Highway Builders Blast Govt Over Arbitration Ban, Fear Soaring Costs
Overview
Highway developers are fiercely opposing a government proposal to end arbitration for large road projects. They warn this move risks prolonging disputes and significantly increasing financial claims through mounting interest costs, proposing time-bound settlement mechanisms instead. The government aims to curb alleged malpractices and control liabilities.
Developers Push Back Against Arbitration Ban
Highway developers are strongly opposing a government proposal to scrap arbitration for large road projects. The National Highway Builders Federation (NHBF), representing the sector, has warned that removing arbitration without an effective alternative risks extending dispute resolution times. This delay, they contend, will inevitably lead to inflated claims driven by mounting interest costs.
Escalating Claims and Interest Burdens
Developers cite past cases where original claims of ₹50-100 crore have swelled to ₹150-300 crore or more over 10 to 15 years. This dramatic increase is largely attributed to accrued interest. Courts have consistently awarded interest when delays are attributable to the authority, sometimes pushing interest payouts beyond the principal amount.
Government's Proposed Shift
Last month, the Ministry of Road Transport and Highways proposed eliminating arbitration for highway disputes exceeding ₹10 crore. The ministry suggests mandatory conciliation or mediation, followed by recourse to civil courts, through amendments to standard contract agreements. This move is reportedly aimed at curbing alleged malpractices, undue influence, and prolonged arbitration timelines that often result in substantial liabilities for the government exchequer.
Scale of Sector Disputes
Internal estimates indicate the significant scale of disputes in the highways sector. Between 2015 and 2025, approximately 2,600 arbitration awards were issued. During this period, developers raised claims totaling around ₹90,000 crore, with arbitral awards exceeding ₹30,000 crore.
Developers' Alternative Proposal
The NHBF has formally represented its concerns to the road transport and highways secretary and the National Highways Authority of India (NHAI). They have proposed structured settlements, time-bound closure of disputes, stronger financial and evidentiary discipline, and enhanced techno-legal capacity within NHAI as alternatives to outright arbitration elimination.
