Final and binding power clauses in Indian construction contracts

Most Indian construction contracts while specifying the role and responsibilities of parties in the contracts, also specify certain extraordinary powers to a particular person whose decisions are final and binding to both the parties. These decisions are administrative in nature and they are neither open to arbitration nor to any court of law. They are meant to prevent disputes and are taken in the overall interests of the project. However, in practice, the disputes arise due to varied interpretations of certain technical terms in a contract, unclear domain of "final and binding power" (FBP), or owner's intentions in giving decisions under FBP and thereby preventing contractors from referring the matter to an arbitrator. Based on a legal case study, primary guidelines are formulated to evaluate the applicability and acceptability of decisions under FBP. These guidelines are presented as a decision diagram in this paper. © 2001 Elsevier Science Ltd and IPMA. All rights reserved.