Bhutan Alternative Dispute Resolution Centre, Motithang

ADRC facilitated 120 disputes worth Nu 2.5 bn since its inception

Government agencies won 54 cases while contractors won 47 cases

After the inception of the Bhutan Alternative Dispute Resolution Centre (ADRC) in May 2018, the office has facilitated the resolution of 120 disputes, starting from 4 disputes in 2018 to 41 disputes in 2019, 36 disputes in 2020, 27 disputes in 2021 and 12 disputes in 2022 as of date.

Of the total registered disputes, 23 disputes are pending of which 2 disputes are from 2020, 4 disputes are from 2021 and 17 disputes are from 2022 till date.

In addition, as per the record from the ADRC, as of December 2021, they have administered Nu 2.5 billion (bn) claims in dispute, of which the Arbitral Tribunal has awarded Nu 388.2 million (mn) to the parties.

The record also revealed that from 108 awards rendered as of December 2021, 54 awards were rendered in favor of government while 47 awards were rendered in favor of contractors. Of the 108 awards rendered until December 2021, 42 arbitral awards were appealed to the high court.

Generally, any commercial cases can come for the arbitration with consensus and agreement from both the parties, but in current practice, its mostly between the contractors and government agencies.

This arbitration has recorded the highest cases with 47 cases of termination of contract and time extension followed by 38 cases of final bill or excess payment. Likewise, they have recorded 8 cases of rate analysis dispute, 8 cases of deviation from Bills of Quantities, 3 cases each on the price adjustment and rectification of defective work. ARDC also recorded 1 case of sale and purchase of a flat between two private companies. 

The highest disputes were related to termination of contract, due to which time extension dispute, liquidated damages claim and idle charges claims were raised along with termination of contract. In terms of turnout time for arbitration, the lowest turnaround time was three months and highest was 20 months. On average, it has taken 8.7 months for arbitration of every dispute.

Given the types of cases and the arbitration there are those specially among government agencies who claim that the ADRC is mostly in favor of the contractors.

Acting Chief Administrator of ADRC, Chimi Dorji, said that it is true that people think the center is favoring contractors when the fact is they are not, and this is happening due to trust issues. Going by the arbitration record, he said that government won 54 cases while contractors won 47 cases.

He said, “The statistics indicates that we are not favoring anyone. Majority of the awards are done on the merit basis and as per the law. However, there are few cases which have a defect. So, favoritism is a misunderstanding, and the office, itself being new to people can be one contributing factor.”

He further said that there are lapses from both the parties, whereby, in some cases, the government agencies have awarded the work without issuing the drawings, when the site is not ready and improper handing taking of sites.

Some contractors have claimed to pay the idle charges costing millions. If either of the parties is not happy with the decision then they can appeal to the High Court.

However, he said that the court can only alter the charges only if the office has not followed a due process, and based on the public policy. Going by the awards, he said the defect lies in both the parties.

“People must know that the arbitrator is a neutral body, and once we appoint an arbitrator, we do it independently, and we are not a lawyer to any of the parties. We rule on the merit basis,” he added.

Mediation always existed while arbitration is completely a new concept to the people, he said, adding that it is their responsibility to make people aware of the process, and they have a plan to revise the rules to make it more reliable and competent.

In some cases, the court dismisses cases on merit basis while some cases are dismissed because the cases are not an arbitrable dispute. 

There are cases, wherein, the court has altered the award rendered by ADRC. Highlighting a case from 2016 between the Royal Bhutan Police (RBP) and a private contractor, the ADRC rendered an award in favor of the contractor, after which the RBP appealed to the High Court.

Upon the appeal made by RBP, the High Court took out a judgment in favor of RBP. As per the award rendered by ADRC, the RBP was made liable to pay almost Nu 5.5 mn to the contractors and Nu 8.9 mn for the audit memo.

However, the High Court altered the judgement wherein the contractor has to pay a total amount of almost Nu 700,000 to RBP. The contractor then appealed to the Supreme Court.

The Executive Director of Construction Association of Bhutan (CAB), Tshering Yonten, said that the decision from ADRC comes from the technical experts, which is why there is not much appeals to the High Court.

He said, “The cases in the arbitration might increase because the government agencies fail to abide by the decision or notification issued after the discussions from the Cabinet on the time extension and rescheduling of the completion date. Few abide by the notification, but maximum don’t, which is why, the contractors approach the arbitration.”

He further said that they segregate the case from the association before forwarding it to ADRC, and only the genuine cases are being forwarded and they have won also. “This could be the reason why people feel that there is favoritism, when the fact is that the weak cases are not forwarded in first place,” he added. 

Meanwhile, he said, “When the contractors in other districts approach the courts in cases against the procuring agencies, most of the courts deny to take up the case, given that the case is against the government.”

Therefore, they come all the way to Thimphu to file a complaint at the arbitration. Some of the procuring agencies hold the power to turn down their request despite clear notification from the government. This leaves them in dilemma on who and how to approach, he added.

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