In conversation with Dr. Amit George on Construction Arbitration

Dr George is a NALSAR alumni who completed his LLM (with merit) from the University of London International Programme with a specialisation in International Dispute Resolution. He obtained his Doctor of Philosophy (PhD) in law from National Law University, Delhi in the year 2015. Dr Amit George practices as an advocate before the High Court of Delhi and the Supreme Court of India. He has appeared as an arguing counsel in various matters, before various courts and statutory tribunals, having reported judgments in diverse areas of law under his name. Dr George also frequently appears before various Arbitral Tribunals in ad hoc and institutional arbitrations, with a special focus and expertise in disputes arising out of infrastructure contracts. He has been appointed as an arbitrator on various occasions by the High Court of Delhi and the Delhi International Arbitration Centre (‘DIAC’). Dr George is the author of the book titled “Minority Rights in a Cosmopolitan World” (Media House: 2018), has co-authored a book with Mr Tariq Khan on MSME laws titled “Law Relating to Micro, Small and Medium Enterprises” (Thomson Reuters:2022) and frequently contributes opinion pieces and articles on issues of contemporary legal relevance. He has also held guest lectures at the National Law University, Delhi, Jindal Global Law School, Sonipat and Lal Bahadur Shastri National Academy of Administration, Mussoorie.

1. Dr George, please tell us what motivated you to pursue law.

I do not think there was any concerted intention to pursue law in the years leading up to the ultimate decision. If I must attempt to identify some modicum of a path that resulted in this outcome, it will undoubtedly lead back to my parents, who instilled in me a love for books from a young age. Growing up, I was a voracious reader. I also found great joy in participating in co-curricular activities such as debating and public speaking during my school days. This sparked my interest in, and deepened my fascination with, the art of persuasion. Therefore, as the time came to make a career choice, I found the legal profession to be the closest fit, allowing me to convert my interests into a professional calling. In hindsight, the decision was evidently based on a very naïve idea of what the practice of law entailed. I wish there was a more motivational background story to my journey into the profession, but to be frank, the underlying love for law and litigation stems from the intellectual gratification that I derive from reading up and preparing for a matter, and the subsequent verbal jousting in the court.

2. How important is an LLM for someone who wants to practice?

I think an LLM is worthwhile in the sense of the enhanced focus and specialisation that it provides in certain areas of the law. Speaking from personal experience, when undertaking the LLM, I opted for a specialisation in international dispute resolution, which entailed taking multiple courses on the law and practice of international arbitration. The curriculum was as wide as it was contemporary, which greatly strengthened my understanding of the fundamental theory underpinning arbitration. With the curriculum being focused on international arbitration, I was exposed to influence from both the common and civil law backgrounds, providing me with a holistic understanding of the functioning of arbitration system. However, while an LLM can significantly aid personal development, as a lawyer, it would be a mistake to assume that it would provide a measurable advantage in terms of achieving success in the field of litigation. The very fact that one has secured an LLM, or even a PhD, does not make the daily struggle to make a mark in the courts any easier. While, as a matter of subjective perception, a client may perceive a lawyer as being more “learned” because of their academic qualifications, but this aspect is quite irrelevant in court when confronting the opposite side and while engaging with the Judge. Even though a robust academic foundation in a particular area of law is always valuable, it can never be a substitute for the way in which you engage with the record and present the facts of the case in court as well as the court-craft you employ. Therefore, if you want to pursue an LLM for personal development, I will wholeheartedly recommend it, but if this pursuit is with the assumption that it will immediately take you up a rung or two in your professional career, it may ultimately result in disappointment.

3. As a PhD holder, what inspired you to choose litigation over academia? When can we expect Dr George to be a visiting professor in a law school?

Much like the LLM, my motivation for undertaking a PhD was to deepen my understanding in a particular area of law rather than pursuing a career in academia. While I do not intend to enter academia on a full-time basis, I do enjoy teaching as it presents a rewarding challenge. Hence, I occasionally take up guest lectures and seminar courses at various universities and institutes whenever time permits. It provides a balance and enables me to share my insights while actively practising law.

4. Please tell us about your experience as a Standing Counsel for the Delhi High Court. What are the challenges you face when you represent the Delhi High Court?

Having started my career as a law clerk to a Judge of the High Court and subsequently having practised predominantly before the High Court, it is an honour and a privilege to be able to represent the institution itself as one of its Standing Counsels. My greatest concern while taking up the engagement stemmed from the unsettling anecdotes that I had heard from some of my colleagues at the Bar who represent public institutions: of delayed or non-existent instructions and seemingly nonchalant officials. However, the litigation branch of the High Court is like a well-oiled machine, and I have always received prompt instructions and detailed inputs to be able to effectively represent matters. Therefore, I cannot say that I have faced any particularly differentiated challenge or concern while representing the High Court.

My stint thus far has been enlightening in many ways. Since I have largely appeared for private entities throughout my career, barring a few limited exceptions, representing the High Court provides an invaluable insight into the peculiar issues and administrative constraints that must be reckoned with by a public institution while defending itself in court. I have also encountered significant diversity in the issues that I am required to reckon with while representing the High Court, such as administrative law, service law, public interest litigations, etc.

5. Can you please give us an insight into construction arbitration?

Construction arbitration is a form of Alternative Dispute Resolution (‘ADR’) that is specifically tailored for the construction industry. It involves submitting a construction-related dispute to an independent and neutral third party viz. an arbitrator or an Arbitral Tribunal for a binding decision, as an alternative to the conventional court process, while addressing the unique complexities of the construction industry. Parties usually favour construction arbitration as a dispute resolution mechanism, since arbitration allows them procedural flexibility, confidentiality, and the potential to have subject-matter experts as arbitrators. Construction arbitration usually involves multiple stakeholders like owners/employers, architects, designers, contractors, and sub-contractors, each operating under their distinct contractual agreements, and each might even have a distinct dispute resolution clause in their respective contracts.

Furthermore, construction arbitration usually involves grappling with a voluminous arbitral record given the technical complexity ordinarily associated with construction projects. Consequently, the ability to effectively navigate and analyse a substantial arbitral record containing intricate technical matters becomes a pivotal factor for achieving success in construction arbitration. Nevertheless, it holds true that through experience, individuals can develop the skill to sift through the abundant documentation and extract the essential and pertinent documents crucial for the specific case in question.

6. What are the major categories of disputes in construction arbitration, and the common claims arising therefrom?

With a huge variety of sectors in the industry and the numerous kinds of specialised contracts, it is difficult to specifically enumerate the vast number of different claims that may arise. However, to provide a broad overview, the following can be said to be the most common claims that typically arise in infrastructure arbitration:

1. Variations: In construction contracts, the scope of work that is required to be executed by the contractor is clearly identified in the tender documents. It is, however, a common occurrence that during execution of work, the contractor is required to execute work that is significantly at variance with what was originally contemplated, on account of changing requirements and exigencies at the site. This may involve a significant increase in quantities of the existing items, execution of entirely new items of work, a change in the specification of an existing item, outright deletion of a certain portion of work, etc. These “variations” or “deviations”, and the pricing thereof, are a common arena of contestation in construction contracts.
2. Prolongation cost/delay damages: It is quite a common feature in construction contracts that the originally stipulated period of completion is lengthened, and an extension of time for completion of work is accordingly required. If the reasons for delay in execution of work are attributable to the owner/employer, then the contractor will inevitably raise a claim for additional cost incurred towards the prolonged stay on site in the form of extended deployment of plant and machinery, additional overheads, escalation, etc. On the other hand, if delay is established to be that of the contractor, an owner/employer will inevitably resort to the imposition of liquidated damages for the period of delay, and contractual provisions providing such a right to an owner/employer are a standard feature of most construction contracts.
3. Unpaid/defective work: Disputes can arise when the work executed by the contractor on site is either not measured for payment or, despite measurement and certification, is not processed for payment by the owner/employer. Similarly, disputes may arise when an owner/employer refuses to make payment for the work executed to a contractor if the work is found to be defective in nature or not matching the specifications as provided for under the agreement.
4. Defect liability: In most construction contracts, even after completion of work by the contractor, there is a specified period within which the contractor has the liability to guarantee the work from any defects which may reveal themselves at a later point in time. If and when any such issues are found to have emerged, disputes may arise between the parties in relation to the reason thereof, with the owner/employer claiming that the defect is attributable to the poor workmanship of the contractor, whereas the contractor may claim that the problems with finished work are not attributable to it but have arisen on account of external factors such as poor operationalisation and upkeep by the employer in the post-completion period, etc.
5. Termination: In certain instances, the construction contract itself may come to be terminated by the contractor or the employer on account of a fundamental breach by the counterparty. In such cases, contractors will typically claim loss of profit in addition to other subsisting claims, whereas owners/employers will typically raise a claim towards risk and cost i.e., the escalated cost of tendering out the remaining quantum of work to a new contractor.
6. Subsequent legislation/change in law: Since many construction contracts have lengthy execution time periods stretching to years, the legislative landscape may change significantly between the date of award of contract and the date of completion. This change in legislation and/or applicable regulations can result in additional costs that were not contemplated at the stage of entering into the contract. The identification of the responsibility for bearing the additional cost can lead to disputes between the parties.

7. Competing infrastructure: In the case of Public Private Partnership (PPP) contracts, such as Build-Operate-Transfer (BOT) contracts, the contractor/concessionaire is required to invest the entirety, or a significant portion, of the funds for construction of the project from its own sources. The recovery of this investment is ensured by operation of the project asset by the contractor/concessionaire for a specified period after completion is achieved. To ensure financial viability of the project, there will invariably be an undertaking by the government entity, which has tendered out the work, that no competing infrastructure will be permitted to come up in or around the project asset for a specific period so as to avoid leakage of revenue. However, in certain cases because of various local pressures and requirements, competing infrastructure does emerge and this can result in reduction in revenue being generated from the project. Disputes can arise when the contractor/concessionaire seeks compensation for the adverse financial consequences that arise from the development of competing infrastructure.

7. How can disputes be avoided in a construction contract?

Due to sheer technical and commercial complexity of construction contracts, there can be no boilerplate answer to this question. However, parties can follow certain good practices to avoid disputes in general. Construction contracts should be clear, comprehensive, and unambiguous in nature, and should inter alia include detailed project specifications, clear timelines, communication protocols, and dispute resolution clauses. If crucial terms in a construction contract are spelled out clearly, the allocation of liability among parties becomes straightforward, which, in turn, may reduce the possibility of disputes. In fact, it is interesting to note that several construction companies are already employing software and utilising other technologies inter alia for record-keeping to ensure that in the event of a dispute, all relevant information is readily available. This not only eliminates the need for time-consuming document collation, but also facilitates the construction and monitoring progress.

Apart from the aforesaid general aspects, it is important to note that in India, many disputes arise in construction contracts involving the State and its instrumentalities because the site is not available on account of delayed acquisition of land, insufficient regulatory approvals, etc. at the stage of entering into contract, and commencement of work. Though in certain projects, there might be a justification in expediting the contract award process, unfortunately, it has become a norm that the aspects such as land acquisition and regulatory approvals are procured in an ad hoc manner as the work progresses. Ultimately, the early award of the contract, and the time saving achieved thereby, is usually put at naught by the delays that are subsequently occasioned on account of the ad hoc processes followed in acquiring land and receiving approvals. Putting in place a protocol whereby contracts, particularly public projects, are tendered out only once the fundamentals are in place, is imperative.

8. What are the changes required in the construction arbitration sector?

There are several areas of concern that bedevil the construction sector in India. From my perspective, following are the urgent ameliorative steps that are required to be undertaken:

1. Enacting a specialized statute for the construction industry: While recognising the importance of construction industry, certain countries have specialised legislation that specifically caters to the industry. A very good example of such a legislation is South Korea’s “Framework Act on the Construction Industry” (Law No. 12012, 6-8-2013). Adopting such a measure in India is the need of the hour, considering the vital role played by the construction industry and its burgeoning importance in the modern economy.
2. Setting up of specialist construction courts: Just like specialised legislation, certain jurisdictions have put in place specialist courts that specifically deal with construction contract disputes. An appropriate example in this regard are the Technology and Construction Courts in the United Kingdom, which are specialist courts dealing principally with technology and construction disputes. The High Court of Delhi has witnessed the setting up of a specialist Intellectual Property Rights Division in the recent past, and the said model is now being replicated in various High Courts across the country. Something similar is required to be done for construction contract disputes.
3. Drawing up standard-form contracts: With the Union Government and its agencies being a party to a significant portion of the high-value construction contracts in the country, it would go a long way in achieving standardisation and efficiency if a standard-form construction contract could be drawn up for these government contracts. While curated special conditions of contract and particularised technical specifications could be opted for the individual contracts, the presence of standard-form general conditions for such contracts across the country would greatly aid in effective operationalisation of these contracts and provide more certain guidance for the disputes emerging. This model could then be replicated by the State Governments as well at their level.
4. Encouraging early dispute resolution by way of mediation and negotiation: It needs no gainsaying that by encouraging parties to resolve disputes through mediation and negotiation before resorting to a formal arbitration mechanism can be highly beneficial to the contracting parties. This way of early intervention will help prevent disputes from escalating, saving time and costs, and also preserving working relationships in the construction industry. Within the framework of Mediation Act, 2023, a more concerted push should be made to enshrine mediation more firmly as a form of alternative dispute resolution within the construction industry.

5. Continuing legal education initiatives: The provision of training and educational programmes for all stakeholders involved in construction disputes is essential. Construction professionals, lawyers, and arbitrators alike, should have a comprehensive understanding of both, the intricacies of construction industry as well as the arbitration process. Given the evolving nature of disputes and the dynamic nature of construction industry, the idea of continuous adaptation through learning programmes is essential for development of this field. Therefore, by embracing technological advancements and fostering expertise in these areas, the Indian arbitration sector can stay up-to-date and effective in meeting the evolving needs of all stakeholders. This will not only make the arbitration process smoother and more effective, but also contribute to the overall improvement of the construction industry by reducing disputes and enhancing collaboration. The various arbitral institutions in the country should focus more on this aspect as part of their wider outreach strategy.

9. What are the laws and other conventions/treaties covering the construction arbitration sector?

There are no overarching laws or conventions/treaties that cover the construction arbitration sector at a global level. However, there are standard forms of contract like the FIDIC (International Federation of Consulting Engineers) Yellow Book (Conditions of Contract for Plant and Design-Build) and FIDIC Silver Book Contract Form (Conditions of Contract for EPC Turnkey Projects), the Danish Standard Contract AB18, the International Chamber of Commerce (ICC) Model Turnkey Contract for Major Projects, the Pre-action Protocols in England, the German Construction Contract Procedures (VOB) to name a few, that are widely used by parties in major construction projects around the globe.

From a domestic perspective, one can witness a wide range of contract types utilised by different agencies such as the Central Public Works Department, National Highways Authority of India, etc. There are also certain standard data books such as the one published by the Ministry of Road Transport and Highways of India which are frequently referred to for the purpose of interpreting engineering specifications, pricing etc. From a legislation perspective, it is the Contract Act, 1872 that is largely relied upon in construction arbitration disputes.

10. What are the landmark judgments in this sector?

There are several judgments from the Supreme Court, as also the various High Courts which have dealt with issues specific to construction contracts. If I must identify a few judgments rendered by the Supreme Court which make for interesting reading, they would be as under:

1. Hind Construction Contractors v. State of Maharashtra¹
2. K.N. Sathyapalan v. State of Kerala²
3. McDermott International Inc. v. Burn Standard Co. Ltd.³
4. Food Corporation of India v. A.M. Ahmed & Co.⁴]
5. Dwaraka Das v. State of M.P.⁵
6. G. Ramachandra Reddy & Co. v. Union of India⁶
7. Assam SEB v. Buildworth (P) Ltd.⁷

8. NTPC Ltd. v. Deconar Services (P) Ltd.⁸

11. Dr George, please advise students and practitioners, if any, seeking to build a career in the construction sector.

If the current trajectory of the construction arbitration landscape in India continues, it is poised to undergo significant growth, emerging as one of the most promising sub-fields for arbitration practitioners. This presents countless opportunities for law students and young practitioners.

In addition to availing arbitration-focused internship opportunities, one must develop the practice of staying updated on the latest developments through court judgments and legal blogs—which are easily accessible.

Students and young practitioners can seek opportunities with law firms and practitioners in the construction arbitration space to gain hands-on experience and be able to witness, and work on, arbitration proceedings as also court proceedings involving arbitration law. In addition, there are several universities offering specialised courses, including postgraduate studies, in construction law and arbitration, which students and young practitioners can benefit from.

It is also important to bear in mind that arbitration, especially on the domestic front, is not entirely distinct from litigation. There exists a substantial interplay between the two domains, which is likely to continue into future. Hence, it is prudent, particularly in the early stages of one’s career, to also gain experience in general litigation to the extent possible. Above all, one must maintain strong ethical standards, stay persistent, and commit to continuous learning for a successful career in litigation and arbitration.