“Arbitration is only as good as the Arbitrator” 

The SAROD framework was introduced to resolve disputes in the infrastructure sector –roadways and ports, with a singular objective of resolving disputes in an effective and time-bound manner. Introducing these rules creates a pathway for dispute resolution through SAROD-empanelled arbitrators instead of Ad-Hoc arbitration as per the Arbitration & Conciliation Act, 1996. The disputes in the infrastructure sector are usually high stakes, with claim amounts going into thousands of crores. Therefore, delays caused by lengthy arbitration proceedings can cost immense monetary losses. Thus, the introduction of SAROD Rules was highly anticipated. However, the New Rules have not been proven as promising and fall short on numerous fronts. The SAROD framework is plagued with accusations of partiality of arbitrators, lack of qualifications of empanelled arbitrators, meagre fees for Arbitration as envisaged in the rules, and impractical provisions for avoiding delays, among others. These shortcomings render the new rules almost inefficient and do not fulfil the objectives and intention behind introducing them in the first place.


The National Highway Authority of India (“NHAI”) established the Society for Affordable Redressal of Disputes (SAROD) [Hereinafter referred to as “SAROD”] in August 2013 to ensure that technical experts resolve disputes and to conduct Arbitration in a timely and cost-effective way. SAROD Rules were also introduced in the Port Sector through SAROD-Ports. They were implemented to effectively resolve disputes in the Maritime Sector, comprising Major Ports, Non-Major Ports, and PPP players operating at Major Ports. The range of issues that SAROD’s rules can handle is far broader than the National Highway Act and is not just restricted to cases involving the Right of Way (RoW).  

Therefore, implementing both these frameworks was intended to fill in the cleavages created by the Arbitration & Conciliation Act 1996 (“Arbitration Act”) and provide a gateway to better resolution of disputes. According to arecent news report, around 300 Arbitration cases are pending with the National Highway Ministry, with claims reaching INR 80,000 Crores. Such is the nature of disputes in the Infrastructure and Construction Sector. The disputes are recurring due to inevitable delays in project completion and are further elevated by the complex web of a multiplicity of parties and stakeholders. Thus, the intention to introduce laws that address the sector-specific problems in disputes involving Roadways and Ports and aims to effectuate arbitrations in a timely and cost-effective manner is indeed noble. The blog draws out the differences between the SAROD Rules and the Arbitration Act and further tries to analyse whether the SAROD framework has successfully achieved the objectives it envisaged.

SAROD-Ports: Need, Scope, and Applicability 

In the past 20 years, major ports have beenwitnessing an inclination towards PPP Projects and landlord port models where terminals for particular cargo segments are established and run on a Built-Operate-Transfer (“BOT”) basis by private parties. Apart from disputes with regulatory bodies like Tariff Authority for Major Ports (“TAMP”), there are frequent disputes with primary port trusts regarding the terms of the concession, such as revenue share/royalty, the achievement of minimum guaranteed performance standards and volumes, and facilities and maintenance work. While the parties may first seek Arbitration and then pursue their cases in courts of law, these conflicts usually stretch on for several years. As a result, both the ports and the private players incur hefty Arbitration and lawsuit costs.  

SAROD-Ports offers guidance and support in the Arbitration of conflicts involving ports and shipping in major and non-major ports, including private ports, jetties, terminals, and harbours. It also includes disputes resulting from or occurring during the execution of various contracts between the granting authority, the licensee, concessionaire, or contractor, as well as disputes between the licensee, concessionaire, and their contractors. SAROD-Ports consists of members from Indian Ports Association (“IPA”) and the Indian Private Ports and Terminals Association (“IPTTA”). 

TheSAROD-Ports Rules apply to the concessionaires, enabling them to expeditiously resolve current, ongoing and future disputes arising from the concession agreement. Additionally, the current concessionaire will benefit if a statutory adjudicatory board is established following the passage of theMajor Port Authorities Bill. The bill, now anAct, provided that an Adjudicatory Board be established to carry out the residual duties of the former TAMP for Major Ports, investigate disputes between ports and PPP concessionaires, review distressed PPP projects and recommend actions to revive such projects and investigate grievances regarding the services provided by ports and private operators operating within ports. Suppose the disputes cannot be resolved through Arbitration. In that case, the same may be brought to the Adjudicatory Board with the permission of all parties and in compliance with any applicable legislation.

SAROD Rules v. the Arbitration Act: A Comparison 

SAROD-Roads & SAROD-Ports Arbitration Rules are almost identical, barring some minor differences, which have been brought to light in the below section. 

[In the below section, “SAROD Rules” shall include both SAROD-Roads & SAROD-Ports. Unless otherwise written, it shall be understood that the said Rule is identical in both statutes.]

1. Commencement of Arbitration

Under the Arbitration Act, Arbitration can be initiated under Sections 8, 11, and 21. Rules 4 and 5 of the SAROD Arbitration Rules (“SAROD Rules”) deal with the commencement of Arbitration. The Rule is very similar to Section 21 of the 1996 Act. It provides that either party can commence arbitral proceedings upon serving a notice to the other party informing the same. The party initiating the Arbitration shall furnish to the Secretary of SAROD the request for commencement, nature of the dispute, remedies sought, et al. Unlike SAROD-Ports, SAROD-Roads state that Primary membership of SAROD is a ‘pre-requisite’ to invoke Arbitration. 

The filing fee contemplated under SAROD-Roads is INR 25,000 (plus 18% GST), and under SAROD-Ports is INR 10,000. However, these amounts are merely suggestive and can change at the Governing Body’s discretion. Along with such a filing, the party is also expected to propose the name of an arbitrator from the panel of arbitrators maintained by SAROD in the case of a sole arbitrator and a nominee arbitrator from the panel in the case of a three-member Arbitral Tribunal.  

Though Section 21 does not contain a provision to issue notice, thecourts have interpreted that serving the notice is mandatory and indispensable. According to Rule 5, upon receiving the notice from the Claimant, the Respondent is expected to file with the Secretary and Claimant a submission containing their acceptance or denial of the claims, Counter-claims (if any), and remedies sought along with the name of the proposed Arbitrator. The Respondent is also expected to furnish the same amount as the Claimant’s filing fee.  

Rule 5 of SAROD-Roads states that objections regarding the jurisdiction of the Arbitral Tribunal shall be raised within 15 days of the commencement of the Arbitration; else, the right to object would be forfeited. Rule 5 of SAROD-Ports, on the other hand, provides that conflicts or disagreements concerning the jurisdiction shall be resolved as per the Arbitration & Conciliation Act, 1996. 

2. Statement of Claims & Defense 

Section 23 of the Arbitration Act states that the Statement of Claims (“SOC”) shall be filed “Within the period of time agreed upon by the parties or determined by the arbitral tribunal”. However, under Section 23(4), the Arbitration Act imposes a limitation of 6 months within which both the statement of claim and defence shall be furnished from the date of appointment of the Arbitrator. On the other hand, rule 6 of the SAROD Rules provides that the Claimant shall file the SOC within 30 days after issuing the notice of Arbitration. The SOC shall be served to the Secretary of SAROD and the Respondent. The Respondent is supposed to file the Statement of Defense (“SOD”) within 30 days after the Claimant has filed the SOC. The Claimant then is supposed to file any counter-claims within 30 days from the filing of the SOD. No further statements can be brought on record without leave from the Arbitral tribunal. The Rules suggest that if an Arbitrator/Arbitral Tribunal has not been appointed, the Secretary may extend the time for submission of statements. The strict timelines contemplated under the Rules reflect their objective to resolve the disputes in a time-bound manner.  

3. Appointment of Arbitrators

Rule 11 of the SAROD Rules deals with the appointment of arbitrators. It states that a Sole Arbitrator may be appointed only where the total claim amount is equal to Three Crores or less. Thus it imposes a monetary limit on the appointment of arbitrators. Therefore, an Arbitral Tribunal shall only be appointed in the event the value of claims exceeds INR 3 Crores.

 Section 11(5) of the Arbitration Act states that in case of a sole arbitrator, if the parties fail to reach a consensus as to the appointment of the Arbitrator within thirty days of receipt of the notice of Arbitration, the appointment shall be made upon request of a party, by the Hon’ble Supreme Court of India or, as the case may be, the High Court or any person or institution designated by such Court.  

SAROD-Ports reduce the time limit for the Arbitrator’s appointment to fifteen days. Under the SAROD-Port Rules, if the parties fail to appoint a sole arbitrator within 15 days, the appointment shall be made upon request of a party by the Governing Body from the panel of Arbitrators maintained by SAROD-Ports. The same Rule would also apply in the case of an Arbitral Tribunal. A similar law applies to an arbitral tribunal as well. 

Under SAROD-Roads, however, the Governing Body shall appoint a sole arbitrator without giving either party a chance to nominate. However, in the case of an arbitral tribunal, both parties have the authority to nominate an arbitrator, who would then nominate the presiding Arbitrator. 

4. Impartiality of Arbitrators

The SAROD Rules lay down exhaustive Rules detailing the guidelines on the impartiality of arbitrators to ensure that they are bias-free. The RuleR states that an Arbitrator shall only accept the appointment only if he is fully satisfied that he is able to discharge his duties without bias. Rule 14 states that the Arbitrator shall be impartial and should not act as an advocate for either of the parties. Further, Rule 15 contains the “Code of Ethics” for an Arbitrator. The Arbitration Act does not have such guidelines but promotes impartiality in Sections 11(8) and 12 (grounds of a challenge). The Act, in spirit, promotes impartiality. Further, through a catena of judgments, the law is settled that an arbitrator must be neutral and impartial. 

5. Deposits

Section 38 of the Arbitration Act states that the arbitral tribunal may fix the amount of the deposit or supplementary deposit as an advance in respect of the claim submitted to it. It further states that the deposit shall be payable in equal shares by the parties, and if one party fails to pay his share of the deposit, the other party may pay that share. However, suppose both parties to the Arbitration fail to pay their respective shares towards the fees of the Arbitrator. In that case, the Arbitrator may choose to terminate the proceedings regarding such claims / counter-claims, as the case may be. Rule 35 of the SAROD Rules, on the other hand, states that the Claimant and the Respondent shall deposit half of the fees payable to the SAROD Ports at the time of filing their respective SOC & SOD. The Rule further states that any outstanding fees must be paid 60 (sixty) days before the final hearing date or on any other day the Secretary may specify. The Secretary may occasionally instruct the parties to deposit any additional costs paid or incurred on their behalf or for their benefit. Even if the Arbitration is withdrawn, suspended, or terminated by Agreement or otherwise before the final Award is rendered, the parties will still be equally and severally liable to the SAROD Ports for payment of all such costs and expenses until they are paid in full.

A Critical Analysis 

The objective of introducing SAROD Rules was primarily to provide a cheaper, more affordable, and, most importantly, less time-consuming pathway. Numerous industry insiders haveexpressed their concerns about how the credit profiles of numerous large-scale players in the road and port sectors have been diminished due to contingent liabilities emanating from long-drawn arbitral disputes. The case of Sadbhav Engineering is a prime example. The shares of Sadbhav Engineering havetumbled over 50% within 52 weeks. The Company has been relying on proceeds from arbitral awards to infuse them as working capital and growth capital. However, the prolonged arbitral proceedings have made it difficult for the company to procure funds through the arbitral awards. The Company has been arbitral awards for the Rohtak-Panipat project and Mumbai-Nasik Expressway project. The intention behind introducing the Rules was a cost-effective and quick resolution of disputes. Also, the option to involve experts in the arbitration process could be advantageous given that certain members of the businesses havecomplained that arbitrators lack sufficient knowledge of the port industry. 

However, these objectives are somewhat misplaced. The Rules have provisions to complete the Arbitration in a time-bound manner. However, at the same time, the Rules give the Arbitral Tribunal, and in some cases, the Secretary, the power to extend the time limits envisaged in the Rules. Thus, if the time bar enshrined in the Rules can be extended at the Arbitrator’s discretion, then it becomes no different than the law given under the Arbitration Act. If it is assumed that such strict time protocols are to be followed in the Arbitration, they would still be more suitable for disputes with fewer quantum claims. However, claim amounts in Infrastructure disputes are disproportionately high. The time of “thirty days”, which is contemplated in the SAROD Rules, to submit the SOC, SOD, and even to write the Award is far too less, considering the complexities of high-stake arbitrations.  

Though keeping a provision for appointing experts is noble, the Arbitration Act also contains a similar provision under Section 26. Therefore, if such a section is already enshrined in the Arbitration Act, it becomes difficult to grasp why one would prefer SAROD Arbitration over Ad Hoc Arbitration under the Arbitration Act. Regarding expertise, 85 out of 110empanelled arbitrators under SAROD do not have an LLB degree. Expertise is indeed a valuable asset. However, putting Civil Engineers in the seat of an Arbitrator could potentially lead to impartiality and decisions which might not be legally sane. Having a law degree or even a diploma in ADR is not aneligibility criterion for the empanelment of Arbitrators under SAROD. InMadurai Tuticorn Expressways Ltd. v. National Highways Authority of India, 2022 SCC OnLine Del 3986, MTEL sought direction for substitution of the presiding arbitrator with a person having legal/judicial background. The Coordinate Bench of the Delhi High Court directed the Governing Body of SAROD to decide upon the issue. InTrichy Thanjavur Expressways Ltd v. NHAI O.M.P. (COMM) 106/2023, the petitioners had prayed for substituting all the arbitrators constituting the present arbitral tribunal since the three member tribunal consisted of only Civil Engineers having no legal or judicial background. Though the High Court ruled against the reconstitution of the Tribunal, the court did acknowledge the inordinate delays caused by the Tribunal which were largely attributed to NHAI seeking extensions for filling its claims and additional documents. 

On the Implementation front, the cases involving SAROD Rules are plagued with numerous cases concerning the “impartiality of Arbitrators”. In theCG Tollway Limited v. National Highway Authority of India, 2021 SCC OnLine Del 4838, the petitioners had contended that respondent-NHAI was in a dominant position in empanelling arbitrators on the SAROD panel. The petitioner urged for quashing or setting aside the four-member Committee for empanelment/re-empanelment of Arbitrators to resolve disputes concerning NHAI. The Claimant had raised the grievance due to its lack of faith in the selection process of SAROD for its empanelment being dominated by the NHAI. Moreover, National Highway Builders Federation (NHBF), vide its letter addressed to the President of SAROD, informed its inability to fulfil the aspirations of members of NHBF and stated that future disputes might have to be settled under ad hoc arbitration under the Arbitration and Conciliation Act, 1996. Since SAROD was established to resolve disputes regarding NHAI, the Governing Body and critical positions of SAROD, such as President, Secretary, and Treasurer, areunder the aegis of NHAI. SAROD Roads does not give the parties the liberty to nominate/choose the Arbitrator in case of a sole arbitrator. The governing Body, upon its discretion, can appoint the Arbitrator. Such a Rule is not just arbitrary but is also deemed to have apparent repercussions. To give the Governing Body, which consists of people who are associated with NHAI, the absolute discretion to appoint the Arbitrator in disputes which will, in most cases, have NHAI as the party to the dispute seems rather convenient and unfair. 

The Fee structure given under the SAROD Rules for Road Construction is the same as given under Schedule IV of the Act. The Delhi High Court, on the issue of fees of sole arbitrators, hasheld that, even with the 2015 amendments to the Arbitration Act, the Arbitrator may choose its fee schedule in an arbitration conducted without the intervention of a court. In cases where the parties appoint the Arbitrator, the High Courtheld that Schedule IV of the Arbitration & Conciliation Act, 1996 would not be mandatory in determining the fee structure where the fee structure has already been decided in the Agreement.  

The IV Schedule of the Arbitration Act is a model fee structure. Section 11(14) of the Arbitration Act states that the High Court may frame such rules as necessary after considering the rates specified in the Fourth Schedule. The Hon’ble Supreme Court, in the case ofONGC Ltd. v. Afcons Gunanusa JV, 2022 SCC OnLine SC 590, observed that an arbitrator could not unilaterally fix its fees. However, since most of the High Courts in India have not framed rules for fixing the arbitrators’ fees, it cannot be said that the Fourth Schedule is, by default, applicable to all such matters where the High Court appoints arbitrators.  

The Apex Court further held that the arbitral tribunal must also specify the components of its fees in terms of reference, which will serve as a tripartite agreement between the parties and the arbitral tribunal. The fees payable to the arbitral tribunal would be in accordance with the arbitration agreement, especially in cases where the parties appoint an arbitrator as per the manner specified in the arbitration agreement.  

In contrast to the fee structure under the Arbitration Act, where the fee of the Arbitral Tribunal is determined by the Agreement between the parties and the Arbitral Tribunal, the fee structure under the SAROD Rules is binding and not merely suggestive. The latter restricts the Arbitrator’s fees to the amount stipulated in the Rules. Such a threshold acts as a deterrence for seasoned arbitrators to apply for empanelment under SAROD Rules as arbitrators. The fee structure under the SAROD-Ports Rules is less than that in the SAROD-Roads. The Fees prescribed under SAROD-Ports for claim amounts ranging from 100 Crores to 500 Crores and 500 Crores and above is INR 40,000/- per day and INR 50,000 /- per day, respectively. These rates are peanuts compared to the current market rate, where retired judges of the Hon’ble High Court and Supreme Court are being gladly paid amountsupwards of 7.5 Lakhs a day (3x their monthly salary and 18.75x the SAROD fee rate) and is much less than the amounts enshrined under Schedule IV of the Arbitration Act and SAROD-Roads. Such a meagre fee has led to many experienced arbitrators’ chambers expressly issuing notices to law firms and general counsels, asking them to refrain from approaching the Hon’ble retired judge for acting as an arbitrator in any SAROD matter. The lack of a respectable fee schedule has led to a dearth of experienced arbitrators, which leads to compromised arbitrations and a heyday for S34 attorneys.


The American Arbitration Association haslisted “Choosing the Right Arbitrator” among the top 10 measures to make Arbitration faster and more cost-effective. The SAROD Rules, among other things, falter mainly on this aspect. The Arbitrators under SAROD not only fall short on qualifications and expertise but are influenced by the entity under whose aegis the SAROD was established in the first place. The modest fee is an additional deterrent to the entry of more experienced and seasoned arbitrators into the panel maintained by SAROD. Through the Arbitration & Conciliation (Amendment) Act of 2015, a one-year time limit has been introduced to resolve disputes. The consent of both parties is required to extend the time limit further. Such an amendment is in furtherance of the pursuit of resolving disputes in a time-bound manner, and the timeline suggested is practical, considering the modalities of the quantum of claims in high-stake arbitrations. The SAROD Rules, on the other hand, suggest impractical timelines, following which the entire arbitration process may suffer.  

As mentioned earlier, introducing a framework to fast-track arbitrations and make them cost-effective is appreciable; however, the execution is somewhat questionable. Another approach to achieve the same goal could have been making a preventive mechanism instead of a dispute resolution mechanism. For example,the Singapore Infrastructure Dispute-Management Protocol (SIDP) launched by the Government of Singapore is a framework that employs a preventive approach by providing an array of dispute resolution options throughout the project’s duration. It has a Dispute Board, which overlooks the project throughout its life cycle and manages differences that may arise. Such an approach prevents the disputes from snowballing over time and can further help reduce the quantum or prevent the dispute altogether. The SAROD framework fails to become an attractive alternative to Ad-Hoc Arbitration. It becomes difficult to grasp in what respect the SAROD Rules are an improvement from the already existing Arbitration law in India. 

About the Authors 

Mr. Parakram Roy is an Independent Legal Practitioner and Ms. Harshita Tyagi is a third-year student at SVKM’s Pravin Gandhi College of Law, and an Associate Editor at IJPIEL.

Editorial Team 

Managing Editor: Naman Anand 

Editors-in-Chief: Jhalak Srivastav & Muskaan Singh

Senior Editor (Ad-Hoc): Naman Anand

Associate Editor: Harshita Tyagi

Junior Editor: Apoorv Vats

Preferred Method of Citation  

Parakram Roy and Harshita Tyagi, “The SAROD Arbitration Framework, 2.5 Years On: How the Government of India Shot Itself in the Foot” (IJPIEL, 24 April 2023) 


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