Construction Arbitration Energy Arbitration Dispute Boards Technical Experts FIDIC

Introduction

Construction and energy projects generate complex disputes requiring specialized arbitration expertise. This article examines sector-specific considerations in construction and energy arbitration.

Construction Arbitration

Common Dispute Types

  • Delay and disruption claims: Critical path analysis, concurrent delay, acceleration costs
  • Variation and change orders: Scope changes, valuation, authorization requirements
  • Defective works: Design defects, workmanship issues, liability allocation
  • Termination disputes: Wrongful termination, repudiation, quantum
  • Payment claims: Interim payments, retention, final accounts
  • Professional negligence: Engineer, architect, consultant liability

Technical Expertise

  • Quantum experts: valuation of works, variation claims, damages
  • Delay experts: critical path analysis, schedule updates, extension of time entitlement
  • Engineering experts: design adequacy, workmanship, remedial works
  • Joint expert reports: tribunal-ordered single joint expert common
  • Hot-tubbing: concurrent expert evidence common in construction disputes

Contractual Frameworks

  • FIDIC (International Federation of Consulting Engineers): Red, Yellow, Silver Books; DAB (Dispute Adjudication Board) pre-arbitration step
  • JCT (Joint Contracts Tribunal): UK domestic contracts; adjudication priority
  • NEC (New Engineering Contract): Collaborative contracting; project manager determinations
  • Industry-specific forms: Oil and gas, infrastructure, power sector forms

Pre-Arbitration Procedures

  • Engineer/contract administrator determinations
  • Dispute boards (DABs, DRBs): standing or ad hoc; decisions binding unless overturned
  • Adjudication: statutory scheme in UK; 28-day determinations
  • Mediation: increasingly common; may be contractually required

Energy Arbitration

Sector Overview

  • Oil and gas: Upstream (exploration, production); downstream (refining, distribution)
  • Power generation: Thermal, hydro, nuclear, renewable energy (solar, wind)
  • Electricity transmission and distribution: Grid connection, transmission agreements
  • Renewable energy: Feed-in tariffs, power purchase agreements (PPAs), RECs

Common Dispute Types

  • Production sharing contracts (PSCs): Cost recovery, profit oil allocation, abandonment obligations
  • Power purchase agreements (PPAs): Tariff adjustments, force majeure, grid connection, availability
  • Gas supply agreements: Take-or-pay, price review, force majeure
  • Renewable energy: Regulatory changes, feed-in tariff adjustments, permitting delays
  • Construction and EPC contracts: Delay, performance guarantees, defects

Industry-Specific Institutions

  • LCIA Energy & Resources List: Specialist arbitrators with energy sector expertise
  • SIAC Energy Arbitrator List: Designated panel for energy disputes
  • HKIAC Energy Panel: Energy-specific arbitrator expertise
  • ICC Energy & Resources Commission: Guidance and rules development

Expert Witnesses in Technical Arbitration

Types of Experts

  • Quantum: valuation, damages, loss of profit
  • Delay: schedule analysis, critical path, entitlement
  • Technical: engineering, design, performance
  • Regulatory: tariff, licensing, environmental
  • Valuation: business valuation, discounted cash flow

Expert Evidence Management

  • Expert conferencing (hot-tubbing): concurrent testimony; direct examination by tribunal
  • Joint expert reports: experts instructed to identify areas of agreement/disagreement
  • Witness conferencing: direct examination of multiple experts together
  • Document management: extensive technical documentation; e-discovery tools essential

Procedural Considerations

Document Production

  • IBA Rules on Taking of Evidence: Redfern schedules common
  • Technical documentation: design drawings, specifications, correspondence, site records
  • Electronic discovery: email, project management systems, schedule updates
  • Privilege: legal advice privilege; without prejudice communications

Witness Evidence

  • Fact witnesses: project managers, engineers, quantity surveyors
  • Witness statements: detailed; may be subject to cross-examination
  • Remote hearings: increasingly common post-pandemic
  • Site visits: may be ordered for construction disputes

Provisional Measures

  • Emergency arbitrator: for urgent relief (performance bonds, continuation of works)
  • Security for costs: common in construction disputes; funding arrangements relevant
  • Interim payments: may be ordered where clear entitlement

Dispute Boards

Types

  • Dispute Adjudication Board (DAB): FIDIC contracts; decisions binding unless overturned in arbitration
  • Dispute Review Board (DRB): Recommendations non-binding unless parties agree
  • Combined Dispute Board: Can issue binding decisions or recommendations

Advantages

  • Early dispute resolution; issues addressed during project
  • Board members familiar with project; continuity
  • Decisions typically implemented; deter future disputes
  • Expertise of board members (legal, technical, commercial)

Practical Recommendations

  1. Select arbitrators with relevant sector expertise
  2. Engage expert witnesses early; coordinate with legal team
  3. Maintain thorough documentation: schedules, correspondence, variation records
  4. Consider pre-arbitration procedures (DABs, adjudication) to narrow disputes
  5. Address expert evidence management in procedural orders
  6. Plan for electronic discovery and document management
  7. Consider concurrent evidence (hot-tubbing) for expert testimony