05.10.2021
F.No.
Dated:

CONCILIATION AND SETTLEMENT GUIDELINES
Subject: Establishment of a Conciliation & Settlement Mechanism forContractual Disputes under the contract /agreements with the Contractors/
Concessionaires/ Consultants/Service Providers at Major ports - Panel ofIndependent Experts, Constitution of Conciliation & Settlement Committee
and Guidelines - regarding
INDEX
1. Background
2. Objective and Rationale
3. Application and scope.
4. Constitution of Conciliation and Settlement Committee.
5. Appointment of the committee.
6. Commencement of conciliation proceedings.
7. Procedure in cases already pending before the Arbitral Tribunals/Courts.
8. Procedures of the committee and submission of statements to committee.
9. Special experts to assist committee
10. Conciliators not bound by certain enactments.
11. Role of conciliators.
12. Administrative assistance.
13. Communication between conciliators and parties.
14. Disclosure of information.
15. Co-operation of parties with conciliators.
16. Suggestions by parties for settlement of dispute.
17. Settlement agreement.
18. Status and effect of settlement agreement.
19. Confidentiality.
20. Termination of conciliation proceedings.
21. Follow-up action by the Port Trust on the recommendations of the Conciliation Committee.
22. Resort to arbitral or judicial proceedings.
23. Conciliation to be under Arbitration and Conciliation Act.
24. Fee.
25. Costs.
26. Deposits.

27. Role of conciliators in other proceedings.
28. Admissibility of evidence in other proceedings.
29. Committee to give suggestions
30. Information dissemination
GUIDELINES
1.0 Background:
1.1 The Major Ports have been entering into contracts / agreements with the Contractors/
Concessionaires/Consultants / Service providers (to be called contractors) for implementing projects
or for obtaining services through different types of contracts (PPP Concessionaire, O&M services,
consultancy services, or similar contracts). Several disputes have been arising under these contract/agreements. Presently, there are more than 100 references pending before the Courts/ Arbitration
panel on contractual disputes in Major Ports. The early resolution / settlement of claims, preferably
through an out-of-court settlement process, is in the interest of all the stakeholders. In thisbackground, NITI Aayog, on the basis of experience of some of the PSU’s in settling issues throughconciliation, issued directions on 5.09.2016 on initiatives to be taken up for revival of theConstruction Sector. In pursuance of these directions, Ministry of Shipping (now Ministry of Ports,
Shipping and Waterways) came out with Guidelines on 10.06.2019 for processing Arbitration
Awards in Major Ports. Accordingly, the Major Ports, following the conciliation procedure of the
Guidelines, initiated the conciliation process in case of 25 disputes. Out of the 24 disputes taken up
for conciliation, 7 have been successfully resolved. 9 disputes are presently at various stages ofconciliation. However, in case of 8 such disputes, no settlement has been reached. It is felt that, theexisting mechanism has not been able to deliver the expected outcome, thus a need for a more robust
dispute resolution mechanism with comprehensive Guidelines has been felt to serve the intended
purpose.
2.0 Objective and Rationale
2.1 The Cabinet Committee on Economic Affairs (CCEA) took certain decisions in its meeting heldon 31.08.2016 for revival of the construction sector. These decisions were communicated by the
NITI Aayog vide its two OMs No. 14070/14/2016-PPPAU dated 5th September 2016. One of theseOMs titled “Initiatives on the measures for revival of the Construction Sector” (copy enclosed at
Annexure-1) required all the concerned Departments/ Ministries/ PSUs to expeditiously examine
the initiatives contained therein and take action for their implementation. The initiatives inter alia
include establishing a system of conciliation of disputes for amicable settlement throughappointment of Conciliation Committees comprising of independent experts in order to ensure
speedy disposal of pending or new cases. Recourse to such conciliation is open before, during or
after the arbitration proceedings/Court cases.
2.2 Dispute resolution mechanism followed through Arbitration or Courts has been found to be
exceedingly time consuming and financially burdensome on commercial entities like Ports. A
settlement reached through conciliation, mediation or mutual understanding will lead to financial

gains to both the disputing parties. The process of settlement of dispute is a preferred method and iswrit large in various sections of the Arbitration and Conciliation Act 1996. It has been detailed out
for various stages. Thus section 30 provide for settlement even when the dispute resolution
mechanism is underway in Arbitration or Courts.
2.3 The dispute resolution mechanism through settlement process brings finality to a dispute as theparties reach an agreement and thus do not require to further approach arbitration or court forums
which saves both time & financial resources of the Port/organizations. It thus needs to beinstitutionalized and emphasized as a preferred tool of dispute resolution mechanism.
2.4 Following the aforesaid decision of CCEA and provisions of the Arbitration and Conciliation
Act 1996, Ministry of Road Transport & Highways developed a mechanism of Conciliation
Committee in the arbitration issues relating to them.
2.5 Therefore, a Conciliation& Settlement Committee for deliberating the disputed issues between
the Concessionaires/ Contractors/ Consultants / Service providers and the Major Ports, in order toexplore the possibility for amicable resolution of the issues, is proposed to be constituted.
2.6 The Conciliation process will be conducted under Part III of the Arbitration and Conciliation
Act, 1996 as amended.
2.7 In view of the aforesaid, the procedure for conciliation/ amicable settlement of disputes isrevised as under with the approval of Board of Port Trust in its meeting held on ----------------in
order to ensure speedy disposal of pending or new cases of disputes in all forms of contracts (Item
Rate, DBFOT, EPC, OMT, O&M, Consultancy Contract etc.). The revised procedure given
hereunder will supersede all the previous procedures/ circulars on the subject.

3.0 Application and scope.
3.1 Save as otherwise provided by any law for the time being in force and unless the parties haveotherwise agreed, Part III of the Arbitration and Conciliation Act, 1996 shall apply to conciliationand settlement of disputes arising out of legal relationship, whether contractual or not and to allproceedings relating thereto.

4.0 Constitution of conciliation and settlement committee.
4.1 On the same analogy as that of the decisions of the CCEA and the provisions contained in the
Arbitration and Conciliation Act 1996, it has been decided to constitute a Conciliation & Settlement
Committee(CSC) comprising of persons from amongst the panel of the following Independent
Experts:-

Sl. No.

Designation/ Brief particulars of the Expert

1.

Former Chief Vigilance Commissioner (CVC)/ ex-Secretary to theGovernment of India/ ex-Chairman, Major Port Trust

2.

Retired Judge of a High Court / former Lokayukta/ Senior counsel in reputed
Legal firm who has handled PPP/ Concessions Agreements in
Infrastructure/Construction Sector especially in Ports – as Legal Expert
Retired Additional Secretary/Special Secretary/Secretary to the Governmentof India who has served as Financial Advisor as an expert in Public Finance
A renowned person having experience in the Port or Shipping industry as
Industry representative

3.
4.
5.

Formerly a Senior Partner with one of the reputed accounting
Finance Expert.

firms

as

6.

Former Chief Mechanical or Electrical Engineer in Infrastructure/constructionindustry as Technical/Engineering Expert.

4.2 Depending upon the response to this mechanism, the work load and requirements for speedy
settlement of disputes, the panel may be expanded further with the approval of the competentauthority.
5.0 Appointment of the Committee
5.1 The Committee will be constituted with minimum three members as conciliators and they ought,
as a general rule, to act jointly. The committee shall function with minimum three members.
5.2 The CSC shall be chaired by the senior most member of the Committee i.e. either
depending upon their date of appointment in civil services or as deemed appropriate inmutual agreement amongst the members. The Chairman shall decide on administrative andprocedural matters.
5.3 The members of the Conciliation and Settlement Committee (CSC) shall be drawn from thefollowing independent experts:
1. Shri Gopal Krishna, former Secretary (S), Ministry of Ports, Shipping & Waterways
2. Shri N. Sivasailam, former Special Secretary (Logistics), Ministry of Commerce
3. Shri A. Balasubramanian, Senior Director (Project Finance) Infrastructure Development
Finance Company Ltd.
4. Dr. C. Chandramouli, former Secretary, Department of Personnel and Training
5. Shri Shambhu Singh, former Special Secretary and Finance Advisor, Ministry of RT &H, Shipping & Power.
5.4 The Committee constituted under these guidelines shall remain valid for a period of three years
from the date of issue of these guidelines. Depending upon response from the contesting parties andthe work-load, one more such committee may be constituted at a later stage with the approval of thecompetent authority.
6.0 Commencement of conciliation proceedings
6.1 If any commercial dispute or a dispute which may have commercial aspects in the future arises
between the Port and Contractor the Port authorities and the contractor may mutually decide to settle
the dispute through the conciliation and settlement process.
6.2 Either the Port or the contractor may send a reference about the dispute to the other party. The
party initiating conciliation shall send to the other party a written invitation to settle or conciliate
under this Part, briefly identifying the subject of the dispute. The concerned Technical
Division in the Port shall send a request or response within 7 working days if a reference is received
from the contractor thereby inviting the Contractor to depute a team of their representatives tointeract with the Contract Management Division(CMD) constituted by each Port. A template
response is attached herewith as Annexure-2.
6.3 The CMD will obtain and examine the correspondence/ documents of the parties relating to thedisputes, within 15 days, hold discussions with the team of the Contractor and the Technical
Division to crystallize the issues, prepare the agenda containing the gist on dispute.
6.4 Port shall offer/agree with the other party to refer the matter to the CSC as conciliation isintended to be one consolidated package of settlement. Upon receipt of the consent of the Contractor
for making a reference to the CSC, the Chairman Port Trust shall refer the matter to the Committee.
The consent of the Contractor for conciliation shall also be deemed to be the consent to theCommittee in terms of sections 63 and 64 of the Arbitration and Conciliation Act,1996.
6.5Any issue arising out of TAMP guidelines of the order between the major ports andconcessionaire / contractor may also be included for resolving through this process.
6.6 The proceedings, shall commence when the Port or the other party accepts in writing theinvitation to settle/conciliate.
6.7 If the other party rejects the invitation, there will be no settlement/conciliation proceedings.
6.8 If the party initiating settlement/conciliation does not receive a reply within thirty days
from the date on which he sends the invitation, or within such other period of time as specified in
the invitation, he may elect to treat this as a rejection of the invitation to settle/conciliate and if he soelects, he shall inform in writing the other party accordingly.
6.9 It may be noted that this is an alternate dispute resolution mechanism being put in place and if
the Contractor is not willing to take recourse to this process or has any reluctance whatsoever in thisbehalf, there is no compulsion and they are free to follow the provisions as per law.

7.0 Procedure in cases already pending before the Arbitral Tribunals/Courts
7.1 In cases of disputes pending before the Arbitration Tribunals or the Courts, either party could
make an offer to the other party to come forward and explore the possibilities of settlement andconciliation through the CSC as per template communication enclosed as Annexure-3. Whenever
the parties agree to refer the dispute to the CSC, the Port shall make an appropriate reference to the
CSC, upon which the Committee shall proceed to examine such reference(s). However, wherever theparties agree to reach out to the CSC, they shall be required to keep the proceedings pending before
the Arbitral Tribunals/ Courts in abeyance.
8.0 Procedures of the committee and submission of statements to committee.
8.1 Upon receiving a reference the committee shall meet in the first instance and evolve its own
procedures and methodologies for undertaking the functions of the conciliation and settlement
committee.
8.2 The committee may request each party to submit to it a brief written statement describing thegeneral nature of the dispute and the points at issue. Each party shall send a copy of such statement
to the other party.
8.3 The committee may request each party to submit to it a further written statement of his position
and the facts and grounds in support thereof, supplemented by any documents and other evidence
that such party deems appropriate. The party shall send a copy of such statement, documents
and other evidence to the other party.
8.4 At any stage of the conciliation proceedings, the committee may request a party to submit to itsuch additional information as it deems appropriate.
8.5The committee shall hold its day-to-day sittings at a suitable place as convenient to both parties
and may hold as many sittings every month as it deems appropriate keeping in view the volume ofwork at its disposal. It is expected that the conciliation-cum-settlement proceedings shall becompleted in each case through 5 sittings in a period of not more than six months from the day thereference is made to the committee.
8.6 For abundant clarity and understanding of the parties, it may be noted that the procedure ofcommittee may not be treated as alternate arbitration proceedings, where both parties come with
Statement of claims/ defense, arguments/ counter arguments, rejoinders, written submissions, etc.,
aided by their respective lawyers. The forum of CSC is a settlement forum, where mutual give andtake constitutes the essence, rather than strict legal position of the parties. Hence, the parties are
expected to be brief and to the point before the CSC with regard to their respective stands and viewthe exercise in the spirit of conciliation/settlement.
8.7 The committee may give its recommendations on amicable settlement separately for eachcontract.

8.8 The committee is set up for speedy dispute resolution and as such its proceedings for a caseshould be compulsorily be finalized within 6 months of reference been made to the committee. If nosettlement is reached in this time and only as a special case if both the parties request, the committee
may continue to proceed with the issue for a further period of 3 months. If no settlement is reachedin 9 months then the proceedings before the committee will automatically cease.
9.0 Special experts to assist committee
9.1 Unless otherwise agreed by the parties, the committee may—(a) appoint one or more specific experts to report to it on specific issues to be determined by
the committee and(b) require a party to give the expert any relevant information or to produce, or to provide
access to, any relevant documents, goods or other property for his inspection.
9.2 Unless otherwise agreed by the parties, if a party so requests or if the committee considers it
necessary, the expert shall, deliver a written report.
9.3 Unless otherwise agreed by the parties, the expert shall, on the request of a party, make available
to that party for examination all documents, goods or other property in the possession of the expert
with which he was provided in order to prepare his report.
10.0 Conciliators not bound by certain enactments.
10.1 The conciliators are not bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian
Evidence Act, 1872 (1 of 1872).
11.0 Role of conciliators.
11.1 The conciliators shall assist the parties in an independent and impartial manner in their attempt
to reach an amicable settlement of their dispute.
11.2 The conciliators shall be guided by principles of objectivity, fairness and justice, giving
consideration to, among other things, the rights and obligations of the parties, the usages of
the trade concerned and the circumstances surrounding the dispute, including any previous
business practices between the parties.
11.3 The conciliators may conduct the conciliation proceedings in such a manner as heconsiders appropriate, taking into account the circumstances of the case, the wishes theparties may express, including any request by a party that the conciliator hear oral
statements, and the need for a speedy settlement of the dispute.
11.4 The conciliators may, at any stage of the conciliation proceedings, make proposals for asettlement of the dispute. Such proposals need not be in writing and need not be accompanied by a

statement of the reasons therefor.
12.0 Administrative assistance.
12.1 In order to facilitate the conduct of the conciliation proceedings, the parties, or the conciliatorswith the consent of the parties, may arrange for administrative assistance by a suitable institution or
person. Alternatively, if both parties agree the Contract Management Division (CMD) created byevery port could provide secretarial assistance in respect of the disputes. The CMD will arrange forthe required infrastructure, secretarial assistance and logistic support to the CSC.
13.0 Communication between conciliator and parties.
13.1The conciliators may invite the parties to meet them or may communicate with them orally or inwriting. They may meet or communicate with the parties together or with each of them separately.
13.2 Unless the parties have agreed upon the place where meetings with the conciliator are to beheld, such place shall be determined by the conciliators, after consultation with the parties, having
regard to the circumstances of the conciliation proceedings.
14.0 Disclosure of information.
14.1 When the conciliators receives factual information concerning the dispute from a party, heshall disclose the substance of that information to the other party in order that the other party may
have the opportunity to present any explanation which it considers appropriate.
14.2 Provided that when a party gives any information to the conciliators subject to a specificcondition that it be kept confidential, the conciliators shall not disclose that information to the otherparty.
15.0 Co-operation of parties with conciliators.
15.1 The parties shall in good faith co-operate with the conciliators and, in particular, shallendeavour to comply with requests by the conciliators to submit written materials, provide evidence
and attend meetings.
16.0 Suggestions by parties for settlement of dispute.
16.1 Each party may, on his own initiative or at the invitation of the conciliators, submit to theconciliator suggestions for the settlement of the dispute.
17.0 Settlement agreement.
17.1 When it appears to the conciliators that there exist elements of a settlement which may
be acceptable to the parties, it shall formulate the terms of a possible settlement and submit them tothe parties for their observations. After receiving the observations of the parties, the conciliators
may reformulate the terms of a possible settlement in the light of such observations.

17.2 If the parties reach agreement on a settlement of the dispute, they may draw up and sign awritten settlement agreement. If requested by the parties, the conciliators may draw up, or
assist the parties in drawing up, the settlement agreement.
17.3 When the parties sign the settlement agreement, it shall be final and binding on the parties andpersons claiming under them respectively.
17.4 The conciliators shall authenticate the settlement agreement and furnish a copy thereof to eachof the parties.
18.0 Status and effect of settlement agreement.
18.1 The settlement agreement shall have the same status and effect as if it is an arbitral award on
agreed terms on the substance of the dispute rendered by an arbitral tribunal under section 30 of the
Arbitration and Conciliation Act ,1996.
19.0 Confidentiality.
19.1 Notwithstanding anything contained in any other law for the time being in force, theconciliators and the parties shall keep confidential all matters relating to the conciliation
proceedings. Confidentiality shall extend also to the settlement agreement, except where its
disclosure is necessary for purposes of implementation and enforcement.
20.0 Termination of conciliation proceedings.
20.1The conciliation proceedings shall be terminated(a) by the signing of the settlement agreement by the parties, on the date of the agreement;or(b) by a written declaration of the conciliator, after consultation with the parties, to theeffect that further efforts at conciliation are no longer justified, on the date of thedeclaration; or(c) by a written declaration of the parties addressed to the conciliator to the effectthat the conciliation proceedings are terminated, on the date of the declaration; or(d) by a written declaration of a party to the other party and the conciliator, if appointed, tothe effect that the conciliation proceedings are terminated, on the date of the declaration.
(e) due to condition specified in para 8.8 if the proceedings are delayed beyond 6/9 months.
21.0 Follow-up action by the Port on the recommendations of the Conciliation Committee
21.1 The Port would honour and implement the recommendations/ decisions of the CSC.
21.2 Once the recommendations/ decision of the CSC are received, the CMD of the Port Trust shallinform the concerned Technical Division accordingly within 7 working days. In the event of theconciliation between the parties being successful, the CMD/Technical Division shall prepare theagenda for the Executive Committee / Board of Port as per internal delegation of powers in the Portfor seeking approval.
21.3 On receipt of the approval prompt action would be taken by the Port for signing the settlementagreements and thereafter completing the formalities for resolution of the dispute in its entirety
including making payments, if any, to the Contractors and withdrawal of the cases pending before
the Arbitration Tribunals/ Courts, preferably within a period of 30 days.
21.4 The CMD/Technical Division shall place a Standing Item for the Board of Port t containing
information about the Settlements reached at the level of the CSC for information of the Board inevery Board meeting in the following format:Sl. No.

Brief of the
DisputeClaim Amount

Settlement
AmountLevel
ofSettlement (Chairman/EC/
Board of Port)

22.0 Resort to arbitral or judicial proceedings.
22.1 The parties shall not initiate, during the conciliation proceedings, any arbitral or judicial
proceedings in respect of a dispute that is the subject-matter of the conciliation proceedings
except that a party may initiate arbitral or judicial proceedings where, in his opinion, suchproceedings are necessary for preserving his rights.
23.0 Conciliation to be under the Arbitration and Conciliation Act.
23.1 The conciliation process shall be conducted under Part III of the Arbitration Act andConciliation 1996. The CSC would either be able to resolve and settle the dispute(s) between theparties, or the process may fail. In case of failure of the conciliation process at the level of the CSC,
the parties may withdraw from the conciliation process and take recourse to the laid down legal
process of arbitration/ Courts. In the event of the conciliation proceedings being successful, theparties to the dispute would append their signatures to the settlement concluded by the Committee.
24.0Fee24.1 The sitting fee of the committee will be based on success fee model. Each member of thecommittee may be paid a sitting fee of Rs 7,500/ per day for a maximum of 5 days (irrespective if
the sittings are more than 5) if the proceedings of the committee do not result in conciliation and aclear settlement.

24.2 If the proceedings/case leads to signing of a Settlement Agreement each member of thecommittee (CSC)shall be paid a sitting fee as follows:SN
1.
2.

Amount settled and agreed by the Parties
Up to Rs. 5,00,000
Above Rs. 5,00,000 and up to Rs. 20,00,000

3.

Above Rs. 20,00,000 and up to Rs. 1,00,00,000

4.

Above Rs. 1,00,00,000 and up to Rs.
10,00,00,000

Fee(Rs)
45,00045,000 plus 3.5 % of amountabove 5,00,000
97,500 plus 3.0 % of amountabove 20,00,000
3,37,500 plus 1.0 % of amountabove 1,00,00,000

5.

Above Rs. 10,00,00,000 and up to Rs.
20,00,00,000

12,37,500 plus 0.75 % ofamount above 10,00,00,000

6.

Above Rs. 20,00,00,000

19,87,500 plus 0.50 % ofamount above 20,00,00,000
with a ceiling of 30,00,000

24.3 Each member of the committee shall be paid other expenses, subject to actual and on
production of bills as follows:Sl.No.
1.

Nature of Expense
Traveling Expenses

2.

Lodging3.

Local Travel

and Boarding

AmountEconomy Class (by Air), First Class AC(by Train) and AC Car (by Road @ 13/Km)
Rs.15,000/- per day (Metro Cities) or
Rs.8,000/- per day (in other Cities) or
Rs.5,000/per
day,
if
any
Conciliator makes own arrangement.
Rs.2,000/- per day

24.5 Lodging, Boarding and Travelling expenses shall be allowed only for the conciliator
who is residing at least 100 Kms away from the venue of the meeting.
24.6 Delhi, Mumbai, Chennai, Kolkata, Bengaluru and Hyderabad shall be considered as Metro
Cities.
25.0 Costs.
25.1 Upon termination of the conciliation proceedings, the conciliators shall fix the costs of theconciliation and give written notice thereof to the parties.
25.2 For the purpose of sub-section (1), “costs” means reasonable costs relating to—(a) the fee and expenses of the conciliators and witnesses requested by the conciliatorwith the consent of the parties;(b) any special expert advice requested by the conciliator with the consent of the parties;(c) any other expenses incurred in connection with the conciliation proceedings andthe settlement agreement.
25.3 The costs shall be borne equally by the parties unless the settlement agreement
provides for a different apportionment. All other expenses incurred by a party shall be borne bythat party.
26.0 Deposits.
26.1 The conciliators may direct each party to deposit an equal amount as an advance for the costs
referred to in Para 25 above which it expects will be incurred.
26.2During the course of the conciliation proceedings, the conciliators may direct
supplementary deposits in an equal amount from each party.
26.3 If the required deposits are not paid in full by both parties within thirty days, the conciliator
may suspend the proceedings or may make a written declaration of termination of the proceedings
to the parties, effective on the date of that declaration.
26.4 Upon termination of the conciliation proceedings, the conciliator shall render an accounting to
the parties of the deposits received and shall return any unexpended balance to the parties.
27.0 Role of conciliators in other proceedings.
27.1Unless otherwise agreed by the parties,—(a) the conciliator shall not act as an arbitrator or as a representative or counsel of a party in
any arbitral or judicial proceeding in respect of a dispute that is the subject of theconciliation proceedings;(b) the conciliator shall not be presented by the parties as a witness in any arbitral or
judicial proceedings.
28.0 Admissibility of evidence in other proceedings.
28.1The parties shall not rely on or introduce as evidence in arbitral or judicial proceedings, whether
or not such proceedings relate to the dispute that is the subject of the conciliation proceedings,—(a) views expressed or suggestions made by the other party in respect of a possible
settlement of the dispute;(b) admissions made by the other party in the course of the conciliation proceedings; (c)proposals made by the conciliator;(d) the fact that the other party had indicated his willingness to accept a proposal forsettlement made by the conciliator.

29.0 Committee to give suggestions
29.1 Based on the experience gained in the course of conciliation proceedings, the committee may
suggest/ recommend advisories to the Port from time to time for improvement in its Contract
Management Systems.
30.0 Information Dissemination
30.1 All Ports will give wide publicity to this form of dispute resolution amongst all contractors.
A draft is placed as Annexure 3.
30.2 A template letter to be given by the Concessionaires/Contractors/Consultants in responseto the letter from the Ports (Annexure 3) is attached as Annexure 4.
******

Annexure-1
No. N-14070/14/2016-PPPAU
Government of India
National Institution for Transforming India (NITI Aayog)
NITI Bhawan, New Delhi
September 05, 2016
OFFICE MEMORANDUM
Subject: Initiatives on the measures for revival of the Construction Sector - regarding.
The construction sector has been facing a number of problems, mainly arising from theliquidity constraints caused on account of their payments not being released by the Government
Departments/ Public Sector Undertakings (PSUs) pursuant to the arbitral awards. To discuss the
problems of the construction sector, detailed deliberations/ consultations were held with therepresentatives of the construction industry, banks, major government PSUs and concerned

Ministries/ Departments. Based on the above deliberations/ consultations, the NITI Aayog placeda proposal before the Cabinet Committee on Economic Affairs (CCEA) for its considerationsuggesting various immediate and long-term measures required for addressing the issues ailing theconstruction sector. The CCEA, chaired by the Hon’ble Prime Minister, has considered the
proposals of NITI Aayog in its meeting held on 31 August 2016 and approved the same for therevival of construction sector.
2.
The NITI Aayog has separately issued instructions on the subject with regard to theimmediate measures to be taken by all concerned. In addition to the said instructions, the CCEA
has also directed that the following measures may be expeditiously examined by all the concerned
Departments/ Ministries/PSUs:
2.1
Item-rate contracts may be substituted by EPC (turnkey) contracts, wherever appropriate.
Such contracts have been in vogue for over two decades in the developed world and Federation
Internationale Des Ingenieurs-Conseils (FIDIC - an International Federation of Consulting
Engineers, known by its French acronym) has also published such contractual frameworks:
2.2
Model bidding documents and Model EPC contracts, suitably revisited or modified
wherever required to suit the requirements of particular sectors, may be adopted by PSUs/
Government Departments for construction works;
2.3
Ministry of Finance has issued model bidding documents for RFQ, RFP etc. which may be
adopted (with appropriate changes wherever required) in all sectors. Model EPC contracts havebeen developed for Highways and Railways and published by the erstwhile Planning Commission
also. NHA1 has already adopted this document and all construction contracts are currently being
structured on this model. NITI Aayog shall assist the concerned departments, wherever required,in this regard.
2.4
The method of conciliation has proved more effective in settling disputes as per experienceof some of the PSUs. All PSUs/ Departments issuing public contracts may consider setting up
Conciliation Committees/ Councils comprising of independent subject experts in order to ensure
speedy disposal of pending or new cases. Recourse to such conciliation may be open before,
during or after the Arbitration proceedings. A provision to this effect would also need to be madein the Contract Agreements in future as a mechanism for resolution of disputes.
3.
All the concerned Ministries/ Departments shall also communicate the above to theirrespective PSUs for taking necessary action on the aforesaid measures.

(A.
To
1.
2.
3.
4.
5.
6.

Muthuvezhappan)
Director (PPPAU)

Secretaries of all the Ministries/Departments of Government of India.
Chairpersons/ CMDs/ MDs of all the Central Government PSUs.
Chairpersons/ CMDs/MDs/CEOs of all the Scheduled Commercial Banks.
Chief Executive, Indian Banks Association, Mumbai.
Shri Alok Tandon, Additional Secretary, Cabinet Secretariat, Rashtrapati Bhavan, New
Delhi -110001.
Dr. T. V. Somanathan, Joint Secretary, PMO, South Block, New Delhi - 110001. Copy for
information to:

7.
8.

PS to Vice Chairman/ PS to MoS/ PS to all Members
Sr. PPS to CEO/ PPS to Special SecretaryAnnexure-2
Template Letter to be sent to the Concessionaire/ Contractor/ Consulting party
From:

To:

Major Port,No.
Subject: Your reference dated
settlement.

Date:regardingtheDisputeintheproject for

Sir,

Kindly refer to your above cited reference on the subject cited above. It is agreed to refer
the matter for consideration of the Conciliation and Settlement Committee. However, in order toarrive at any proposed conciliation, it would be useful if the team from the Port Trust and yourCompany/ firm discuss and crystalise the issues in advance.
2. You are, therefore, requested to discuss the issues/ disputes with the Port Trust team led by
the Contract Management Division of the Port Trust on a date and time mutually convenient.
3. Once the issues to be referred to the Conciliation and Settlement Committee are finalized, wewould request the committee to commence their proceedings.
Yours Sincerely,(General Manager, Port)
Copy to:1.
Chairman/CMD, Port.
. It is requested that all correspondence/2
Project Director,
documents relating to the subject along with index may please be furnished to the Contract
Management Division within 7 days of issue of this letter.
3.
Independent/ Authority Engineer,Annexure-3
Letter to be sent to all the Concessionaires/ Contractors/ Consultants of Port Trust
No.
Date:
Subject: Establishment of Conciliation and Settlement Committees of Independent Experts
in terms of the provisions contained in Part-Ill of the Arbitration & Conciliation(Amendment) Act, 2015 in Port Trust pursuant to the decisions of the CCEA.

Dear Sirs,
I have been directed to inform you that the Port Trust has established a Conciliation andSettlement Committee of Independent Experts for conciliation/ settlement of any contractual
disputes/ difference between the Port Trust on the one hand and the Concessionaires/ Contractors/
Consultants working for the Port Trust on the other.
2. The Standard Operating Procedures (SoP) for conciliation and settlement of disputes throughthe conciliatory process and the constitution of the Conciliation and Settlement Committee of
Independent Experts (CSC) is contained in the Policy Guidelines issued by the Port Trust on thesubject and placed on the website of the Port Trust. It may be noted that the scope of the CSC
pervades across disputes before, during or after the Arbitral process.
3. As on 15.05.2020, there are 120 references before the Courts/Arbitration panel on contractual
disputes/ claims and may be that other references have been made to various other bodies. The Port
Trust would be agreeable to refer all the cases filed by it before the Hon'ble Courts challenging the
Arbitral Awards with appropriate request to the Hon'ble Courts for holding the proceedings in thesematters in abeyance for such time as may be taken by the CSC for settlement of the related disputes
in case you are agreeable to the same.
4.Further, in case you are agreeable to refer the disputes presently under Arbitralproceedings/pending before courts to the said Committee(s), you may also take recourse to thisconciliatory and settlement route with appropriate request to the Arbitral Tribunals to hold theproceedings in abeyance till such time the said dispute(s) is/ are considered by the CSC.
5. Please take note that by giving your consent/ willingness to refer the dispute(s) to the CSC, youare also confirming your acceptance of the conciliation process as contained in the Policy Guidelines
of Port Trust dated 02.06.2017 and _ _ 2021, more specifically to the provisions contained in
sections 63 and 64 of the Arbitration and Conciliation/Amendment) Act, 2015, and that it meets therequirements on "conciliation” under the Act ibid.
6. Accordingly, you are requested to indicate your consent/willingness in this behalf at the following
address:

The Chief General Manager
Contract Management Division, Port Trust Email:Contact No.

Copy to:1.
Concerned Divisions, Port.

Yours Sincerely,()
Chairman/CMD

Annexure-4
Template letter to be given by the Concessionaires/ Contractors/
Consultants to the Port TrustNo.---------

Date:

To
The Chief General Manager
Contract Management Division,………..Port Trust
Address:………………
Email:
Contact No.

Subject: Establishment of Conciliation and Settlement Committees ofIndependent Experts in terms of the provisions contained in Part-Ill of the
Arbitration & Conciliation (Amendment) Act, 2015
Madam/ Sir,
Please refer to your letter no.---------- dated ------ (reference to be made ofthe letter issued by the port as per Annexure-3) on the above subject providing us
an opportunity of resolving the dispute presently under arbitral proceedings/
pending before Courts through the conciliatory and settlement route withappropriate request to the Arbitral Tribunals to hold the proceedings in abeyance tillsuch time the said dispute(s) is/ are considered by the CSC.
2.
We hereby convey our acceptance for referring the disputes to CSC for
resolution. We have noted that by giving our consent/ willingness to refer the
dispute(s) to the CSC, we are also confirming our acceptance of the conciliation
process as contained in the Policy Guidelines of the Port Trust dated 02.06.2017
and _ _ 2021, more specifically to the provisions contained in sections 63 and 64 of
the Arbitration and Conciliation (Amendment) Act, 2015.

Yours sincerely,()
Chairman/CMD