed specifically within 90 days from the date of Final Bill is ready for payment, Railway shall discharge and release all liabilities of Contractor.
● Cost of Arbitration - borne by the Both parties.
Amount of Claim
No of Arbitrators
Up to Rs.50 Lakhs
Rs. 50 Lakhs to Rs. 1 Crore
JAG & above
Above Rs. 1 Crore
Panel of Three
Two - JAG & above
One - Retd Sr.Scale & above