Consequence of Removal of Arbitration Clause from Engineering Contracts-A Discussion

Abstract

The arbitration clause which was an integral part of the Engineering Contract in India is presently a matter of considerable debate. This is because of the obvious reason that there are many instances where abuse of the arbitration clause in the Engineering contract has been made. There is an well-established legal system in India and any plaintiff who is a party to Engineering contract can bring a suit to a court of law if he feels that injustice has been performed and contractual clauses has not been adhered to. The legal system is very formal and substantial time is consumed before the issue is settled through the intervention of the court of law. As time being the essence of contract, especially engineering contract where delayed decision for contractual dispute resolution may actually affect infrastructural development and overall wellbeing of the citizen of the country, alternative dispute resolution system through an arbitral mechanism is preferable practise. However some long drawn and costly arbitration proceedings for dispute resolution of Engineering contract has become one of the major reason for discouraging arbitration in engineering contracts. To facilitate arbitration, an arbitration agreement should executed between the contracting parties. The agreement is generally in the form of an arbitration clause in the Engineering contract. But various Government and Semi Government Engineering departments who invite tenders for large Engineering projects has either done with the arbitration clause by introducing departmental dispute resolution committee or have issued conditional arbitration clause fixing financial ceiling of tender amount for taking arbitration proceedings. In this article it is proposed to discuss the consequences which shall fall due to discouraging or removal of arbitration clause from engineering contracts.