By S&S Co. Advocates & Solicitors · Published 26 January 2026 · Informational content, not legal advice. See our disclaimer
The GFR's Influence on Standard Tender Clauses
The General Financial Rules (GFR), 2017 issued by the Department of Expenditure, Ministry of Finance, do not themselves prescribe a binding arbitration clause for every government contract, but they shape the model dispute resolution clauses that individual ministries, departments and public sector infrastructure bodies incorporate into their standard tender and contract documents. Government infrastructure tenders (for road, rail, port, airport and urban infrastructure works) typically follow a graded dispute resolution structure influenced by GFR guidance and subsequent government instructions on arbitration in public contracts.
The Value-Based Approach to Arbitration
Following government policy instructions issued in recent years, several infrastructure-sector public authorities have moved to a value-based approach that reserves arbitration for disputes below a specified claim-value threshold, while directing higher-value disputes toward conciliation or, in some structures, civil court. Bidders responding to a government infrastructure tender should read the draft contract's dispute resolution clause carefully rather than assuming a uniform, unrestricted right to arbitrate every dispute: thresholds and the escalation path vary by department and by contract vintage.
Arbitrator Appointment Clauses and the 2015/2019 Amendments
Older government contract templates sometimes retained clauses permitting the appointing authority (or its own senior officer) to nominate the sole arbitrator: a practice the Supreme Court has repeatedly held incompatible with Section 12(5) of the Arbitration and Conciliation Act, 1996 as amended, which bars an interested party from unilaterally appointing an arbitrator. Bidders should check whether the tender's arbitration clause has been updated to comply with the amended Act, since an unamended clause risks being struck down or substituted at the appointment stage, causing delay.
Pre-Arbitral Steps: Conciliation and Dispute Boards
Many infrastructure tenders following GFR-influenced templates mandate an internal grievance redressal mechanism, or a project-level Dispute Resolution Board, before either party can invoke arbitration or approach conciliation. Contractors who bypass this pre-arbitral step risk having a subsequent arbitration or suit resisted on maintainability grounds, so the tender document's full dispute escalation ladder (not just the arbitration clause) should be mapped out before a dispute arises.
Frequently Asked Questions
Do the GFR themselves mandate arbitration in government contracts?
The GFR set out general financial and procurement governance principles; the specific dispute resolution clause in a given tender is drafted by the procuring department or authority, informed by GFR guidance and subsequent government instructions on arbitration policy, and can vary by department.
Can a government authority still nominate its own employee as sole arbitrator?
Generally no: following the 2015 and 2019 amendments to the Arbitration and Conciliation Act, 1996, and Supreme Court rulings applying Section 12(5), a unilateral appointment of an arbitrator by an interested party is impermissible unless the parties expressly waive the disqualification in writing after the dispute has arisen.
What happens if a contractor files for arbitration without exhausting a mandatory Dispute Resolution Board step?
The arbitration risks being resisted on maintainability grounds for failure to exhaust a mandatory pre-arbitral step: contractors should always complete any DRB or conciliation step required by the contract before invoking arbitration.
References & Further Reading
This article references the following statutory provisions. Readers should always verify current rules, fees and timelines against the applicable statute and rules as amended, since these are revised from time to time.
- General Financial Rules, 2017, Department of Expenditure, Ministry of Finance.
- Arbitration and Conciliation Act, 1996, Section 12(5) and Seventh Schedule, as amended.