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Evolving Nature of Construction Disputes in India and the World: How to stay ahead of the curve



The role of the Construction Industry is akin to that of a drip irrigation which slowly but steadily fuels the growth of other sectors of the Economy whether it is transportation of goods and services; tourism sector or agriculture etc. Drawing an analogy from Drip Irrigation, Construction Sector with a limited investment of resources has a multiplier effect on the economy as it goes on to boost the other sectors of National Economy. The Union Budget, 2023 issued by the Government of India is a living testimony of the growing impetus on the development of Infrastructure with the passage of time which has made India one of the biggest and the fastest growing economies of the World.


It is estimated that the key infrastructure sectors such as Roads, Railways, Defence, etc. will drive the growth of India in the current financial year. The proposed Capital Expenditure in the Financial Year 2023-24 is almost three times the Capital Expenditure in 2019-20. The Union Budget, 2023 revolves around the four I’s or components for the next twenty-five years i.e., Infrastructure, Investment, Innovation, and Inclusion.


Cost Overrun and Time Overrun: The Biggest Challenges for the Construction Sector

Our Experience of more than three decades in the arena of Construction Arbitration has taught us that two broad themes i.e., cost overrun and time overrun. Whenever a Construction Project is sabotaged by delays in the completion schedule, it bleeds financially all the stakeholders involved in the project and private contractors are no exception to it. Such a prolongation in the Project may be due to a variety of factors which include but are not limited to Non-Availability of Site, Force Majeure Events, On Ground Disruption of the Construction Works, Change of Scope related to the Construction Project, Non-Clearance or Delayed Clearance of the bills/invoices incurred towards the Construction of the Project. The delay in the construction of the project inflicts a severe blow on the private contractor who has already mobilized its plant and machinery at the site at the commencement of construction related activities.


Arbitration Mechanism and Real Time Documentation of the evolving disputes: An anti-dote for the contractor


Arbitration, a cost-effective mechanism owing to its’ very structure and idea is like a cold breeze of relief after a scorching heat of time and cost overrun which a contractor might have to encounter during the construction of a Project. However, there are a certain set of pitfalls which ought to be plugged at the earliest possible stage i.e., during the inception of the construction itself in order maximize the percentage of overpowering the challenges which a Private Contractor may have to encounter at the stage of Arbitration. The real time documentation of the disputes/claims or timely response to claims or false citation of deficiencies goes a long way in ensuring that an early action is required to catch the fly.


To summarize the advantages of real time documentation and timely response to the adverse comments by the other contracting party can be summarized as follows:

  • Timely identification of Red Flags which may lead to escalation of disputes and consequently affect the Project, adversely.

  • A proper document management also ensures that the requisite information of the project is independent of any Human Resource which may not exist when the Construction Project finally reaches the annals of Arbitration.

  • A proper in-house documentation procedure ensures that the requisite information is first hand in nature.

  • A consolidated documentation of the Invoices/Bills generated by the Contractor goes a long way in creating a depository where all the information regarding the outstanding and completed payments are stored for ready reference in case of any eventuality which may arise.

  • A well-documented and timely raising of objections/disputes by the Private Contractor with the Employer gives a competitive advantage to the Private Contractor at the stage of Dispute Resolution.


Assemblance of Multi-Disciplinary Team: A potent arrow in the Quiver of Disputes Resolution Lawyer


The Construction Disputes may put forth a wide array of complex challenges which may require a multi-dimensional approach. Most of the common themes of any construction program may revolve around the Delay Mapping and the Extra Items which were not foreseeable at the time of the Agreement but eventually arose at the time of execution of the Construction Works.


We at UNUC Legal LLP understood the potency of assembling a team from diverse backgrounds such as Engineering and Accountancy to well equip ourselves to meet the complex set of challenges which crop up at the stage of Arbitrations arising from Construction Activities. The amalgamation of law with other specialized aspects of Construction Arbitration such as Engineering in addition to the in-house inputs which we receive, brings a fresh and raw perspective for our legal experts to manoeuvre the ships of our client through seas of Arbitral Proceedings.


(Pawan Upadhyay is a seasoned expert in the arena of Construction Arbitration with a mammoth experience of three decades in the Legal Profession. Pawan has to his credit representing the biggest conglomerates of India and successfully assisted them in achieving the desired results. Pawan is also one of the Founding Partner of UNUC LEGAL LLP.


Sharmila Upadhyay is a leading member of our Litigation Team. Sharmila is also an Advocate on Record duly recognized by the Hon'ble Supreme Court of India. She has a rich academic records and holds a Master’s Degree in Law from the Delhi University. Sharmila represents various States, Government Organizations and leading Corporations, High Net Worth Individuals before the Supreme Court, various High Courts of India. Sharmila is a crafty legal strategist par excellence and has to her credit several key and High-Stake matters before the Higher Courts of India.


Rishab Khare holds a Masters in Law (Corporate & Financial Laws) and is a product of leading law schools in India such as Rajiv Gandhi National University of Law, Punjab, and Jindal Global Law School, Sonepat. Rishab during his five years of experience in the field of law has assisted Former Judge of Supreme Court, Leading Senior Advocates and Premium Law Firms in variety of Disputes ranging from High value Arbitrations Criminal& Consumer Matters.)

 

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