With more and more construction projects being undertaken on a global scale, contractors and stakeholders in those projects need to be alive to issues which are generating disputes, both globally and in specific regions, as they take on work in new markets.
To help explain those issues, the global projects and construction team at lawyers Clyde & Co has published a Guide to global construction dispute resolution.
The guide outlines areas of dispute internationally, before examining a number of regions that are expected to give rise to disputes.
John Morris, global projects and construction group head, said: 'Across the diverse range of political and legal landscapes in the global infrastructure market, it is pivotal that construction contractors and project stakeholders understand the context in which any dispute over legal, commercial or technical matters will be fought.
'After a major construction dispute arises, one of the critical success factors from our analysis is the technical experts that are deployed during disputes. Whether you need a process engineer or a delay analyst, there is inevitably a select club of the world's best experts. Choosing the wrong one (or being too late to choose the best candidate) will have a major impact on your chances of success. There is a real issue around a lack of availability which is a key stumbling block when going through a dispute.'
Ben Cowling, head of the group in the Kingdom of Saudi Arabia, added: 'In an increasingly global marketplace it is vital to understand where a dispute might end up and the local nuances when you are new to market. For example, contractors or businesses with experience in more mature markets may be used to compulsory adjudication or Western-style court litigation, while in the Middle East and Asia disputes will be resolved by arbitration or through the local court system. A business that is expanding into a new region needs to get grips with these 'unknown unknowns' before commencing projects, in order to be best armed should issues arise.
'Looking forward, we expect to see multi-tiered dispute resolution procedures, including the use of Dispute Boards and requirement for mediation across the infrastructure sector globally. It is also likely that there will be more 'jurisdiction shopping' for construction disputes with the emergence and use of an increasingly diverse number of key arbitral centres around the world.'
Causes of disputes identified in the construction and infrastructure sector globally include cost overruns, scope changes and payment disputes, delayed or non-performance issues and design and quality errors. The guide lists a number of forms of construction contract generating disputes and most commonly used globally.
Regions identified as giving rise to disputes both now and in the future include Africa, Australia, Europe Ð where disputes have arisen in newly-acceded countries Ð Asia, the Middle East Ð ahead of upcoming cultural and sporting events such as World Expo 2020 and Qatar 2022 Ð and Latin America, where recent events such as the Rio 2016 Olympics are expected to continue generating disputes and arbitration.
To obtain a free copy of the guide, visit www.clydeco.com/insight/updates/view/global-trends-in-construction-dispute-resolution.