India’s power sector is experiencing rapid expansion, underpinned by substantial investment in transmission corridors, renewable energy integration, distribution strengthening, and grid-modernisation. As projects are executed at scale across multiple geographies, Engineering, Procurement and Construction contracts in the power sector have become increasingly complex and risk sensitive. Consequently, delays arising from unforeseen site conditions, regulatory amendments, protracted approval timelines, volatility in material prices, shortages of skilled manpower, and performance-related disputes have become recurring challenges for companies operating in this sector, notes Suchitra Maharana.
It is essential to identify and assess risks through analysis of historical data and site visits, and to evaluate potential risk events that may adversely affect project progress due to technical challenges, financial uncertainties, and political or policy changes. Based on this assessment, appropriate mitigation strategies should be developed, including risk transfer, risk avoidance, risk reduction, or risk acceptance. This approach supports improved decision-making, tighter control over cost overruns and schedule slippages, timely renewals and compliance with permit requirements, robust assessment of project feasibility, and enhanced preparedness to address execution challenges.
Arbitration continues to be widely used for dispute resolution in Engineering Procurement and Construction contracts, reflecting its confidentiality, flexibility in addressing technically complex matters, and the potential for more time-efficient outcomes than conventional litigation. However, in practice, these advantages may be diminished by procedural uncertainty, varying levels of judicial intervention, and delays associated with the appointment of arbitrators as well as court-related processes for interim relief and enforcement. In this context, it is a need to consider collaborative and structured dispute-management approaches to facilitate timely resolution and preserve project and commercial outcomes.
The dispute-resolution landscape in Engineering Procurement and Construction contracts is evolving, with increasing emphasis on mechanisms that support earlier resolution and reduce escalation to arbitration. Accordingly, parties are more frequently incorporating processes such as mediation, adjudication, and expert determination. In particular, Dispute Avoidance and/or Adjudication Boards (DAABs/DABs) facilitate structured, project-level engagement and can enable earlier determination of issues, thereby reducing time and cost impacts during execution.
India is increasingly positioning itself as a centre for international and institutional arbitration, supported by sustained legislative efforts to strengthen the arbitration ecosystem.
Contracting approaches are also increasingly adopting tiered dispute-resolution clauses, under which certain value of claims may be directed to conciliation or mediation prior to arbitration. In parallel, institutional arbitration is often preferred over ad hoc arbitration, given greater procedural certainty, administrative support, and improved efficiency and cost predictability. Technology-enabled processes, including virtual hearings, have further supported efficiency by reducing time and cost burdens and improving accessibility, and are now widely integrated into dispute-resolution practice.
India is increasingly positioning itself as a centre for international and institutional arbitration, supported by sustained legislative efforts to strengthen the arbitration ecosystem. In this context, further reforms proposed in the Arbitration and Conciliation Act in 2024 seek to modernise and refine India’s arbitration framework, reflecting an ongoing policy focus on enhancing dispute-resolution mechanisms, including for the power infrastructure sector. The Arbitration and Conciliation (Amendment) Bill, 2024 (‘2024 Bill’) seeks to address key procedural and structural issues that have, at times, affected efficiency, such as procedural inefficiencies, ambiguity regarding seat versus venue, and variability in the extent of judicial intervention.
The 2024 Bill proposes measures aimed at strengthening institutional processes, providing greater clarity on jurisdiction, and introducing tighter timelines to improve procedural certainty and align the framework more closely with international standards and ease-of-doing-business considerations. Proposed amendments relating to emergency arbitrators and the requirement for arbitral tribunals to determine jurisdictional challenges as a preliminary issue within a fixed timeframe are intended to reduce the overall duration of proceedings. The proposal to introduce appellate tribunals as an alternative to court-based challenges to awards, would also represent a significant structural change, with the stated objective of improving efficiency and cost predictability.
Overall, the proposed amendments are generally viewed as constructive developments intended to enhance consistency and confidence for arbitration users. In parallel, industry practice continues to place emphasis on early and collaborative dispute-management mechanisms, such as mediation and conciliation, particularly where they may enable faster resolution and preserve commercial relationships.
These developments reflect a broader shift towards alternative dispute resolution mechanisms, with the objective of reducing the burden on the judiciary and enabling faster and more cost-effective outcomes. In summary, the future of EPC dispute management is increasingly oriented towards dispute avoidance rather than dispute resolution, with greater emphasis on early, collaborative, and institutionalized approaches to address the growing complexity of infrastructure projects.
While ongoing improvements to arbitration are welcomed, mechanisms such as mediation, Dispute Boards (including DAB/DAAB), and active party engagement are increasingly being used to facilitate timely resolution, particularly at the project level. Where arbitration is pursued, institutional arbitration is generally preferred to support procedural certainty, consistency, and quality in proceedings, consistent with the wider trend towards efficiency and cost predictability.
In the context of India’s accelerating power-sector expansion, these approaches will contribute to a modern, predictable, and efficient dispute-resolution ecosystem, which will be critical to enabling large-scale power infrastructure development over the coming decade.
About the author: Suchitra Maharana is Senior Vice President & Head – Legal, Risks and Contracts, Bajel Projects Ltd