Tribunal to redress PPP disputes faster

New Delhi: The government is planning to set up an independent tribunal for faster resolution of disputes relating to private sector partnerships and public procurement. The tribunal is likely to be set up through an Act of Parliament.

Senior government officials said inter-ministerial discussion on creating the tribunal was currently on. Besides, a PPP re-negotiation framework would also be evolved to give flexibility to contracts signed with private companies. "A Cabinet approval will be taken for the framework," said an official.

Some 1,300 public-private partnership (PPP) projects costing about Rs 7 lakh crore have been undertaken under the PPP mode. Problems in PPP range from land acquisition and other government clearances to companies finding it tough to operate projects at rates quoted by them.

The erstwhile Planning Commission under the United Progressive Alliance government had also drafted a Bill sent for constituting a Tribunal for Public Contracts for resolution of disputes in PPP projects. The tribunal was envisaged to be based out of New Delhi with benches in Chennai, Kolkata and Mumbai. The Bill, however, did not materialise into legislation since a one-size-fits-all solution for disputes across sectors was found to be unfeasible. The ministry of finance had then opposed the Bill.

Finance Minister Arun Jaitley in his Budget speech in February said the government would provide a legal framework for dispute resolution in PPP projects and public utility contracts.

A committee under former finance secretary Vijay Kelkar, set up by the NDA government, had earlier made a case for ex-ante provisioning of renegotiation framework in the bid documents. Besides, it said PPP contracts should have clearly articulated dispute resolution structures that demonstrate commitment of all stakeholders and provide flexibility to restructure within the commercial and financial boundaries of the project, backed by sector-specific monitoring and regulatory committees.

In a report submitted in November 2015, it recommended a two-tier framework of Infrastructure PPP Project Review Committee (IPRC) and Infrastructure PPP Adjudicatory Tribunal (IPAT). Once a stakeholder files a reference before the tribunal, and the IPAT takes cognisance of it, no party or stakeholder would be allowed to approach any court of law, and all courts shall refrain from adjudicating upon any proceedings initiated that are related to the project in question.

The committee has proposed enactment of a law under Article 323B of the Constitution of India under which IPRC and IPAT be empowered to determine whether there is such change in the economic foundation or economic viability of a project which requires any intervention amongst options contemplated in that statute. The article empowers Parliament or state legislatures to set up tribunals for adjudication.

The proposed law will also lay down the guiding principles on the basis of which the IPRC and IPAT will exercise their functions. In case a substantial question of law is involved, the matter should be directly heard by the tribunal.

Twelfth Five-Year Plan (2012-2017) projected an investment of Rs 55.75 lakh crore (at current prices) in infrastructure, which was more than twice that achieved during the Eleventh Plan. Besides, private investment in infrastructure was projected to rise substantially from 37 per cent in the Eleventh Plan to approximately 48 per cent in the Twelfth Plan. The performance in the first two years of the Twelfth Plan, however, suggests that infrastructure investment has slowed and there will be a shortfall of approximately 30 per cent, with the shortfalls in public investment (central and states combined) and private investment at 20 per cent and 43 per cent, respectively.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.