Govt to establish ‘Infrastructure Tribunal’ to fast-track disputes over contracts, Land acquisition and compensation

KATHMANDU: The Government of Nepal is preparing to establish a specialized Infrastructure Tribunal to resolve disputes related to public contracts, land acquisition, and compensation, in a move aimed at accelerating delayed development projects and reducing legal bottlenecks that have stalled major infrastructure works for years.

To facilitate this, the Ministry of Law, Justice and Parliamentary Affairs is drafting a new bill that would create a dedicated judicial body with technical expertise to adjudicate disputes involving development projects.

According to the government, major infrastructure projects in Nepal frequently become entangled in prolonged legal battles over procurement contracts, land acquisition, compensation determination, and environmental clearances. Cases often remain pending in courts for years, escalating project costs and delaying completion of nationally significant infrastructure initiatives.

The ministry said the new concept was introduced to ensure that development projects are not unnecessarily trapped in lengthy legal processes while safeguarding public interest through a faster and more specialized judicial system.

“Given the changing circumstances, it has become essential to establish an expert judicial mechanism that prioritizes public interest and resolves infrastructure-related disputes swiftly and efficiently without causing unnecessary delays and cost overruns in development projects,” the ministry stated in its concept paper.

Cases to Be Resolved Within Three Months

Under the proposed legislation, the Infrastructure Tribunal will have a clearly defined jurisdiction and will include technically qualified judges and subject-matter experts. The tribunal is expected to resolve disputes within three months, significantly shortening the lengthy litigation process currently faced by infrastructure-related cases.

The government believes the new mechanism will help prevent development projects from being halted for years due to legal complications, thereby avoiding excessive cost escalations worth billions of rupees and minimizing direct impacts on the public.

‘Work Continue’ Principle to Prevent Project Stoppages

One of the key features of the proposed framework is the introduction of the “Work Continue” principle, which would allow infrastructure projects to continue even while legal disputes are being heard.

The provision is expected to be particularly important for large-scale projects such as hydropower plants, highways, airports, transmission lines, urban infrastructure, and other national pride projects that are often delayed due to court proceedings.

Additionally, the government plans to introduce an escrow account system, under which disputed financial amounts will remain securely protected until cases are resolved.

‘No Clearance, No Tender’ Policy

The government also plans to implement a “No Clearance, No Tender” policy, meaning procurement processes will not proceed unless necessary approvals — including land acquisition, environmental clearances, and legal permits — are completed in advance.

Authorities say this policy aims to reduce procedural duplication, bureaucratic delays, and legal disputes that frequently emerge after contracts have already been awarded.

For large strategic and nationally significant infrastructure projects, the government intends to place land acquisition, compensation determination, tree-cutting approvals, and Environmental Impact Assessment (EIA) clearances under a fast-track mechanism to ensure time-bound implementation.

The proposal also includes the introduction of an integrated and automated approval system among government agencies to improve coordination and eliminate unnecessary delays and overlapping procedures.

Linked to Government Reform Agenda

The proposal to establish an Infrastructure Tribunal is also included in the government’s 100-point governance reform agenda, approved by the Cabinet on Chaitra 13, 2082 BS.

The reform agenda calls for reviewing long-delayed and underperforming projects while simplifying procedures related to budget allocation, land acquisition, environmental approvals, and contract termination to ensure timely project completion.

Government Lists 10 Expected Outcomes

According to the Ministry of Law, the Infrastructure Tribunal is expected to deliver at least 10 major outcomes, including:

• Resolution of infrastructure disputes within three months through a specialized judicial mechanism;
• Prevention of project paralysis and cost overruns;
• Reduction in multi-billion-rupee financial losses caused by delays;
• Faster and more effective justice focused on public interest;
• Implementation of the “Work Continue” principle to ensure projects are not halted during litigation;
• Introduction of escrow accounts to secure disputed payments;
• Enforcement of the “No Clearance, No Tender” policy;
• Legal recognition of a “Public Interest Test” in court proceedings;
• Clear legal provisions for re-tendering stalled projects; and
• Enhanced accountability, digital monitoring, and transparency in infrastructure governance.

The government believes the proposed tribunal could play a transformative role in breaking Nepal’s long-standing cycle of infrastructure delays, legal disputes, and escalating project costs while significantly improving the pace of development.