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MoRTH Revises Dispute Resolution Framework for BOT (Toll), HAM and EPC Projects
The Ministry of Road Transport and Highways (MoRTH), vide its Circular No. H-25011/02/2025-P&P dated 12 January 2026, and the corresponding policy circular issued by the National Highways Authority of India dated January 19, 2026, has amended the dispute resolution provisions in Model Concession Agreements (MCAs) and contract documents for BOT (Toll), HAM, and EPC projects. The revised chapter applies with immediate effect and supersedes existing provisions, except for ongoing arbitration matters, which will continue under the earlier framework.
The amendment aligns highway sector contracts with the Ministry of Finance Guidelines on Arbitration and Mediation in Domestic Public Procurement of June 2024 and reflects a broader policy shift aimed at reducing routine recourse to arbitration, especially in high-value public contracts, while promoting structured pre-arbitral mechanisms and institutional ADR.
The newly introduced chapter adopts a tiered and value-sensitive approach to dispute resolution, replacing the earlier, arbitration-centric structure.
- Emphasis on Amicable Resolution: All disputes must first be pursued through good-faith amicable resolution. Parties are required to share relevant non-privileged information and attempt settlement. If unresolved within 30 days of notice (or a mutually extended period), the dispute may proceed to formal mechanisms.
- Monetary Threshold as the Determinative Factor: The dispute resolution pathway now depends on the monetary value of the claim:
- Disputes below Rs. 10 crore – Institutional Arbitration: Such disputes are to be referred to institutional arbitration before the Society for Affordable Redressal of Disputes (SAROD) or the India International Arbitration Centre (IIAC), with the constitution of the arbitral tribunal, the arbitrators or code of conduct, and the applicable fee structure shall be governed by the relevant institutional framework under the SAROD Rules or the India International Arbitration Centre Act, 2019, and its regulations. The seat of arbitration would be New Delhi or such place as determined by the institution, and proceedings are to be conducted in English. This move strengthens institutional arbitration while limiting exposure to ad hoc processes that have often attracted criticism for cost escalation and procedural delays.
- Disputes of Rs. 10 crore and above – Conciliation / Mediation: Arbitration is expressly excluded for disputes at or above this threshold. These disputes are to be resolved through conciliation under the Arbitration and Conciliation Act, 1996. The provision is future-proofed to transition to mediation once the relevant provisions of the Mediation Act, 2023, are notified.
Declaratory and other non-monetary disputes are not arbitrable under the revised chapter, with parties retaining recourse to civil courts for such matters.
The agreement remains fully operative during the pendency of any dispute, and parties must continue performance of their contractual obligations until a final award or settlement is reached.
The changes significantly recalibrate dispute strategy in highway projects by narrowing the scope of arbitration, introducing monetary thresholds, and channeling higher-value disputes toward structured conciliation/mediation. This will influence risk allocation, claims strategy, and lender assessment of enforcement pathways in future concessions and EPC contracts.
