The Ministry of Road Transport and Highways (MoRTH) has modified the dispute resolution mechanism in Model Concession Agreements (MCAs) and contract documents governing BOT (Toll), HAM and EPC projects, replacing the existing provisions with a new chapter aligned with the Ministry of Finance’s guidelines on arbitration and mediation in domestic public procurement.
The changes have been notified through a circular dated January 12, 2026, issued by the Ministry’s P&P Section, and are applicable with immediate effect. The new chapter will override the existing dispute resolution clauses in all BOT (Toll), HAM and EPC projects, except in cases where arbitration proceedings are already ongoing, which will continue to be governed by the earlier framework.
Under the revised framework, parties are required to first attempt an amicable settlement of disputes through good-faith negotiations. If the dispute remains unresolved for 30 days, it may be escalated to arbitration or conciliation, as per the newly prescribed thresholds.
A key feature of the modification is the introduction of a monetary threshold of ₹10 crore. Disputes involving amounts below ₹10 crore will be referred either to the Society for Affordable Redressal of Disputes (SAROD) or the India International Arbitration Centre (IIAC). The appointment of arbitrators, their code of conduct, and fees will be governed by the respective institutional rules of SAROD or the IIAC Act, 2019 and its regulations.
For disputes involving ₹10 crore or above, the circular mandates resolution through conciliation under the Arbitration and Conciliation Act, 1996. Notably, the Ministry has expressly excluded such high-value disputes from arbitration. Further, all declaratory and non-monetary disputes have also been barred from arbitration, with parties being permitted to seek remedies before civil courts instead.
The modified clause also clarifies that the conciliation framework will stand substituted by mediation once the relevant provisions of the Mediation Act, 2023 are notified. Thereafter, all references to conciliation will be deemed to mean mediation under the 2023 law.
The circular further stipulates that arbitral awards must be reasoned, final, and binding, and enforceable against the parties and their assets. Each party is required to bear its own costs of the proceedings. Importantly, the agreement and obligations of the parties will continue to remain in force during the pendency of dispute resolution proceedings.
Government of India Ministry of Road Transport & Highways (P&P Section) Click here