Construction Arbitration and Disputes

Bhandari Law and Partners has built a genuine specialization in construction arbitration and disputes, with lawyers in Nepal who work in this space regularly rather than treating it as an occasional extension of general litigation. We've advised clients on some of the largest and most complex engineering and construction projects in Nepal — high-value, often multi-jurisdictional disputes — through litigation, arbitration, adjudication, dispute boards, and other alternative dispute resolution mechanisms including mediation. Our attorneys bring genuine depth in the construction and engineering sectors, not just in dispute resolution generally.

The Legal Framework

Arbitration in Nepal runs primarily through the Arbitration Act, 2055 (1999), and it's the dominant mechanism for construction disputes specifically because Section 58 of the Public Procurement Act, 2063 (2007) makes arbitration mandatory for disputes arising out of public procurement contracts where amicable settlement fails — and public infrastructure work makes up a large share of Nepal's construction sector. Where a foreign investor is a party, Section 40 of FITTA, 2019 separately requires disputes with the Government of Nepal or a Nepali counterparty to be arbitrated, seated in Nepal and, absent a contrary agreement, conducted under the UNCITRAL Arbitration Rules.

The Arbitration Act was amended in 2081 (2025) in ways that matter directly to construction clients — a new fast-track arbitration option, and narrower grounds for setting aside an award. That second change is significant in practice: Nepal's courts have taken the position that a setting-aside application isn't a chance to re-litigate the underlying facts — the measurements, quantities, and technical specifications that construction disputes are usually built around — but is limited to the specific statutory grounds available under the Act. That makes getting the arbitration right the first time considerably more important than it might be in a system where courts take a broader second look.

It's also worth knowing, going in, that government agencies in Nepal have not historically defended procurement arbitrations particularly well — public data shows a high rate of contractors recovering full or partial compensation in disputes against the state. For a private contractor, that's a genuinely favorable environment. For a public entity or its counsel, it's exactly the kind of pattern a properly resourced defense is built to change.

What We Do

We represent clients across the full range of issues that arise on construction and engineering projects, including:

• Bid protests and other procurement disputes
• Wrongful termination
• Breach of contract
• Breach of warranty
• Design and construction defects
• Negligence in construction
• Errors and omissions
• Disputes over performance bank guarantee claims
• Disputes between contractors and subcontractors
• Claims for additional costs
• Bank guarantee disputes
• Variations and changes
• Delay and disruption claims
• Insurance coverage and claims disputes
• Liquidated damages

Who We Represent

We act for a wide range of clients in this space, including multinational corporations, international and domestic developers, contractors, subcontractors, engineering firms, architects, suppliers, lenders, governments and state-owned entities, and individual construction professionals. Our experience spans the sectors where construction disputes are most common and highest in value — road projects, water projects, energy projects, renewables, and commercial property — which puts us on both sides of these disputes often enough to understand how each type of client actually approaches a claim.

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