Fast-Track Justice: Nepal Moves Toward Specialized Court to Unblock Stalled Development Projects

With development projects remaining stalled for years due to legal disputes, the government has initiated a study on establishing an infrastructure court to expedite the resolution of such cases.

Major infrastructure projects often face prolonged litigation, leading to increased costs and extended completion timelines. To address this issue, the government has begun preparations to form an infrastructure court. Law, Justice and Parliamentary Affairs Minister Sobita Gautam has constituted a study task force led by Law Secretary Paraswar Dhunganga to examine the matter.

The task force includes the Registrar of the Supreme Court, joint secretaries from the Ministry of Physical Infrastructure and Transport, the Ministry of Urban Development, the Ministry of Energy, Water Resources and Irrigation, a deputy attorney general from the Attorney General's Office, and joint secretaries from the Public Procurement Monitoring Office and the Office of the Investment Board Nepal. The team is required to submit its report within 15 days.

The Ministry of Law stated that the task force has been formed to study the feasibility of a "fast-track" court, concluding that delays in judicial processes have prevented projects from being completed on time, leading to cost overruns and an additional burden on public resources.

Speaking to New Business Age, Minister Gautam informed that the task force has begun studying the feasibility of an infrastructure court. "The task force will determine whether to establish a separate court or create a distinct bench within the existing court structure," she said. "We are exploring the option of establishing such a court as a specialized judicial body," she added.

Minister Gautam emphasized the need for such a judicial mechanism to reduce delays and the resulting financial burden on development projects. "If the study recommends that an infrastructure court is necessary, it can be established under the constitutional provision allowing for the formation of specialized courts," she said.

Positive Step, Say Construction Entrepreneurs

Nicolas Pandey, President of the Federation of Contractors Association of Nepal, described the government's preparation to establish an infrastructure court or a special bench as a positive move. According to him, projects have been delayed and rendered sick due to legal disputes.

"There is a problem that our infrastructure-related cases get mixed with other cases and are delayed," he said. "If an infrastructure bench or court is formed and experts in this field are appointed as judges, dispute resolution will be effective and easier. We are optimistic that such judges can deliver more just and swift decisions on these complex cases," he added.

Cost Burden Mounts Due to Project Delays

There has long been a complaint that the Government of Nepal's infrastructure projects are not completed on time. On one hand, the public suffers due to incomplete projects; on the other, costs keep rising, placing an additional financial burden on the country.

The government is constructing many infrastructure projects using loans from donor agencies including the World Bank and the Asian Development Bank. Delays in infrastructure projects due to legal disputes have hampered the entire development process.

"Our concern is how to resolve disputes on a fast track," said Minister Gautam. "Therefore, the government plans to study within 15 days whether Nepal now needs an infrastructure court, and after receiving that report, we will begin work based on its recommendations."

Dispute Resolution Mechanism

In international contracts, a dispute board exists. This is an informal board that issues decisions, says FCAN President Pandey. Only if that decision is not accepted can the matter go to arbitration. Many disputes are resolved through these mechanisms. Therefore, establishing a separate infrastructure court at the national level may not be highly relevant internationally.

However, Pandey adds that Nepal has a problematic practice: regardless of what is written in the contract agreement, the concerned parties often do not accept or implement decisions made by dispute boards or arbitration boards, and instead directly approach district courts or high courts. In other countries, arbitration decisions are generally recognized and enforced. This is precisely why disputes over infrastructure projects in Nepal face excessive delays.

“My suggestion, therefore, is that if provisions are made to effectively enforce the decisions of arbitration and dispute boards, most disputes can be resolved quickly to a great extent,” says Pandey.