Firms running cargo terminals at major port trusts have balked at the Centre’s decision to set up an “affordable” dispute redress mechanism as part of the new model concession agreement cleared by Cabinet in January for upcoming public-private-partnership (PPP) projects.
The benefit of the new dispute resolution agency is sought to be extended to existing operators if they sign a supplementary pact with the port authority concerned.
Last week, the government notified rules for existing PPP operators to opt for the dispute redress mechanism named the Society for Affordable Redress of Disputes – Ports (SAROD-Ports).
Arbitral tribunal
SAROD-Ports seeks to resolve existing/future disputes “faster” in a “just and fair manner” at “affordable cost” by “enrichment” of the mechanism with “association of technical experts”, according to the Shipping Ministry.
The arbitral tribunal will comprise a sole arbitrator if the disputed claim is ₹3 crore or less and an odd number of arbitrators if the amount involved is more, in which case, the presiding arbitrator will be named by the arbitrators nominated by the parties and chosen from a group empanelled by SARD-Ports.
“Affordability of disputes was never an issue with us,” said an executive with a port operating company based in Mumbai. “Quick redress is,” he added.
The Indian Private Ports and Terminals Association (IPPTA), a lobby group, has hired top lawyers including some sitting Members of Parliament (MPs), to fight cases against the government/port trusts and Tariff Authority for Major Ports (TAMP) in courts. These legal eagles charge a few lakh rupees for each appearance in court, said an industry executive aware of the issue. A supplementary agreement has to be signed between the existing PPP operator and the concessioning authority for referring the disputes to SAROD-Ports or adjudicatory board, as the case may be.
This is because when a statutory adjudicatory board is set up after enactment of the Major Port Authorities Bill with powers to adjudicate upon disputes between the PPP operator and the port authority, the facility will also be extended to the existing concessionaire. In such a case, all disputes not settled through conciliation can be referred to the adjudicatory board with mutual consent of the parties.
Private port operators say that they were not consulted by the government for setting up SAROD-Ports as a society by the Indian Ports Association (IPA) and the IPPTA under the Societies Registration Act, 1860. “The government never told us about the formation of the Society. We have no knowledge of it,” the industry executive said.
Private terminal operators also say that the many court cases they are fighting, involving rate cuts and other contractual issues, cannot be withdrawn in order to refer the disputes to the arbitral tribunal under SAROD-Ports for conciliation.
Supplementary pact
“The supplementary agreement approved by the Cabinet states that the parties shall respect the (arbitral tribunal) award in letter and spirit and the award shall be binding upon the parties unless the parties invoke the provision of Section 34 of the Arbitral and Conciliation Act, 1996 for challenging the award,” said a second executive with a port operating company. Besides, once the dispute is referred for arbitration by the statutory adjudicatory board, the parties cannot refer the same dispute again under a different clause and the adjudication shall be “final and binding”, he said, adding that the mechanism posed risks to existing PPP operators.
“The government cannot stop us from going to higher courts if the arbitral award goes against us; it would be arbitrary and incorrect in law,” the second port executive said.
“You cannot stop someone from getting justice from the next level. Courts are meant for that only. SAROD-Ports is an arbitrary mechanism.
“The government should allow us the option of going to the higher courts,” he added.