Resolving disputes over public procurement: Let's aim higher

It has been a pivotal year for reforms but India needs more to vie for leadership in dispute resolution

- PRASHANT NARANG

Public procurement disputes are a drag on India's economic growth, often leading to stalled infrastructure projects, cost overruns and diminished public trust, but 2024 has had two signals of a decisive shift in resolving such disputes. The Supreme Court's (SC) judgment in Central Organisation for Railway Electrification (CORE) vs ECI SPIC SMO MCML (JV) and the finance ministry's guidelines on public procurement dispute resolution issued in June have laid the groundwork for an overhaul of India's arbitration framework. Together, they mark the beginning of the end for the inefficiencies of ad hoc arbitration.

While these are a step forward, they also raise critical questions: How can arbitration become an effective, trusted and equitable system? Can India avoid overburdening the judiciary while ensuring fair outcomes?

The SC's CORE vs JV ruling struck down clauses in public contracts that allowed one party—typically a government entity—to unilaterally appoint arbitrators. These often led to perceptions of bias and arbitration panels that lacked independence. Chief Justice D.Y. Chandrachud emphasized that this practice violated the principle of equality between parties and undermined the confidence of stakeholders in the process's impartiality. It's a major step toward ensuring fairness, but it also raises questions about how far courts should intervene in arbitration without undermining the principle of minimal judicial interference.