Construction Disputes


Construction projects, especially those of high economic value or of political importance, often give rise to disputes, which are usually submitted for resolution to dispute adjudication boards (based on the FIDIC standards) and arbitration. Construction disputes (or construction industry disputes) may be considered as typical commercial disputes. However, there are some major differences, which require specific procedure in their resolving. Construction disputes are frequently technically complex and therefore requiring fact intensive investigations as well as efficient management of the claims process.[1] It is also typical that construction disputes involve governments and governmental agencies, private capital and development banks, and will generate disputes that call for consideration of public, social and environmental issues.[2] 

Some of the disputes require to be decided rapidly in order to permit work to progress on the project.[3] Parties involved in construction project all want the project to be done on time, therefore dispute avoidance is desirable at the first place. 

The construction disputes, however, arise also between contractors and sub-contractors and may involve parties from different jurisdictions and different legal systems. Frequency of the construction industry arbitrations is also clear from ICC 2019 statistics, according to which, disputes within the sectors of construction/engineering and energy generated the largest number, approximately 40% of the ICC Arbitration cases.[4] 

The arbitration proceedings in the construction industry allows the parties to tailor the procedure to their needs, but also to choose arbitrators specialised in specific technical areas as well as to choose the seat and the language of proceedings, which is a great advantage particularly in the international construction projects.[5] 

However, it is the high technical complexity of construction projects, as well as other factors, such as shifts in approaches to management and to the allocation of risk and responsibility between the parties, as well as economic and political factors that require specific tools and methods to be applied in the arbitrations proceedings concerning construction disputes.[6] Therefore the ICC drafted recommendation articles for construction industry arbitrations. 

Pursuant to the ICC Commission report, one of the most important requirements is that arbitrators shall be familiar with the industry, construction contracts and shall have strong case management skills. A particular emphasis shall also be put on evidence. 

The construction projects are typically subject to standard forms of contract, such as FIDIC etc., which may provide the parties with some kind of pre-arbitral procedure (e. g. adjudications, mediation, etc.) as a pre-condition to arbitration. Parties may agree on a Dispute Adjudication Board (standing or ad hoc), which consists of an independent person or a panel of individuals who, under the terms of a contract, act in some form of dispute prevention or resolution. Dispute Adjudication Board provides contractors with ‘recommendations’ or ‘decisions’, which may subsequently be submitted to the arbitration proceedings, should the Parties not agree with the outcome of the DAB proceedings. 

Provided the pre-arbitral proceedings are required, construction arbitration may be considered as ultima ratio, i.e. final step, concerning disputes dealing with main or important questions of contract that cannot be resolved satisfactorily in pre-arbitral proceedings.[7] Also, where the pre-arbitral proceedings is required, the initiation of arbitration proceedings without prior mandatory pre-arbitration procedures may lead to the lack of jurisdiction of the arbitral tribunal or inadmissibility of the case.[8]

In the construction industry disputes a need for an urgent interim or conservatory measures can arise. To preserve the so-called status quo parties may submit their request for an emergency arbitration. In construction disputes, emergency arbitration is frequently used. As ICC 2019 statistics show, half of the Emergency Arbitrator applications were in the construction/engineering and energy sectors.[9] The parties undertake to comply with the emergency arbitrator’s decision (in form of an order) however, the arbitral tribunal may modify, terminate or annul the order or any modification thereto made by the emergency arbitrator[10] (an Emergency Arbitrator shall not act as the arbitrator or the member of the arbitral tribunal in main proceedings afterwards).


[1] JENKINS, J.: International Construction Arbitration Law (Second Edition), 2013, ISBN 9789041149855, p. 2.

[2] ICC Commission Report. Construction Industry Arbitrations: Recommended Tools and Techniques for Effective Management. 2019 Update, ISBN 978-92-842-0539-4, p. 8.

[3] JENKINS, J.: International Construction Arbitration Law (Second Edition), 2013, ISBN 9789041149855, p. 2.

[4] International Chamber of Commerce (ICC). Dispute Resolution 2019 Statistics, p. 15.

[5] JENKINS, J.: International Construction Arbitration Law (Second Edition), 2013, ISBN 9789041149855, p. 80.

[6] ICC Commission Report. Construction Industry Arbitrations: Recommended Tools and Techniques for Effective Management. 2019 Update, ISBN 978-92-842-0539-4, p. 8.

[7] ICC Commission Report. Construction Industry Arbitrations: Recommended Tools and Techniques for Effective Management. 2019 Update, ISBN 978-92-842-0539-4, p. 8-9.

[8] BALTAG, C., VASILE, C.: Construction Arbitration in Central and Eastern Europe, 2019, ISBN 9789403503318, p. 12.

[9] International Chamber of Commerce (ICC). Dispute Resolution 2019 Statistics, p. 17.

[10] Article 29 of ICC Arbitration Rules in force as from 1st January 2021.