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AcknowledgementtotheSecondEdition
Source

SimonStebbingsmycoauthorofthefirsteditionhavingretired
fromFreshfieldsBruckhausDeringer,Ihavetakenforwardthetask
ofupdatingthebooktoproducethissecondedition.Iwouldliketo
thankthemembersoftheFreshfields'EngineeringandConstruction
teamwhohelpedincluding(innoparticularorder)ElizabethWilson,
JaneDaviesEvans(ofCounsel),KimRosenberg,DeepaKhandhia,
TomHutchison,VanessaMedinaandJuliaHorbachinLondon,Dr
MartinEimerbasedinMunichandcolleaguesinNewYorkand
MENA.ThanksalsotomyPADebbieRhodenandthedocument
specialistsinLondonforproducingthetext.

Acknowledgementto
theSecondEditionin
JaneJenkins,
International
ConstructionArbitration
Law(SecondEdition),
ArbitrationinContext
Series,Volume3
(JaneJenkinsKluwer
LawInternational2013)
pp.xviixviii

Thesecondeditionupdatesthefirsttoreflectrevisionstoarbitral
rules,standardformcontractsandkeylegaldecisions.Aswiththe
firsteditiontheaimisnottoattemptacomprehensivelegal
analysisbutinsteadtoprovideapracticalguidetointernational
constructionarbitrationlaw.Indeedgiventheinternationalnatureof
constructionandengineeringprojectsitwouldnotbepossibleto
produceacomprehensivetextwithoutconductingacomparative
reviewofdifferentlegalsystemsandhowtheyapproachkey
substantiveandproceduralissues.Suchanexerciseisoutsidethe
scopeofthisbook.
Illustrations,however,havebeenprovidedunderEnglish,German
andothersystemsoflawbywayofexampleofthedifferingresults
thatmayariseunderdifferentgoverninglawsanddifferentlocal
laws.Thereaderwillappreciatethatitisdangeroustoassumethat
anidenticalcontractunderonesystemoflawwillhavethesame
effectwhengovernedbyanothersystemoflawforaproject
executedinadifferentlocation.Locallawadviceisalways
essentialasisaproperappreciationoftheimpactofchoiceofthe
governinglawofthecontractandoftheseatofthearbitration.
Annexeswhichappearedinthefirsteditionwhicharereadily
availableontheInternethavebeenremovedfromthesecond
editionandreplacedbyflowchartstoshowthestagesinstandard
formcontractdisputeresolutionprocedures,theproceduralstages
ofarbitrationsundertheICC,LCIAandUNCITRALrulesandto
providesomeoutlineexampledocuments.Thelatterareprovided
asillustrationsonlyandarenotasubstituteforlegaladviceinthe
contextofanyspecificprojectordispute.
page"xvii"
SimonandIwereverypleasedbythesuccessofthefirstedition
andIhopethatthesecondeditionprovidesausefulupdateand
valuableguideforthoseencounteringthesubjectforthefirsttime.
JaneJenkins
London,September2013

Chapter1:Introduction
1.01.WhatIsSpecialaboutInternationalConstruction
Disputes?
Whyisabookdevotedtoconstructionarbitrationrequired?What
differentiatesconstructioncontractsfromanyothercommercial
agreements?Inessence,whyareinternationalconstruction
disputesspecial?Wesuggestthatanumberofissuesdifferentiate
constructiondisputesfromothersandhavegivenrisetoparticular
practicesbeingadoptedtoassistintheresolutionofsuchdisputes.
First,constructiondisputesarefrequentlytechnicallycomplex,
requiringfactintensiveinvestigationswhichnecessitateefficient
managementoftheclaimsprocess.Guidancehasbeendeveloped
byarbitralinstitutionsfocusedspecificallyonsuitableprocedures
forconstructiondisputes.Forexample,theICChaspublisheda
ReportonConstructionIndustryArbitrations,recognisingthat
particularpracticesandproceduresassistintheeffectivecase
managementofsuchdisputes.Intheauthors'view,itishelpfulto
focusatthestageofcontractdraftingonthemeanstofacilitatethe
earlyresolutionofdisputesandefficientcontractadministration.In
theeventthatthepartiesareunabletosettleadisputeinadvance
ofarbitration,efficientcontractadministrationcanonlyhelpin
presentingevidencebeforethearbitraltribunal.

Source
Chapter1:Introduction
inJaneJenkins,
International
ConstructionArbitration
Law(SecondEdition),
ArbitrationinContext
Series,Volume3
(JaneJenkinsKluwer
LawInternational2013)
pp.112

Asecondrelevantfeatureisthatconstructiondisputesinvariably

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necessitatearapid,iftemporary,decisioninordertopermitworkto
progressontheproject.Itisintheinterestsofallpartiesthat
completionshouldbeachievedontimeoratleastattheearliest
possibleopportunityandrecoursetoalengthyarbitrationtodecide
questionsnecessaryforcompletionoftheworks,suchasthe
correcttechnicalsolutiontoovercomedesignproblems,isclearly
notpractical.Thishasgivenrisetotheincreasinglyimportantrole
ofdisputereviewboardsinresolvingdisputesatthefirstinstance.
Afurthercomplicatingfactoristhatconstructionprojectsinvariably
involvemanyparties.Themethodofprocurementadoptedmay
introduceafragmentationofresponsibilities,forexample,fordesign
andfabricationofparticularequipment.Even
page"1" wherea
turnkeyarrangementisadoptedwithonecontractoracceptingsingle
pointresponsibilityfordesignandconstructionoftheproject,there
willbesubcontractorsandsuppliersinvolvedinchaincontracts
belowtheturnkeycontract.Themethodsforresolvingdisputeswill
ideallycontemplatejoinderorconsolidationofrelatedproceedings
andthemanagementoftheinterfacesbetweenthecontractsisan
importantroleforacontractadministrator.Theuseofproject
financeoninternationalprojectsintroducesanaddedlayerof
complexity,astheinterestsoflendersandothercreditproviders
havetobetakenintoaccount.Lendersmay,forexample,havethe
opportunitytostepintoaprojectintheeventofthreatened
terminationoftheprincipalprojectagreements.Therewillnodoubt
bereportingrequirementstolendersandalsoinsurersastothe
statusofdisputesandtheymaybeentitledtodictateorinfluence
themannerinwhichclaimsarepresentedandpursued.
Arelatedissueistheinvolvementonmajorinternational
constructionprojectsofpartiesfromdifferentjurisdictionswith
differentculturalapproaches,andindeedwithdifferentlegal
systems.Theywillcometoaprojectwithdifferentexpectations
perhapsbothastotheeffectoftheirsubstantiverightsunderthe
contractandalsoastothetreatmentofdisputesasandwhenthey
arise.Theseareaspectsthatanyonedealingwithdisputesneedsto
beawareof,andthatwillbeofparticularrelevanceinanyformal
disputeresolutionprocedurewhere,forexample,thecontrasting
approachesofcivilandcommonlawjurisdictionstoprocedural
issuesmaygiverisetodifficultiesifnoteffectivelymanaged.
Anotherfactortobearinmindwhenapproachingconstruction
disputesistheinfluenceofthewidespreaduseofstandardformsin
theindustry.Partiesmaychoosetouseastandardform,typically
makingamendmentstotailortheformtotheprojectinquestion,or
theymayusethestandardformasthestartingpointfordraftinga
bespokecontract.
Somestandardformshavebeeninuseformanyyearsandhave
beenlitigatedfromtimetotime.Certainprovisionsmaytherefore
haveawellsettledmeaningunderthegoverninglawofthecontract
inquestion.Forinstance,Englishcourtshaveruledonthemeaning
ofcontemporaryrecords'inclause53oftheFIDICConditionsof
ContractforWorksofCivilEngineeringConstruction(4thEdition),(1)
ontheemployer'spowerofforfeitureunderclause63oftheFIDIC
ConditionsofContractforWorksofCivilEngineeringConstruction
(2ndEdition),(2)ontheliabilityoftheemployer'sengineertothe
contractorunderclauses60and67oftheFIDICConditionsof
ContractforWorksofCivilEngineeringConstruction(2ndEdition),(3)
onvaluationsforextraworkunderclause52(1)(b)oftheICE
ConditionsofContract(6thEdition),(4)andonthescopeof
unforeseenphysicalconditionsfallingwithinclause12oftheICE
ConditionsofContract(5thEdition).(5)
page"2"
Anysuchinterpretationshowever,maynotapplywherethe
governinglawisotherthanEnglishlaworalegalsystemderived
fromEnglishlaw.Itisnotuncommonforpartiestonegotiatea
contractontheassumptionthat,sayEnglishlawwillbethe
governinglawonlytochangethegoverninglawprovisioninthefinal
stagesofnegotiation.Itiscriticalthentoreassessthemeaningof
thecontractunderthenewchoiceoflaw.
Inaddition,arbitraldecisions,althoughnotbindingprecedent,may
alsoprovideausefulguidetointerpretation.Summariesorextracts
fromICCawardsarepublishedonanonamesbasisinspecialist
journalsincludingtheICCInternationalCourtofArbitrationBulletin,
YearbookofCommercialArbitration,Journaldudroitinternational
andRevistadeDerechoInternacionalydelMercosur.(6)
Majorcontractorsandclientshaveconsideredapplyingthesame
systemoflawtoalloftheirprojectsirrespectiveoftheplaceof
executiontoachieveuniformityintheassessmentandevaluationof
keyrisksandadministrationofthecontracts.Thisapproachwhile
appearingsuperficiallyattractivehasitsdrawbacks.
Firsttherewillalmostcertainlybelocallawsthatwillapplytothe
contractexecutiontheeffectofwhichhavetobeassessedona
projectspecificbasis,forexample,healthandsafety,planningand
permitting.Suchregulatoryissuesarefrequently,intheauthors'
experience,significantcausesofdelaytotheproject.Thisis
particularlythecasewherearegulatorysystemisuntested,such
asinnuclearnewbuildprojectswherethereremainsignificant
differencesbetweentheregulatoryregimesforthegrantofdesign
andconstructionpermits.
Secondtheveryterminologyusedinthecontractmayhavea

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differentmeaningunderdifferentlegalsystems.Examplesinclude
themeaningofconsequentiallossunderEnglishandGermanlaw
discussedfurtherinChapter2.TheGermancourtsindeedhave
concludedthatthechoiceofEnglishlanguagetowritethecontract
evenwherethegoverninglawisGermanlawmayhavetheeffectof
importingEnglishlawconceptsintothecontractdependingonall
thecircumstances.(7)
Thirdthelatitudeforstrictenforcementofcontractualrightsdiffers
undercommonandcivillaw.TakingGermanlawasanexamplea
contractormustbegiventherighttorepairdefectsbeforedamages
maybeclaimed.Thereisnosuchobligationonanemployerunder
Englishlawalthoughitisverycommon,ofcourse,tograntthe
employertherightunderaconstructioncontracttorequirethe
contractortoreturntothesitetomakegooddefectsduringthe
defectsliabilityperiod.Anotherexampleistheabilityforathird
partytoenforceacontractmadeforitsbenefitwhichgivesriseto
thethornydoctrineofprivityofcontractwhichhasbeenonly
partiallyreformedbytheContracts(RightsofThirdParties)Act
1999.TheinflexibilityofEnglishlawinthisregardcancomeasa
shocktocivillawyerswhomayassumecontractsmade,for
example,byparentcompaniescanbeenforcedbysubsidiaries.
Equallyimportantareprecontractualobligationsandremedies.The
partiesmayagreeheadsoftermsoraletterofintentbutthen
negotiationsmaynotleadtofinal
page"3" agreementonthe
detailedcontracttermsandconditions.Thegeneralpositionunder
Englishlawisthatanagreementtoagreeisunenforceableandthe
courtsorarbitraltribunalwillnotfillgapsorpolicethenegotiations
bytheparties.BycontrastunderGermanlaw,forexample,a
remedyindamagesmaybeavailableifapartyhasalegitimate
expectationthatacontractwillbeconcluded.
Intheauthors'experienceofadvisingonthenegotiationof
contracts,itisimportanttocheckthepartiesfullyunderstandthe
implicationsofadoptingaparticularsystemoflawanddonot
proceedontheassumptionthatbecausethecontracthasthesame
writtentermsandconditionsitmusthavethesamemeaningand
effectirrespectiveofthechosengoverninglaw.Thisisadangerous
assumptionandonethattimeandtimeagainresultsin
misunderstandingsintheadministrationandexecutionofthe
contractwhichmayleadtoexpensiveandprotracteddisputes.
Anotherfeaturedifferentiatingconstructioncontractsfromother
commercialagreementsistheimpactofsectorspecificlegislation,
whichaddressesparticularpracticesrelevanttotheconstruction
industry.AnexampleistheUKHousingGrantsConstructionand
RegenerationAct1996(theUKConstructionAct1996)which
outlawspaywhenpaidprovisions,introducesarighttostopwork
fornonpaymentandarightfordisputesunderconstruction
contractstobereferredtofasttrackadjudication.Similarlegislation
hasrecentlybeenadoptedinSingaporetheBuildingand
ConstructionIndustrySecurityofPaymentAct2004.
Ahostilelocalenvironmentmaygiverisetolegalaswellas
technicalchallenges.Theabsenceofasophisticatedlegalsystem
mayunderminelegaldevicesadoptedreadilyinotherjurisdictions,
suchasthemeansofprovidingsecuritytolenders,presentingthe
needfornoveltechniquestobeadopted.Thesemayprovidea
fertilesourceofdisputeswhenprojectsrunintodifficulties.
Thefactorsaddressedaboveappearandreappearthroughoutthis
book,providingtherationaleforpracticesadoptedforeffective
disputeresolutionor,perhaps,thereasondisputesariseinthefirst
place.Theydemonstratewhyconstructiondisputesjustify,and
indeedrequire,aparticulartreatmentthatdifferentiatesthemfrom
othercommercialandcontractualdisputes.
1.02.TheAimsofThisBookandItsScope
Thisbookisdesignedtoprovideapracticalguidetodispute
resolutionunderconstructioncontracts.Themajorityofitsfocusis
onarbitrationasameansofresolvingconstructiondisputes.Asa
startingpoint,however,Chapter2providesabasicintroductionto
thekeyfeaturesofaconstructioncontract,withaviewtosetting
thesceneandidentifyingtheissueswhichcommonlygiveriseto
disputes.Examplesofstandardformprovisionsaregivenbywayof
illustration.
InChapter3theissueofdisputeavoidanceanddisputeresolution
isaddressed,lookingatthedifferenttechniquesavailablefor
resolvingdisputes.Ineveryprojecttheclientwillwanttoseethe
workdeliveredontimeandwithinbudget.Theclient'sfinanciers,
whetherlendingtotheclientortotheproject(inthecaseofpublic
privatepartnershipsandprojectfinancedprojects)haveasimilar
interest,oftenwiththe
page"4" additionalconcernofensuring
thattheprojectgeneratestheanticipatedrevenueswithintheperiod
overwhichthefinanceistoberepaid.Contractors,particularly
wheretheyareinvolvedonlyascontractorsandnotalsoasequity
participants(asiscommonlythecaseinprojectfinancedprojects),
arelookingtomaximisecashflowandtheprofittobeearnedinthe
constructionoftheproject.Allhaveakeeninterestinseeing
disputesresolvedswiftlysoasnottodisruptordelaythe
constructionprocess,toimprovecashflowandmaximisereturns.
However,itmaybethatswiftsolutionstodisputesareatthe
expenseofacomprehensiveandrigorousreviewofallrelevant
circumstancesandtheconsequencesflowingfromtheeventsin

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question.Thislackofrigourmaybeacceptableforlowvalue
disputesbutwillnotusuallybesuitableforlargerandmore
importantdisputes.Itiscommon,therefore,toseeatiered
approachtodisputeresolution,withthepartiesagreeingtoaseries
offasttrackprocedureswhichareeithernonbindingorwhichhave
onlyinterimeffect.Arbitrationorlitigationisthenthelaststepinthe
processleadingtoafinalandbindingdecisionifthepartiesfailto
achieveanacceptableresolutiontotheirproblem.
Increasingly,theapproachtakenbystandardformcontractsinuse
internationallyistoincorporatemultitiereddisputeresolution
provisionsprovidingforintermediatestageswitharbitrationasthe
finaltier.
Negotiationsataseniorlevelmaybeexpresslyprovidedforasa
conditionprecedenttoserviceofanyformalnoticeofdispute.
Thereafterdisputereviewboards,beingessentiallyapanelof
experts,havetakentheplaceinmanycasesoftheengineerin
resolvingdisputesatfirstinstance.Typically,thedecisionofa
disputereviewboardisbindingunlessanduntilchallengedin
arbitrationor,rarelyininternationalprojects,litigation.Multitiered
disputeresolutionprovisionsareconsideredinChapter3,alongwith
theadvantagesanddisadvantagesofarbitrationandlitigation(with
thebalancefallingfairlydecisivelyinfavourofarbitrationasthe
finaltierofdisputeresolutiononinternationalprojects).
Intheauthors'view,itseemedimportantalsotocovertheeffective
administrationofconstructioncontractsandclaimsmanagement.
Toolsforeffectivecontractadministrationandclaimsmanagement
arethereforeaddressedinChapter4,includingsuggested
provisionstoincludeincontractsinordertofacilitateclaims
handling.Thischapteralsoconsiderspartneringandalliancing
techniques,whichareprovingincreasinglypopularasameansof
establishingjointworkingbetweenclients,contractorsandsuppliers
withaviewtosolvingdisputesattheprojectlevelwithouttheneed
forrecoursetoformaldisputeresolution.
Chapter5focusesonproceedingsbeforedisputereviewboardsor
expertpanels.Asnotedabove,thesearenowcommonlyseenin
standardformconstructioncontractsasthefirsttierofbinding
disputeresolutiontechniques,beingbindingonlyonaninterimbasis
unlessanduntilrevisedbyarbitration.Typicalproceduresbefore
disputereviewboardsareconsideredandtherelevantprocedural
rulescompared.Thechapteralsocommentsonhowtoapproach
thepreparationofreferencestactically.
Thedecisionsofdisputereviewboardsorexpertpanelswillnotbe
enforceableinthesamewayasanarbitralaward.Instead,theyare
bindingonlyonthebasisoftheparties'contractualagreement.
Accordingly,intheeventofdefaultincompliancebya
page
"5" losingpartyaclaimforbreachofcontractwouldhavetobe
pursuedamorecumbersomeandcostlyprocessthan
enforcementofarbitralawards.Inthecontextofattemptstoenforce
thedecisionsofdisputereviewboards,welookatgroundsfor
attackofsuchdecisions,anissueofgreatsignificanceintheevent
thatthepartieshaveagreedinadvancethatcertaindecisionsshall
befinal.
Chapter6considersmediation,conciliationandotherformsof
alternativedisputeresolution.Suchtechniquesforalternative
disputeresolutionarebecomingincreasinglypopular,certainlyin
commonlawjurisdictions.Costordersmaybemadebycourtsin
theUSortheUKforexample,againstpartieswhohaverefusedto
participateinsuchproceedings.Theimpetusbehindthis
developmentistoavoidthecostsanddelayassociatedwiththe
hearingofacomplexconstructiondispute.Perhapsitisbecause
proceduresincivillawsystemsaremorestreamlinedthatmediation
isnotseensoofteninsuchjurisdictions.Ininternationalprojects,
however,intheauthors'experience,itisincreasinglybeingused
andwithreasonablesuccess.
Chapter7thenturnstoarbitrationandthestepsforcommencement
ofarbitrationproceedings.First,welookattheselectionofthe
tribunalandtheprocedureforagreeingonasolearbitratororthe
appointmentoftwonominatedarbitratorsandathirdtoactas
chairman.Whereinstitutionalarbitrationhasbeenselectedbythe
parties,Chapter7looksattherolethattheinstitutionsplayinthe
appointmentofthetribunal.Italsoconsidersthedutiesof
arbitratorsandgroundsforchallengeonthebasisofimpartialityor
conflictofinterest.Theneedforjoinderofrelateddisputes
(involvingthirdparties)isconsidered,togetherwithconsolidation
(wherethesamepartiesareinvolvedinrelateddisputeswhichmay
potentiallybeheardbeforedifferenttribunals).Theaim,obviously,
istotrytoavoidmultiplicityofproceedingsandtobringthesame
issuesbeforethesametribunaltoavoidtheriskofincreasedcosts
andinconsistentdecisions.Whilethedomesticcourtsinmost
sophisticatedlegalsystemswillhavepowerstoorderjoinderofthird
partiestoproceedingsandconsolidationofexistingproceedings,
thisisnotthecaseinarbitration.Asarbitrationisaconsensual
processbasedontheagreementoftheparties,anysuch
arrangementsneedtobebyconsent,eitherbyincludingappropriate
provisionsinthecontractfromtheoutsetorbyachievingconsent
asandwhendisputesarise(whichmaybemoredifficultifjoinderis
perceivednottobeintheinterestsofoneormoreoftherelevant
partiesatsuchtime).
Chapter7thenaddressestheformofatypicalrequestfor
arbitration.Itconsidersthebasicinformationtobeincludedinsuch

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adocumenthavingregard,whererelevant,totherulesofthewidely
usedinstitutions.Thechapterthenconsiderstheearlyselectionof
theparties'lawyers.
InChapter8weconsidertheimportanceofeffectivecase
managementinthearbitration,addressingthepowersofthetribunal
tocontroltheproceedingsindefaultof,orsometimesasanadjunct
to,theagreementoftheparties.Referenceismadetothe
UNCITRAL,ICC,LCIAandAAAarbitrationrulesandalsotothe
UNCITRALModelLaw.Examplesarealsogivenfromselected
jurisdictionsinrelationtotheroleofthedomesticcourtsin
supportingthearbitralprocessindefaultofagreementbythe
parties.
page"6"
Chapters9and10lookatthepreparationandcollectionof
evidence.Chapter9providesageneralsummary,lookingatthe
valueofachronology,documentmanagement,technicalevidence,
theuseofsocalledScottschedules(whichessentiallysetoutall
relevantparticularsofaclaimintabularform)andtheevidence
requiredforcommonconstructionclaims,includingpossible
approachestothequantificationofclaims.Chapter10thenfocuses
specificallyonprogrammeanalysis,lookingattheroleofthe
programme,criticalpathanalysis,questionsofconcurrentdelay
andtheissueofownershipoffloatintheprogramme.
ProceduralissuesarethenaddressedinChapter11.Atopicof
greatinteresttoarbitratorsoverrecentyearsisthe
internationalisationofarbitration:thecomingtogetherofthemost
usefulelementsofcivilandcommonlawproceduralapproaches.
Theseissuesareaddressedinthecontextofthepreparationof
evidence,crossexaminationofwitnesses,expertreportsandthe
extentofdocumentdisclosure.Typicalproceduraldirectionsare
thenaddressed,withsuggestionsastoadditionalissuesthatmay
berelevant,includingidentificationofanypreliminaryissues
suitableforearlydetermination,securityforcosts,interimmeasures
andsitevisits.
InChapter12weconsidertheconductofthehearing,includingthe
likelytiming,thedivisionofissues,thepresentationofsubmissions
andthetakingofevidence,aswellasessentiallogistical
considerations.
Chapter13addressestheeffectoftheaward,potentialgroundsfor
challengeandenforcementoftheaward.
Chapter14isanewchapterinthesecondeditionofthebookwhich
developsatopictouchedoninthefirsteditionbutwhichis
becomingincreasinglyimportant,thatis,theroleplayedby
investmenttreatiesininternationalconstructionprojects.Often
overlooked,suchtreaties(betheymultilateralorbilateral)provide
partieswithrecoursetoarbitrationagainstahostnationstate
absentacontractualarbitrationagreement.Theyprovideavaluable
meansofinvestorprotectionandareausefuladjuncttocontractual
remedies.
Finallywesumupandpresentsomeconclusions,withcomments
onpossiblefuturedevelopmentsinconstructioncontractingand
disputeresolution.
1.03.TheIntendedAudience
Itwillperhapsbeapparentfromtheaboveintroductionthatthis
workisdesignedtoprovideguidancetothoseunfamiliaror
inexperiencedintheworkingsofconstructioncontractsandmeans
ofdisputeresolution.Itisaimedatinhouselawyerswhomayhave
manyyearsexperienceascommercialcontractnegotiatorsbut
havenothadtolivethroughaconstructiondisputenormanagea
constructioncontractduringthelifeofaproject.Wehopethat
lawyersinprivatepracticeembarkingonaconstructiondisputefor
thefirsttimewillalsofindthisbookofvalue.
page"7"
1.04.APracticalGuide
Theaimindraftingthisbookistoprovideapracticalguide.Where
relevant,checklistsandexecutivesummariesofkeypointsare
given.Annexesproviderelevantsupportingmaterialincluding
outlineexampledocumentsforuseinarbitration.
Thisworkisintendedforaninternationalaudience.Itsauthorsare
bothEnglishtrainedlawyersbutwhoworkoninternational
constructionprojects.Increasinglyinourexperiencetechniquesfor
disputeresolutionarebecominginternationalisedalthough,of
course,partiesmustalwaysbewaretheidiosyncrasiesofthe
governinglawandlocallaw.Locallaw,forexample,mayrestrictthe
parties'freedomtoagreedisputeresolutionproceduresoftheir
choice.Itmayinsteadimposecompulsoryadjudicationasthefirst
tierofdisputeresolutionforcertaintypesofconstructioncontracts.
Itcomesasasurprisetomanyinternationalparticipantsin
constructionprojectstakingplaceinEngland,WalesandScotland,
thatthereislegislationimposingmandatoryfasttrackadjudication
fordisputesarisingunderconstructioncontracts(seefurther
Chapter5).Thisworkdoesnotandcannotattempttoaddressall
suchregimesthatmayapplyoninternationalprojects:examplesof

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Englishlawproceduresandrulesareprovidedasexamplesonly,to
flagupthesometimessurprisingresultsofchoiceofgoverninglaw,
seatofarbitrationorlocationoftheprojectinquestion.
Standardformcontractsusedoninternationalconstruction
contractsarecited,againtoprovideillustrationsandexamples.
Thosereferredtomostfrequentlyarethestandardformspublished
bytheFdrationInternationaledesIngnieursConseils(FIDIC),
theEngineeringAdvancementAssociationofJapan(ENAA),the
InstitutionofCivilEngineersICEandtheAmericanInstituteof
Architects(AIA).Eachoftheseisbrieflyaddressedbelow.
[A].FIDICConditionsofContract
FIDICwascreatedin1913byBelgium,FranceandSwitzerlandand
representsnationalassociationsofconsultingengineers.TheUK
becameinamemberin1949andtheUSfollowedin1958.FIDIC's
membershipiscurrentlydrawnfromninetyfourcountriesacross
fivecontinents.Recentjoinerswhosemembershipwasratifiedat
theGeneralAssemblymeetinginSeoul,SouthKoreainSeptember
2012includeChile,Columbia,Peru,TheDominicanRepublicand
Thailand.Inaddition,variousorganisationsrepresentingnon
engineering/constructionprofessionals,suchaslawyersand
insurers,whoneverthelesshaveaninterestinthefield,have
affiliatedmemberstatus.FIDICmaintainsitssecretariatinGeneva,
Switzerland.
FIDICpublisheditsfirststandardformin1957,theConditionsof
ContractforWorksofCivilEngineeringConstruction(oldRed
Book).TheConditionsofContractforElectricalandMechanical
Works(oldYellowBook)followedin1963.In1995,theConditions
ofContractForDesignBuildandTurnkey(OrangeBook)was
released.
Fromthestart,FIDIC'sstandardformswereintendedforuseon
projectswithaninternationaldimension.Forexample,theoldRed
BookwasbasedonUKstandardconditionsofcontractandwasfor
useonthevariousdevelopmentprojectsbeing
page
"8" undertakenbyBritishandotherengineersintheCommonwealth
aswellasotherjurisdictions.(8)
Inthelate1990s,FIDICcarriedoutamajoroverhaulofallofits
standardformsandreleasedasuiteoffourcontractsin1999to
replacethepreviouscontracts.Thenewsuiteofcontracts
consistedofthreestandardformsformajorworksandoneforminor
works:
ConditionsofContractforBuildingandEngineeringWorks
DesignedbytheEmployer(RedBook).
ConditionsofContractforPlantandDesignBuildforElectrical
andMechanicalPlant,andforBuildingandEngineeringWorks
DesignedbytheContractor(YellowBook).
ConditionsofContractforEPC/TurnkeyProjects(SilverBook).
ShortFormofContract(GreenBook).
TheRedBookreplacestheoldRedBookandisforuseonalltypes
ofprojectswherethemainresponsibilityfordesignlieswiththe
employer.Today,FIDIC'sRedBook,albeitanamendedversion,
remainsthefirstchoiceofallmajorinternationaldevelopmentbanks
andagenciesforuseasgeneralconditionsofcontractona
constructionprojectfinancedbythem.(9)Theseinstitutionsinclude
theAsianDevelopmentBank(ADB),AfricanDevelopmentBank
(AfDB),CaribbeanDevelopmentBank(CDB),Commissionofthe
EuropeanCommunities(CEC),EuropeanBankforReconstruction
andDevelopment(EBRD),EuropeanInvestmentBank(EIB),Inter
AmericanDevelopmentBank(IDB),InternationalBankfor
ReconstructionandDevelopment(IBRD)andtheUnitedNations
DevelopmentProgramme(UNDP).
TheYellowBookisbasedontheoldYellowBookandOrangeBook
andisintendedtoreplaceboth.
TheSilverBookisarelativelynewstandardformaddedtothe
FIDICcontractsuiteandismeanttocaterforthegrowingtrendin
theinternationalmarketforprojectswherethecontractorbears
morerisk(atextracosttotheemployer)andamoredefinitefinal
priceandcompletiontimeisagreedfromtheoutset.
TheGreenBookisanothernewstandardformfromFIDICandis
designedforuseonnoncomplexinternationalprojectssuchasrural
roads,watersupply,sewagedisposal,andelectricitytransmission
indevelopingcountries.TheGreenBookcanbeusedirrespective
ofwhethertheemployerorcontractoriscarryingoutdesignor
whetherpaymentisonalumpsumorotherbasis.(10)
page"9"
[B].ENAAModelForms
ENAAisanonprofitmakingorganisation,establishedinAugust
1978,supportedbytheMinistryofInternationalTradeandIndustry
(MITI)ofJapanandvariousothernationalandlocalgovernment
agencies,universitiesandresearchorganisations.TheAssociation
hasthesupportofover1,500specialistsfrommembercompanies,
aswellasvariousexpertsintheirrespectivefields.

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In1986,theENAAdevelopedaturnkeystylecontractdesigned
specificallyforprocessplantconstructioncalledtheModelForm
InternationalContractforProcessPlantConstruction.Themodel
formwassubsequentlyrevisedandathirdeditionwaspublishedin
March2010(ENAAProcessPlantModelForm2010).Theform
consistsoffivevolumes:FormofAgreementandGeneral
Conditions(Volume1,2010ed.),GuideNotes,Samplesof
AppendicestotheAgreement(Volume2,1992ed.),Work
Procedures(Volume4,1992ed.)andAlternativeFormforIndustrial
PlantWithoutProcessLicense(Volume5,1992ed.).Theform
contractismeantforuseinconnectionwiththedesignand
constructionofprocessplantsusingtheturnkeyapproach.(11)
In1996theENAApublishedtheModelFormInternationalContract
forPowerPlantConstruction(ENAAPowerPlantModelForm1996),
aturnkeycontractfortheconstructionofpowerplants.The1996
modelformconsistsofthreevolumes:FormofAgreementand
GeneralConditions(Volume1),SamplesofAppendicestothe
Agreement(Volume2)andGuideNotes(Volume3).
[C].ICEStandardForms
TheICEwasestablishedin1818andisbasedintheUK.TheICE
drawsitsmembershipfromover70,000professionallyqualifiedcivil
engineersintheUK,China,Russia,Indiaand140othercountries.
TheICEpublishestheNewEngineeringContract(NEC)and(until
2011)publishedtheICEConditionsofContract.(12)
[1].TheNewEngineeringContract
TheNewEngineeringContractwasfirstpublishedbytheICEin
1993andwassubsequentlyrenamedastheEngineeringand
ConstructionContract(ECC).Athirdedition(NEC3)waspublished
in2005andwasrecentlyrevisedinApril2013.ThetermNEC3'is
nowusedtorefertothewholesuiteofcontractswhichincludesthe
ECCaswellasasubcontract,aprofessionalservicescontract,an
adjudicator'scontract,a
page"10" shortcontract,ashort
subcontractandtheNECpartneringoption.TheECCistherelevant
contractforinternationalconstructionprojects.TheECCis
designedforusein:
engineeringandconstructionworkwhethercivil,electrical,
mechanicalorbuildingwork
projectswhetherthecontractorhasfull,partialornodesign
responsibilityand
UKandinternationalprojects.
TheECCalsoallowsachoiceforachoiceofsixcontract
strategies:OptionAPricedcontractwithactivityscheduleOption
BPricedcontractwithbillofquantitiesOptionCTarget
contractwithactivityscheduleOptionDTargetcontractwithbill
ofquantitiesOptionECostreimbursablecontractandOptionF
Managementcontract.
[2].TheICEConditionsofContract
TheICEConditionsofContractarestandardformsdraftedbythe
ConditionsofContractStandingJointCommittee(CCSJC)foruse
oncivilengineeringworks.TheCCSJCcomprisesrepresentatives
fromtheICE,theCivilEngineeringContractorsAssociation(CECA)
andtheAssociationofConsultingEngineers(ACE).Thesuite
consistsof:
MeasurementVersion7thEdition.
Design&Construct2ndEdition.
TermVersion1stEdition.
MinorWorks3rdEdition.
PartneringAddendum.
TenderingforCivilEngineeringContracts.
AgreementforConsultancyWorkinRespectofDomesticor
SmallWorks.
TheICEDesign&ConstructionConditionsofContract(ICED&C)is
themostrelevanttointernationalconstructionprojects.
[D].AIAStandardForms
TheAIAisanationalassociationofarchitectsfoundedin1857.The
AIAhasover125yearsofexperiencecreatingstandardforms,
publishingitsfirstuniformcontractforusebetweenanowneranda
contractorin1888.In1911,theAIApublisheditsfirststandard
generalconditionsforconstruction,theprecursoroftheA2012007
GeneralConditionsoftheContractforConstructiondiscussedin
moredetailbelow.TheAIAcontractsarenowastandardinthe
constructionindustryoftheUnitedStates.TheA1412004
AgreementbetweenOwnerandDesignBuilderandA2012007
GeneralConditionsoftheContractforConstructionarethetwo
mainstandardformsusedonconstructionprojects.
page"11"
[1].A1412004AgreementbetweenOwnerandDesignBuilder

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TheA1412004AgreementbetweenOwnerandDesign/Builder
(A141)isintendedforusewheretheemployercontractsdirectly
withoneentityforbothdesignandconstructionservices.Itisa
twopartagreement,evolvingtheprojectandthedesignthroughtwo
separatecontracts,oneforpreliminarydesignandbudgetingand
oneforfinaldesignandconstruction.Thefirstisusedtomapout
thedesignandpricingoftheproject,whilethesecondprovides
constructionarrangementswheretheemployerdecidestomove
forwardwiththeproject.
[2].A2012007GeneralConditionsoftheContractfor
Construction
TheA2012007GeneralConditionsoftheContractforConstruction
(A201)isforusewherethedesignresponsibilitybelongstothe
architect,asdistinctfromthecontractor.TheA201setsoutthe
rightsandobligationsoftheemployer,contractorandarchitect.
Thoughthearchitectisnotapartytotheconstructioncontract,he
neverthelessparticipatesinthepreparationofthecontract
documentsandperformscertainconstructionphasedutiesand
responsibilitiesdescribedindetailintheA201.Supplementary
conditionsareusuallyaddedtoamendorsupplementportionsof
theA201asrequiredbytheexigenciesofaparticularproject.

AttorneyGeneralfortheFalklandIslandsv.GordonForbes
Construction(Falklands)Ltd(No.2)[2003]BLR280.
2
MvitaConstructionCoLtdv.TanzaniaHarboursAuthority[1989]
46BLR19.
3
PacificAssociatesInc.v.Baxter[1988]44BLR33.
4
HenryBootConstructionLtdv.AlstomCombinedCyclesLtd
[2000]BLR247.
5
HumberOilTerminalTrusteeLtdv.HarbourandGeneralWorks
(Stevin)Ltd[1991]59BLR1.
6
ComprehensiveannuallistsofICCawardspublished,thenames
ofjournalsandvariouslanguagesofpublicationareavailableat:
http://www.iccdrl.com/(accessed10Sep.2013).
7
FederalSupremeCourt,decisionof2Dec.1991,fileno.
11ZR274/90(NJWRR1992,423seq).
8
SeeChrisWade,AnOverviewofFIDICContracts,notesfrom
presentationatanICCFIDICconferenceinParis(April2004).
9
Forexample,seetheWorldBank'sStandardBiddingDocument
forProcurementofWorks(March2012)availableat:
http://siteresources.worldbank.org/INTPROCUREMENT/Resources/Works
EN22March12_Rev5.pdf(accessed10Sep.2013).
10
SeeWade,OverviewofFIDICContracts.
11
Eng.AdvancementAss.Japan,ModelFormInternational
ContractforProcessPlantConstructionvol.3,1(2ded.ENAA
1992).
12
TheICEofficiallywithdrewfromtheICEConditionsofContract
inAugust2011andthisformofcontracthasbeenreplacedbythe
InfrastructureConditionsofContract.Althoughweunderstandthat
theICEConditionsofContractisstillinuse,weanticipatethatthe
useofthiscontractwillbecomeincreasinglyrare.

Chapter2:KeyFeaturesofConstruction
Contracts
2.01.Introduction
Theaimofthischapteristoprovideanintroductiontotheshape
andstructureofaconstructioncontract,withparticularattention
paidtothosefeaturesthatcommonlygiverisetodisputes.It
focusesonthekeyplayersandkeyprovisionsthatconstruction
contractsusuallycontain.Italsoconsiderstheroleofancillary
documentssuchasbondsandguaranteeswhich,iftheydonotplay
acentralrole,areoftenanimportantpartofthebackgroundfactsor
motivationforadispute.Demandsmaytriggercommencementof
anarbitrationeithertoproveentitlementtoclaimsecuritywhere
bondsareconditionalortorecoversumspaidunderondemand
instruments.

Source
Chapter2:Key
Featuresof
ConstructionContracts
inJaneJenkins,
International
ConstructionArbitration
Law(SecondEdition),
ArbitrationinContext
Series,Volume3
(JaneJenkinsKluwer
LawInternational2013)
pp.1348

2.02.KeyPlayers
Theobviousstartingpointistheclient,whoissometimesreferred
toinconstructioncontractsastheemployer(ortheprincipalor
owner).Theemployermaybe,forexample,adeveloper,a
governmentorstateentity,aninvestororanenduser.
Nextthereisthecontractorwhobuildsandpossiblydesigns,or
manages,theconstructionprocess.Thesevariousrolesare
discussedlaterinthischapter.

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Themainorprimecontractortypicallysubcontractssomeorallof
itsworktosubcontractors'(eitherchosenbythecontractoror
nominatedbytheemployer).Itmayalsoenterintocontractswith
suppliers'forthesupplyofequipmentormaterials.
Therewillalsobeadesignteam,themembershipofwhichwill
dependuponthetypeofproject.
2.03.KeyDocumentsinaConstructionContract
Constructioncontractsareoftenvoluminousandconsistofmany
documentsofdifferentorigin,authorshipanddevelopment.The
standarddocumentsformingaconstructioncontractare:
page
"13"
ArticlesofagreementTheseareusuallyonlyafewpageslong
andsetoutthenamesofthepartieswithabriefdescriptionofthe
project.Thearticlesincorporatetheconditionsofcontractupon
whichthepartiesaretocarryouttheproject.Sometimesthe
articlesofagreement(oralsocontractagreement)andthe
conditionsofcontractmayformasingledocument.
ConditionsofcontractThesecontainthebulkofthe
substantiveclausesofthecontract.Theircontentdependsupon
thecontractualstructurechosenfortheproject.Typical
structuresareaddressedinthenextsectionofthischapter.
SpecificationThespecificationsetsouttheproject
requirements.Specificationsfallintotwomaincategories,
althoughasingledocumentmaycontainelementsofboth.A
technicalspecificationsetsouttheactualtechnicalcriteriaof
theproject(methodsofconstructionetc).Thistypeof
specificationoftenaccompaniesthecontractdrawings.Itcan
usuallybefoundinabuildonlycontractwherethedesignofthe
projectislargelycompletebeforethecontractisenteredinto.The
otherformofspecificationisaperformancespecification,which
usuallyformspartofaturnkeycontractasitsetsoutthe
standardofoutputsthattheconstructedprojectmustachieve.
DrawingsInanidealworldthedrawingsincorporatedinabuild
onlycontractshouldbetheconstructionstageorasfor
constructiondrawingswhichmeansthatthecontractorcanbuild
theprojectstraightfromthedrawingssupplementedbymore
detailedelaborationproducedbythecontractororits
subcontractorsandsuppliers.Quiteoften,however,thecontract
drawingseveninabuildonlycontractarenotatsuchan
advancedstageandthereforesubsequentrevisionsareissued.
Eachtimeadrawingisissuedthereisusuallysomethingto
indicatethatitisarevisionandtherelevantamendmentisnoted
eitherinaboxonthedrawingoronthedrawingitself(e.g.,bya
circlearoundtheaffectedarea).Inturnkeyandconstruction
managementcontracts,anycontractdrawingswillusuallyshow
onlyanoutlinedesignasthedetaileddesigniscarriedout
pursuanttothecontract.
BillofQuantitiesThisdocumentismorecommoninsmall
projects,howeveritmayalsoappearinlargeinternational
projects,forexample,asatooltovaluevariations.Itidentifies
thequantityofeachitemofmaterialthatisrequiredinorderto
constructtheproject.Sometimesacontractmayrefertoan
approximatebillofquantitiesifthedesignisfarfromfinalisedat
thetimethecontractisenteredinto.Abillofquantitiesusually
containsasectioncalledthepreliminarieswherethesite
conditionsandrestrictionsunderwhichtheworksaretobe
carriedoutwillbesetout.Thesemaynotappearanywhereelse
inthecontractdocumentationbutcanbecriticallimitationson
thecontractor'smannerofperformance.
ContractPriceAnalysisSomeformofbreakdownofthepriceis
usuallyalsofoundinlumpsumturnkeycontractsforlarge
internationalprojects.Itistobedistinguishedfromabillof
quantitiesinthatitmerelyprovidesatoolfortheemployerto
doublecheckwhetherornotthecontractor'scalculationofthe
priceisbroadlyinlinewithanticipatedprojectcosts.Thissanity
checkalsoisanimportantaspectinlenders'assessmentofthe
project'srisksand
page"14" bankabilitythatistoprovide
comfortthatcompletioncanbeachievedwithinthedebttoequity
fundingratios.Otherthanabillofquantitiesacontractprice
analysisorbreakdowndoesnot,however,haveanybinding
effectonthepricingwhereactualquantitiesexceedthoseinitially
contemplatedoradditionalworksareinstructedunlessagreed
otherwisebytheparties.
Giventhedifferentorigin,authorshipanddevelopmentofthese
documents,itisnotuncommontofindthataconstructioncontract
isinternallyinconsistent(orambiguous)and,intheabsenceofa
welldraftedprecedenceclause,disputesfrequentlyinvolve
resolutionofcompetingclauses.Forexample,acommonproblem
iswhereatechnicalspecificationpreparedearlyinthelifeofa
projectbyaconsultantengineercontainssubstantiveclausesthat
contradicttheconditionsofcontractpreparedmuchlater,basedon
astandardformorbyalawyerwhoisnevershownthetechnical
specification.Anotheriswherethespecificationenvisages
proceduresfordesigndevelopmentthatareinconsistentwiththe
conditionsofcontract.Ofcoursesuchinconsistenciesshould
ideallybeaddressedandremovedorreconciledbeforethecontract
isexecuted.Bestpracticeisforlawyerstoworkwiththetechnical
experts,projectmanagersandcontractadministratorstoensurethe
schedulesandtermsandconditionsarecompatibleandreflect
procedureswhicharepracticalandworkableforthesupervisionand

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managementoftheworks.Experiencetellsthatthispracticeisnot
uniformlyadoptedandhencedisputesariseduringprojectexecution
andthereafterwhereliabilitiesofthepartieshavetobeaddressed
byreferencetocompetingprovisions.
Anotherfrequentsourceofdisputesisthequestionwhichpartyis
responsibleforthecorrectnessandcompletenessofdocuments,
dataandinformationthatformpartoftheconstructioncontract.
Especiallyinlargeprojectstenderersoftenreceivecomprehensive
technicalandotherbackgroundinformationontheprojectwhich
findsitswayintothecontractdocumentsandservesasthebasis
ofthecontractor'sperformance(e.g.,preliminarydesignworks,
feasibilitystudies,groundsurveys,environmentalconditionsetc.).
Thepartiesarefreetodeterminetowhatextenttheemployeris
liableforinformationprovidedtothecontractorandtowhatextent
thecontractoroughttohavereviewedanddiscovered
inconsistenciesorisevendeemedtobesatisfiedwiththequalityof
suchinformation.Intheabsenceofapreciseagreementtothat
effectthereoftenissignificantroomforargumentonbothsides.
Liabilityforunknownconditionssuchasgroundconditionsisoften
determinedbyreferencetoabenchmarkofconditionsan
experiencedcontractoractingwithdueskillandcarewouldhave
identifiedrequiringexpertevidencetoestablishsuchstandards.
2.04.FormsofContractualStructure
Constructioncontractscomeinvariousdifferentformsdepending
ontheparticularneedsoftheproject.Themostcommonly
encounteredformsonmajorprojectsare:
page"15"
[A].DesignBidBuildorBuildOnly
Thisisthemosttraditionalmodelofconstructioncontract.The
designstageinvolvestheemployerappointingitsowndesignteam
todesigntheproposedproject.Usually,whentheoutlinedesignis
completed,thisisfollowedbytenderingforconstructionofthe
worksonly,byasinglecontractororinworkpackages'bya
numberofcontractors.Finalisationofthedetaileddesignfor
constructioncanbecarriedoutintandemwiththenegotiationofthe
constructioncontracts,soallowingforresolutionofanyconflicting
designandconstructionissues.Thereissignificantflexibilityinthe
timingofthelettingoftheconstructionpackages.Forexample,civil
worksmaybeletatanearlystageoftheprojectwithaseriesof
M&E(mechanicalandelectrical)packagesdividedintospecialist
activities,suchasventilation,powersupplyandcommunications
beingletatalaterstage.Alternatively,specialtyworkpackages,
suchassignalling,trackworksandstationinfrastructurepackages,
maybeletearlyinthelifeofarailproject.
Theemployerisnotdirectlylinkedtosubcontractorsorsuppliers
althoughtheemployermaycreateadirectcontractualrelationship
withsubcontractors/suppliersbyenteringintocollateralwarranties
(ordirectagreements')enablingtheemployertopursuethe
subcontractors/suppliersforbreachofcontractandpossibly
allowingtheemployertostepintothecontractor'sshoes'underthe
subcontractintheeventofimpendingterminationofthesubcontract
bythesubcontractor.
Inprojectfinancedprojectslendersmayinsistonsuchrightsor
takeasecurityassignmentoftheemployer'srights.
Thismodelcanbediagrammaticallyrepresentedasfollows:

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Ofthecommonlyusedinternationalstandardforms,theFIDICRed
Bookisabuildonlycontract.
Theadvantageofthisstructureisthattheemployerhasadirect
contractuallinkwitheachmemberofitsdesignteamandthe
contractor(s)andthereforecontrolstheentiredesignprocessand
canbeassuredthatthedesignwillmeetitsobjectives.The
employerdoesassumetheriskofthedesigninrelationtothe
contractoralthoughthisriskwouldbepassedontotherelevant
designprofessional(subjectalwaystoagreed
page"16" limits
onliabilityandthedesignagreements).Theemployeralsobears
responsibilityforthecoordinationofdesigndevelopmentwith
construction.
Theprincipaldisadvantageofthemodelisthattheseparationofthe
designandconstructionphasesresultsinlongerperiodsforproject
completion.Also,theemployerwillbeexposedtotheproblemof
fragmentedliabilitiesanditisoftendifficulttodeterminewhether
responsibilitylieswithamemberofthedesignteamoracontractor
acommonareaofdispute.Inthecaseofprojectfinanced
construction,(1)thereisanadditionaldisadvantageinthatthereisno
guaranteeatthetimethedesignworkiscontractedforthatthe
workswillbebuilteitherforacost,orwithinaperiodwhichwill
enabletheprojecttobefinanced.Wherethedesignprocessand
partsoftheconstructionworksruninparallelwithoutthenecessary
professionalcoordinationofthetwo,theriskofamismatch
betweendesignandactualconstructionisenormous.Thepotential
consequencescanbeobservedinlargescaleprojectsofthepublic
sectorinGermanysuchasthenewBerlinairportwherethealleged
lackofadequatecoordinationofthevariousworkstreams
threatensmassivedelaysandcostoverruns.
Avariationofthismodeliswherethedesignteamiscontractedto
theemployerattheoutsetoftheprojectandthentheemployer
novatesthedesignteamcontractstothecontractorforthe
constructionperiodoftheproject.Thedesignersbecomethe
contractor'ssubconsultants,underthecontractor'ssupervisionand
control.Theprincipalbenefitiscontinuationofthedesign
developmentbythesamedesignteam.Therisksfortheemployer
includelossofcontrolandpotentialfordesigningdowntoreduce
contractorcostsbyachievingcompletionoftheworkstorequired
standardsbutshorteningtheoperatinglifeofcomponentsor
otherwiseincreasingmaintenancecosts.Theseriskscanbe
mitigatedbyretainingcompliancemonitorswhoreviewandreportto
theemployerondesigndevelopment.Thisvariationisessentiallya
hybridbetweenthebuildonlyandturnkeymodels.
[B].DesignandBuildorTurnkey
Thismodelinvolvesalldetaileddesign,constructionand
procurementobligationsbeingassumedbyasinglecontractor(or
morefrequentlyinlargeinfrastructureprojects,aconsortiumof
contractors).Essentiallythecontractorisresponsibleforturning
overtotheemployerareadytousefacility.Thecontractor,in
additiontobuildingtheworks,assumesthedutiesofthedesign
team.Itmanagesthedesignprocessaswellastheconstruction
processand,importantly,takestheriskofthedesignandtherisk
oftheinterfacesbetweenthedesignteam,itsownworksandthose

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ofitssubcontractors.
Asinthecaseofthebuildonlymodel,theemployerdoesnothave
adirectcontractuallinkwiththesubcontractors/suppliers,asthey
contractonlywiththecontractor.However,againtheemployer
commonlycreatesadirectcontractualrelationshipwith
subcontractors/suppliersbyenteringintodirectagreements.
page"17"
Thismodelcanbediagrammaticallyrepresentedasfollows:

Ofthecommonlyusedinternationalstandardforms,theFIDIC
YellowandSilverBook,ENAAModelFormInternationalContract
forProcessPlantConstruction2010andAIAA1412004are
turnkeycontracts.
Theadvantageoftheturnkeymodelisthattheprojectcanprogress
onafasttracktimetablewithdesign,constructionand
procurementprogressinginparallel.Anotheradvantageforthe
employeristhatthecontractortakesthefullriskofdesignandalso
ofchangestothedesign(otherthandesignchangesrequestedby
theemployer).Also,theemployerwillhavenodifficultyindeciding
whoisresponsibleasthereisasinglepointofresponsibility.Of
course,thecontractormusthavetherequisitecoordination
capabilitiestomanagecontractualinterfacesamongitsown
consortiummembersandsubcontractorsandsuppliers.Whilethe
contractormightbeassumedtopossesstheseskills,thepractice
maybedifferent.Mismanagementandlackofcoordinationisa
commoncomplaintandcatalystfordisputebetweenemployersand
contractorsand/orcontractorsandtheirsubcontractorsespecially
whereconsortiummemberstakeresponsibilityfordifferentaspects
ofthecontractor'sduties.
Theassociateddangerwiththisapproachisthatprojectsgenerally
goouttotenderonapreliminarydesign,whichwillrepresentonly
between20%and35%ofthetotaldesigndevelopmentrequiredto
finalisethedesign.Detaileddesignbythecontractorwillbebased
onthispreliminarydesignandparameterssetbytheemployer's
designcriteriaincludingperformancecriteria.Theemployercan
thenchangeitsrequirementsonlyifitacceptsresponsibilityfor
attendantdelayandcosts.Changesinthedesignwilloftenhavea
significantimpactintermsofdelayanddisruptionto(and,therefore,
costof)theconstructionprocess.Thisriskofincreasesinproject
costandtimeisparticularlyacutewhereconstructioncommences
beforethedesignissufficientlyadvanced.Wherethereare
significantdesignchanges,theresponsibilityfortimeandcost
repercussionsisacommonareaofdispute.
Anadditionalproblemcanalsoariseastheturnkeycontractormay
betemptedtoassumetoomuchoftheworkitself,ratherthan
contractingouttheworktothe
page"18" subcontractorsbest
qualifiedtocarryoutthework,asmighthavehappenediftheworks
hadbeentenderedoutinseparatepackages.Whereworkis
subcontractedouttocontractorsnotformingpartoftheturnkey

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contractor'sconsortium,theturnkeycontractorwillnormallyadda
percentagemarkuptothesubcontractpriceforcoordinationand
anassociatedprofitelementincreasingoverallprojectcosts.
[C].ConstructionManagement
Intheconstructionmanagementmodel,theemployerappointsthe
tradecontractorsdirectlytoundertaketheworks.Inaddition,the
employerappointsaconstructionmanagertoundertaketheroleof
coordinationofthedesignandconstruction.Theconstruction
managerdoesnotcarryoutanyconstructionworks.Generallythere
isnoguaranteebytheconstructionmanagerorstrictliabilityto
achieveafixedpriceoftheworksortimeforcompletion.Instead,
theconstructionmanagerisobligedtouseitsreasonablecareand
skilltoendeavourtoachievespecifieddatesandbudgets.To
provideadditionalteeth,constructionmanagementcontractsmay
includetargetsasincentivesfortheconstructionmanagerto
completetheworksontimeandtobudgetforexample,the
constructionmanagermaybeentitledtorecoveronlyitscosts(i.e.,
withoutprofit)ifitfailstoachievelongstopdates,oritmayreceive
anincreasedprofitmarginifitcompletesontimeorwithinbudget.
Iftheconstructionmanagerisinvolvedearlyintheproject,itcan
alsoassistwithbuildabilityissues,arrangingtheworksintowork
packagesandmanagingtheprocurementprocess.
Thismodelcanbediagrammaticallyrepresentedasfollows:

Theadvantageofthismodelisthatthephasesofdesign,planning
andconstructioncanalsooverlapeasilyandtheemployerhas
directrightsagainstthetradecontractorswhoarecarryingoutthe
works.
Thedrawbackofconstructionmanagementisthattheemployer
bearstheinterfaceriskbetweeneachindividualtradecontract
packageandalsobetweenthedesignteamandconstruction
manager.Therefore,liabilitiesarefragmentedandtheemployermay
beunclearwhereliabilitylies.Conversely,theemployerisalsoat
riskofbeingadefendanttoamultiplicityofclaims.Despitethe
managementresponsibilitiesoftheconstructionmanager,there
remainsasignificantmanagerialburdenontheemployerwhois
responsiblefortheinterfaceofallpartiesincludingtheconstruction
manager.Thismodelisattractiveforsophisticatedandwell
resourceddeveloperclientswhohavetheprojectexperienceand
capabilitytomanageinterfaces.Itrenders
page"19" redundant
theprimecontractor'smarkupforcoordinationandadditionalrisk
contingencesgivenrisksaremanagedanddistributedamongstthe
specialisttradecontractors.
[D].ManagementContracting
Managementcontractingisahybridbetweenthetraditionalformsof
procurementandtheconstructionmanagementmodel.The
employerappointsitsdesignteamand,inaddition,amanagement
contractor.Themanagementcontractorgenerallydoeslittleorno
directconstructionworkitself,butorganisesandcoordinatesthose
thatdo.Themanagementcontractcanbeletatafarearlierstage
thanatraditionalformcontractandbeforeanyofthedetaileddesign
hasbeendoneorevenbeforeplanningpermissionhasbeen
obtained.Commonly,themanagementcontractwillcomprisetwo
stagespreandpostconstructionwithanoptiononthepartof
theemployereithertoabandontheprojectaltogetherortoretender
theconstructionworksbeforethesecondstage.Management
servicescanbeinrespectoftheworksonlyorboththeworksand
thedesign.Theworks(and,insomecases,thedesign)aredoneby
workscontractors'whoaresubcontractorstothemanagement
contractor.Themanagementcontractorisresponsibleforthe
managementoftheconstructionprocessforthebenefitofthe
employerandmustpursueanydefaultingworkscontractorsonthe
employer'sbehalf.Itisusuallystipulatedthatanyshortfallin
recoveryisbornebytheemployerandanyotherlosswhichis
suffereddirectlybythemanagementcontractor(e.g.,inmeeting
claimsagainstthemanagementcontractorbyaworkscontractor

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whohasbeendisruptedbyadefaultingworkcontractor)mayalso
bepassedtotheemployerifthedefaultingworkscontractorfailsto
pay.Commonly,theemployercreatesadirectcontractual
relationshipwiththesubcontractorsbyenteringintocollateral
warrantieswhichare,ineffect,directcontractsbetweenthe
employerandsubcontractors.
Thismodelcanbediagrammaticallyrepresentedasfollows:

Thistypeofcontractualstructureaffordsasignificanttime
advantagecomparedtothetraditionaldesignbidbuildmodelasthe
managementcontractorcanbeappointed
page"20" whenthe
designisataveryearlystage.Anotheradvantagefortheemployer
isthatthereisasinglecoordinatingentitywithwhomitmustdeal
(althoughthisdoesnotnecessarilytranslatetoasinglepointof
liability).
Thedisadvantageofmanagementcontractingisthattheemployer
bearstheriskofthedefaultoftheworks'contractors,saveinthe
caseoffailurebythemanagementcontractorinitsmanagement
role.Further,whenadefaultingworkscontractorcauseslossand
expensetoaninnocentworkscontractor,theinnocentworks
contractorwilllooktothemanagementcontractorfor
reimbursement,whowillinturnlooktotheemployerfor
reimbursement.Theemployeralsobearstheriskofinsolvencyof
theworkscontractors.Intheauthors'experiencethismodelof
contractingisrelativelyrarelyadopted.
[E].PartneringandAlliancing
Partneringandalliancingarealternativemethodsofprocurement
thathavelargelygrownoutofdissatisfactionwiththetraditional
designandbuildprocurementmethodsandparticularlythe
adversarialculturetheytendtopromote.Theiraimistoimproveco
operationandjointworkingbetweenvariouspartiesandto
encouragetheearlyresolutionofproblemsandpotentialdisputes
withcollaborativeeffort.Partneringandalliancingtechniquesare
addressedinmoredetailinChapter4.
2.05.PricingMethodologies
Whichevercontractstructureisselected,theworkcanstillbe
pricedinanumberofdifferentways.Themostcommonbasesfor
pricingunderconstructioncontractsareasfollows:
[A].CostPlus
Thismethodinvolvespayingthecontractoritsactualcosts,
reasonablyandproperlyincurred,plusaprofitfee.Itmaybe
appropriatewheretheconstructionpresentsunusualdifficulties,for
example,innovativedesignorcomplexengineeringwithhighrisks,
inwhichcasealumpsumpricethatadequatelytakesaccountofall
contingencieswouldbeprohibitivelyhigh.However,asneitherthe

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employer(noranylenders)wouldbewilling(saveinexceptional
circumstances)toacceptanopenendedcommitmenttomeetthe
contractor'scostswithoutlimitthereisusuallysomemechanismto
encouragetheworkstobebuiltforthelowestpossiblecostandin
theshortestpossibletimescale.Sometimestheriskismitigatedby
incorporatingacaponthecontractor'sfee.Alternatively,itmaybe
donebyintroducingceilingsortargetsbeyondwhichcostsare
shared(seebelow).Incontractsofthiskindtheemployer'srightsto
auditthoroughlythecostsclaimedtoensurethattheyhavebeen
reasonablyandproperlyincurred,andtorequirethecontractorto
maintaincomprehensiverecordsforauditpurposes,arekey.The
mostcommonareafordisputeinpurecostplusarrangementsis
whetherthecostsincurredbythecontractorarebothreasonable
page"21" andproperlyincurredorwhethertheycouldhave
beenavoidedbypropercoordination,supervisionorefficient
working.
[B].TargetCost
Costpluscontractsincorporatingceilingsortargetsareknownas
targetcostcontracts.Essentiallytheemployerandthecontractor
willagreeonanestimateforthelikelycostofthework.Thisis
knownasthetargetcost.Thecontractorispaidtheactualcosts
incurred,togetherwithafeeorothermechanismtocoverprofitand
indirectcosts(e.g.,headofficeoverheads).However,ifactual
costsincurredexceedthetargetcost,theemployerandthe
contractorwillshareliabilityfortheoverspendinagreedproportions.
Asanadditionalincentiveforthecontractortokeepcoststoa
minimum,atargetcostcontractmayalsoincludeasystemof
bonuspaymentsbywhichthecontractorsharesinthebenefitof
costsavings.Thisbasisforpricingraisesthequestionwhether
costshavebeenreasonablyandproperlyincurred,andalso
whether,andtheextenttowhich,thetargetcostshouldbeadjusted
wherevariationsareorderedontheproject.
[C].LumpSum
Attheotherendofthescaleofpricingstructuresisthelumpsum
contractthatentitlesthecontractortoapreagreedcontractsum
regardlessofactualcostsincurred,subjectonlytoadjustmentfor
variationstotheworksandinalimitednumberofother
circumstances.Thelumpsumshouldbesufficienttocoverthe
contractor'santicipatedactualcostsincludingoverheadsplusa
profitcomponent.Themainadvantagefortheemployeris(atleast
apparent)costcertainty.Afurtheradvantageisthatthe
administrationofthecontractisusuallymorestraightforwardthan
underthecostplustargetcostmethods,wherecostshavetobe
verified.Theapparentappealofalumpsumprice,however,maybe
illusorywherethecontingenciesrequiredtobeincludedinthe
contractor'sbidaresuchastomakethecontractor'soffer
prohibitivelyhighorwherethedesignoftheprojectorregulatory
requirementsaresufficientlyuncertaintomakevariations(andthus
additionalpayment)avirtualcertainty.Acommonareaofdisputein
lumpsumcontractsisthequestionofpreciselywhatworkis
coveredbythecontractandwhatworkamountstovariationsfor
whichthecontractorisentitledtoextrapayment.Turnkey
contracts,wherethespecificationoftheworksisgeneralordefined
byreferencetoperformancecriteria,areparticularlypronetothese
typesofdisputes.
[D].ProvisionalLumpSum
Aprovisionallumpsuminvolvestakingafirmpriceforpartofthe
works,withprovisionalratestoapplytoaseriesofcontingencies.
Forexample,arangeofpotentialgroundconditionscouldbe
separatelypricedandtherateswouldsimplybeappliedtomatch
theconditionsactuallyencountered.Theemployerthenknowsthe
worstcasescenario,butwillbenefitfrompayingthelowerratesif
theconditionsencounteredprovetobestraightforward.A
provisionallumpsumalsomitigatesthepotential
page
"22" problemswherethedesignisdefinedbyreferencetoopen
endedorgeneralcriteria,byallowingforalternativedesignsolutions
tobepriced.
[E].GuaranteedMaximumPrice
IncreasinglypopularistheGuaranteedMaximumPrice(GMP)
Contract.Thisinvolvesatwostageprocurementprocess.Thefirst
stageincludesapreliminaryinvestigation,feasibilitystudyand
outlinedesign,sometimeswithenablingworks.Thesecondstageis
thedevelopmentofthedesignandprojectconstruction.Thefirst
stageoftheprojectispaidforonacostplusbasis.Thecontract
thenconverts'toaGMPoncethescopeanddefinitionoftheworks
becomesmorecertainandatthispointthecontracteffectively
operatesasalumpsumcontract.Theemployerretainstheoption
nottocontinuewiththeprojectatallafterthefirststageiftheGMP
offeredisprohibitivelyhighortobreakwiththecontractorand
tenderthejobanewonthebasisofthecompletedpreliminary
design.
[F].UnitPriceorMeasuredWorks
Thepricingmethodmidwaybetweenlumpsumandcostplusisthe
unitprice.Thepriceoftheprojectiscalculatedpertaskin

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accordancewithabillofquantitieswhichcomprisesalistofitems
givingthequantitiesandbriefdescriptionsofworkcomprisedinthe
contract.Itformsthebasisuponwhichtendersareobtainedand
affordsameansofcomparingtendersreceivedoncepriced.
Terminologyusedinconnectionwithbillsofquantitiesinclude:
Daywork:themethodofvaluingworkonthebasisofthetime
spentbytheworkmen,thematerialsusedandtheplant
employed.Dayworkratesareeffectivelycostplus'rates.
PrimeCost(ortheinitialsPC):asumenteredinthebillof
quantitiesatthetimeoftenderasthenotionalsumprovidedto
coverthecostofspecificarticlesormaterialstobesuppliedor
worktobedone,afterdeductingalltradediscountsandany
discountforcash.Thecontractorispaidtheamountthework
(usuallycarriedoutbyothers)actuallycosts.
ProvisionalSum:anysumofmoneyincludedinthebillof
quantitiestoprovideforworknototherwiseincludedthereinorfor
unforeseencontingenciesarisingoutofthecontract.Itis
generallyonlytobeexpended,eitherwhollyorinpart,underthe
employer'sdirectionandatitsdiscretion.Theonlyrealdifference
betweenprimecostitemsandprovisionalsumsisthatthe
employerintendstohaveprimecostitemsincludedintheworks
(thoughbypeopleitspecifiesandforwhosecostsiteffectively
remainsresponsible)whereasprovisionalsumsareforwork
whichmayormaynotbecarriedout.
Whereworkispricedonthebasisofagreedratesandprices,the
contractshouldalsospecifyachosenstandardmethodof
measurement.Standardmethodsofmeasurementspecifyhow
virtuallyallcommonlyencounteredconstructionactivitiesaretobe
page"23" measured.Aunitpriceormeasuredworkscontract
withoutanagreedmethodofmeasurementispronetodispute.To
illustrate:thecostofexcavationofapittoaccommodateatank
withverticalsidesmightbedeterminedbythevolumeofmaterial
removedtoallowthetanktobeerected.However,itisgenerally
impossibletoexcavateapitofanydepthwithverticalsides,soa
largerpitwithslopingsidesneedstobeexcavated.Intheabsence
ofanagreedmethodofmeasurement,istheworktobepricedon
thebasisofactualvolumeofexcavationormerelyontheamount
requiredtofitthetankin?Sometimes,however,standardformsof
measurementcreateadangerouspriorityoverthedrawingsand
specificationscontainedinthecontract,andcanbeusedto
increasethefinalpricebytheirmanipulation.Standardformsof
measurementmayalsobeusedasguidesinthequantificationof
disputedconstructionclaimsgenerally,forexample,valuationof
variationclaimsorquantummeruitclaims.
[G].MixandMatch?
Largerprojectsmayadoptamixofpaymentarrangements.For
example,ontheChannelTunnelprojectfortheconstructionofa
railwaylinkbetweenEnglandandFrancebywayoftworunning
tunnelsandaservicetunnel,theundergroundcivilworks(the
structureofthetunnels,thecrosspassagesforemergencyescape
andthevariousundergroundductsandmachinerooms)werepaid
foronatargetcostbasis.Theterminals(buildingsandplatforms)
andthemechanicalandelectricalequipment(track,catenary,power
supplies,signalling,ticketingsystems,firemains,pumpsetc.)were
paidforonthebasisofasinglelumpsum.Finallytherollingstock
wasprocuredonacostreimbursementbasis.Interestingly,the
largestcostoverrun(incashterms)wasforthemechanicaland
electricalequipmentprocuredonthebasisofasocalledlump
sumcontractbecausechangesindesignforoperationalandsafety
reasonsresultedinmultiplevariationswithsignificantadditional
directandconsequentialcosts.
Differentpricingmethodologiesmayalsoappearwithinacontract.
Forexample,alumpsumcontractmayincludeaprovisionalsum
componentforapartoftheworksthatmayormaynotgoahead
andmayprovideforvariations(i.e.,worksadditionaltotheoriginal
scopeofworks)tobepaidonthebasisofdayworkrates.
Mixingpaymentandpricingmechanismswithinthesamecontract
cangiverisetodisputeswherechangestooneareaofworkimpact
onanotherwhichhasadifferentpricingmethodology.Forinstance,
intheChannelTunnelprojectthecontractor,aspartofthelump
sumworks,decidedtoreplacemilesofexpensivehighcurrent,low
voltagecableinthetunnelswithasystemofhighvoltagecables,
intermediatestepdowntransformersandshorterrunsofless
expensivelowvoltagecables.Thismadesensetothecontractor
fromaneconomicperspective(thecostofthecomponentsrequired
forthehighvoltagesolutionwascheaper)andalsomadesense
fromanengineeringperspective.Thecontractorwasentitledtodo
thisastheworkfellwithinthelumpsumelementoftheworksand,
forthesamereason,thesavingsontheequipmentcostsaccrued
tothecontractor.However,thetransformershadtobeput
somewhereandinordertoaccommodatethemadditionalspacehad
tobeexcavatedin
page"24" theunderseamachinerooms.
Thisworkformedpartofthetargetworkswhichwaspaidforinfull
bytheemployer.Theoveralleffect,therefore,wasthatthe
contractorwasabletotakethebenefitofthenewengineering
solutionasasavinginthelumpsumpartoftheworkswhilethe
costofthetargetworks(andtheoverallcosttotheemployer)
increased.
Amixedpaymentmechanismallowingforpartialadjustmentsofthe

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contractpricebasedonactualoutturncostsisusuallynot
bankablefromaprojectfinanceperspectivewherelenderswantto
havepricecertaintytotheextentpossibleandthusinsistonthe
useoflumpsumcontracts.
2.06.PaymentArrangements
Itisveryrareforcontractors(otherthanonverysmallorshortterm
projects)tobepaidbywayofasinglepaymentatthecompletionof
works.Cashflowisvitalforthesuccessofanyconstructionproject
ascontractorsmustbeabletocovertheconsiderablecosts
incurredthroughouttheentireconstructionperiodinorderto
continueworkingandcompletetheproject.Therefore,somesystem
ofpaymentatintervalsisrequired.Insomejurisdictions,legislation
hasbeenenactedtorequireemployerstopaycontractorsona
regularbasisthroughouttheconstructionperiodforexampleinthe
UKundertheHousingGrants,ConstructionandRegenerationAct
1996(asamended).Atthesametimeasthecontractorreceives
interimpayments,theemployerneedstoensurethatitisobtaining
valueforthepaymentsmadeandthatthecontractorissufficiently
incentivisedtoremainandcarryouttheprojectinaccordancewith
therequirementsofthecontract.
Interimpaymentsmaytakeavarietyofforms(sometimesin
combination).Themainonesare:
[A].ProgressPayments
Mostconstructioncontractswillprovideforstagedpaymentstothe
contractor,frequentlyonamonthlybasisduringthecourseofthe
project.Theamountduetothecontractorateachstagewillreflect
itsprogressontheworksforexample,asapercentageofthe
totalprojectworksandwillberecordedinaninterimcertificate
issuedbythecertifier.Thecertificatewillsetoutthecumulative
amountspaidtothecontractortodateandtheadditionalamount
duetothecontractorintherelevantpaymentperiod.Thecertificate
willthenrecordthetotalamountduetothecontractorinthe
paymentperiod.
[B].MilestonePayments
Someconstructioncontractsprovideforpaymentstocontractors
uponachievementofmilestonesthroughouttheconstructionperiod.
Milestonesaresetagainstthecompletionofcertainactivitiesora
sectionofworkand,uponcompletingthoseworksorthatsection,
thecontractorispaidfortheworks/section.Milestonesareoften
incorporated
page"25" in,andshownon,theprojectprogramme
andmaygiverisetobonusentitlementswhereachievedearlyand
tobudget.Thistypeofpaymentmethodincentivisesthecontractor
tocompleteworksinaccordancewiththeprogramme.Inthe
absenceofobligationstocompletestagesoftheworktosuch
milestonesthecontractorgenerallyhastherighttoplanand
executetheworkasitwishes,subjectalwaystomeetingthefinal
completiondate.Asaconsequencetheemployermayhavelimited
controlstorequirethecontractortospeedupworksevenwhereitis
apparentthereissignificantdelay.Suchanarrangementis
unacceptablewherethecompletionoftheprojectontimeis
essential.ThecontractsforworksfortheLondon2012Olympics
werewrittentoprovideearlyterminationrightsforfailuretoachieve
milestones,rightstoorderaccelerationoftheworksandrigorous
requirementstoupdatethecontractprogrammetoreflectactual
progress.
2.07.AdministrationoftheContract
[A].Background
Essentialtomanyconstructioncontractsistheroleofthecontract
administrator.Theadministratorwillbasicallyperformoneormore
ofthefollowingthreediscretefunctions:
theemployer'sagentinoverseeingtheprogressoftheworksand
generallygivinginstructionsastohowtheworkshouldproceed
certifierunderthecontract:constructioncontractsinvariably
provideforcriticaldecisionswhicharedeterminativeoftherights
ofthepartiestoberecordedincertificates,forexample
certificatesofpayment,certificatesofcompletion,certificatesof
makinggooddefectsetc.
(possibly)resolvingdisputesbetweenthepartiesinthefirst
instance.
Inrelationtothelastfunction,theconstructionindustriesinFrance
andothercivillawjurisdictionsdonotgivethesameprecedenceto
theroleofthecontractadministratorasdoestheUKconstruction
industry.Mostnotably,theengineerorMatred'Oeuvredoesnot
normallyhaveanyroleindisputeresolutionintheFrenchor
Germanconstructionindustry.Infact,inGermanconstruction
practicethereusuallyisnotadistinctpersonorentityengagedfor
thepurposeoffulfillingthespecificrolethatanengineertraditionally
takesintheUKconstructionindustry.(2)
page"26"

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[B].TheIndependentEngineer
Traditionallytheroleofcontractadministratorwasgiventothe
engineerseeforexampletheICEandFIDICRedBookstandard
formsofcontract.Whenactingascertifierandinresolving
disputes,theengineerwasrequiredtoexercisehisjudgmentfairly
andimpartiallybetweentheparties.Essentially,hewassupposed
toactasaprofessionalexercisinghisjudgmentinanevenhanded
manner.Inhisotherduties,hewasfreetoactastheemployer's
representativeoragent.
Therealityisandprobablyalwayswassomewhatdifferent.The
socalledindependentengineerisappointedbytheemployer.One
ofhisrolesistoactastheemployer'sagentinoverseeingthe
progressoftheworks.Thestrongperceptionofcontractorsisthat
theengineerwilltendtofavourtheemployer'sposition.The
contractor'sconcernsareevenmoreacutewheretheengineeris
resolvingdisputesbetweenthepartiesinthefirstinstance.Almost
invariablyhewillbesecondguessinghisowndecisionsfor
examplewhereoneofhiscertificatesischallenged.
[C].Reality:TheEmployersRepresentative
Therealitiesoftherelationshiphaveledtotheindependent
engineerbeingreplacedbytheemployer'srepresentativeas
contractadministrator.Thereisnopretencehereatindependence.
Theemployer'srepresentativeisnotonlyoftenanemployeebutis
acknowledgedtoactintheemployer'sbestinterestswhen
administeringthecontract.However,Englishcourtshave
determinedthattheemployer'srepresentativemustacthonestly,
fairlyandreasonablywhenissuingcertificates(asanimpliedterm
ofthecontract).(3)
Asacounterbalancetotheconsolidationofcontrolofcertification
andcontractadministrationinthehandsoftheemployer,dispute
resolutionprovisionsfrequentlyprovidefordisputestoberesolved
inthefirstinstancebyanindependentpanelorexpertwhohasno
roleincontractadministration.ThissubjectisaddressedinChapter
3.
[D].TheRoleofCertificates
Constructioncontractsprovideforcriticaldecisionsthatare
determinativeoftheparties'rightstoberecordedincertificates
issuedbythecontractadministrator.Themostimportant
certificatesare:
Interimpaymentcertificates(seeabove).
Completionorhandoverortakingovercertificates,whichmark
thepointintimeatwhichtheemployerisentitledtotakeoverthe
completedworksandthepointwhentheriskintheworks(and
responsibilityforinsurance)transfersfromthecontractortothe
employer.
page"27"
Certificate(s)ofnoncompletion,whichrecordthefailurebythe
contractortocompletebytheduedate(sometimesacondition
precedenttoadeductionbytheemployerofliquidateddamages).
Certificate(s)ofmakinggooddefects,whichareissuedon
inspectionattheendofthedefectsliabilityperiod(s),provided
thatthecertifierissatisfiedthatalldefectshavebeenadequately
remedied.Itwillalsousuallytriggerreleaseofanyfinaltrancheof
retentionheldbytheemployer.
Thefinalcertificate,whichisessentiallyafinalreconciliation
statementbetweentheparties.Itwilltakeaccountofall
necessaryadjustmentswhichhavetobemadetodeterminethe
finalfigureduetobepaidtothecontractorforalloftheworks.
Deductionswillbemadeasappropriatetoreflectthecostof
remedialworkstocorrectanyoutstandingdefectsnotifiedtothe
contractor.Thefinalcertificatemaybegivenaconclusiveeffect,
subjecttoanydisputesreferredtodisputeresolutionwithina
limitedperiodfollowingthedateofissueofthefinalcertificate.
Thisquestionisaddressedfurtherbelowinthecontextof
limitationofliability.
Itshouldbenotedinthiscontextthatcertificatesplayaparticularly
prominentroleinEnglishandstemmingtherefrominternational
(standardform)constructioncontracts(seetheFIDICsuiteof
modelforms).Despitetheobviouspracticalityofsuchcertificates,
thisisfarlessthecaseinotherjurisdictionsase.g.,inGermany
wheretheissuanceofacertificateisoftenlimitedtothe
acceptanceoftheworksuponcompletion.Thatisnottosaythat
someformofadocumentaryrecordoftheachievementofkey
performancemilestonesisnotpreparedelsewhere,butthisis
usuallydoneasamatterofpracticewithintherelevantparty's
organisationwithoutexpresscontractualrequirementsforsuch
documents'production.
Thereasonsforthedifferentapproachespartlyhavetheirrootsin
differencesoftheapplicablelawsthatprovidethelegalframework
fortheconstructioncontract.E.g.,thefinalorperformance
certificateissuedattheendofthedefectsnotificationperiodunder
anEnglishlawcontractconfirmsthecontractor'sperformanceofall
ofitscontractualobligations,includingtheobligationtocarryout
anyremedialworkswithinsuchdefectsnotificationperiod.Given
thereisnostatutoryregimefordefectsremediationthepartiesmust

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agreeondefectremediesaspartoftherightsandobligationsunder
thecontractitself.Thecontractorwillonlyhavefulfilledits
contractualobligationsunderthecontractif,attheendofadefects
notificationperiod,therearenomoreremediationobligations
pending.NosuchcertificatewillbefoundinGermanlaw
constructioncontractswhereafullfledgedstatutoryregimeon
warrantyrightsandclaimsincludinglimitationorwarrantyperiods
applies.InaGermanlawcontractthepartiesdonot(needto)agree
onaregimefordefectsremediationasaspecificpartofthe
contractualrightsandobligationssavetotheextenttheywishto
deviatefromthestatutoryregime.Thecontractor'sprimary
contractualobligationsareconsideredtobesatisfiedupon
acceptanceoftheworksasbeingsubstantiallyinaccordancewith
thecontractwithouttheneedtoconfirmperformanceofongoing
obligationstoremedydefectswhicharegovernedbytheunderlying
statutorylaw.
page"28"
[E].ChallengingCertificates
Someconstructioncontractsconfertheabilityonanarbitratorto
openup,reviewandamendcertificatesissuedunderaconstruction
contract.ThistypeofprovisionledtheEnglishCourtofAppealto
saythatsuchpowerwasreservedforarbitratorsalone,tothe
exclusionofthecourts.(4)Subsequently,theEnglishHouseofLords
overruledtheCourtofAppeal'sobitercommentsandfoundthatthe
conferralofsuchpoweronanarbitratordoesnotlimitthe
jurisdictionofthecourtstodeterminetherightsandobligationsof
thepartiestothecontract.(5)Inotherwords,acourtcanmake
findingsthatarecontrarytothoseformingthebasisofthe
administrator'scertificationunderthecontract.Thecourtisfreeto
investigatethefactsandtointerprettheparties'respective
contractualrightsandobligationstheadministrator'sdecisionon
theissuewillsimplybepartoftheevidencethatthecourtwillweigh
up.
Oneprovisoiswheretheconstructioncontractcontainsaclear
statementthatcertificatesissuedunderthecontractareconclusive.
Inthiscase,anEnglishcourtwouldgiveeffecttothecontractual
provisionandwouldnotopenupthecertificate.Saveinexceptional
circumstancessuchasfraud,thecurrentpositionunderEnglish
law,therefore,isthatunlessacertificateisexpresslyconclusive
andbindingitwillbeopentoreviewbyanytribunalcalleduponto
determinetherightsofthepartieswhetherarbitralorjudicial.
2.08.VariationOrders
[A].WhyareVariationOrdersRequired?
Intheory,everyconstructioncontractwilldefinetheprojecttobe
built,whetherbyreferencetoasetofdrawingsand/ortechnical
specificationsor,wherethecontractoristocarryoutthedesign,by
referencetoaperformancespecification.Inpractice,however,the
employer'srequirementswilloftenchangeorregulatoryapprovalsat
theemployer'srisknecessitatedesignorconstructionchanges.
Contractsmayalsopermitthecontractortoproposeachangeto
theemployer,forexample,toachievecostsavings.Itistherefore
customarytoincorporatearequirementinconstructioncontracts
thatthecontractormustexecutethechanges(orvariations).
Variationsareeffectedbywayofvariationorders'(sometimes
calledchangeorders').Theonlylimitimposedontheemployer's
powertoordervariationsasamatterofEnglishlawisthatthe
contractorcannotbecompelledtocarryoutsomethingthatis
completelydifferentfromtheoriginalproposal.(6)
page"29"
Othersystemsoflawimposegreaterrestrictions.Forexample
underGermanlawtheprincipleofgoodfaith(7)andwhere
applicablethe(strict)statutoryrulesonstandardtermsand
conditions (8)willsetlimitstotheextenttowhichtheemployermay
beentitledunderacontracttoinstructavariation.UnderGerman
standardtermsforconstruction(GermanConstructionProcurement
andContractRegulationsVergabeundVertragsordnungfr
Bauleistungen,VOB)thataremostfrequentlyusedinGerman
construction,theemployerhastherighttorequestchanges(or
variations)totheoriginalworksbut,asamatteroftheabove
mentionedgoodfaithprinciple,mustnotorderworksthatare
completelydifferentfromtheoriginalbargain.Ifthecontractoris
instructedtocarryoutworksinadditiontotheoriginalproposalthat
donotformpartoftheoriginalscopebutarerequiredforthe
contractortoachievecompletionoftheworks,thecontractoris
obligedtofollowsuchinstructionsavetotheextentthatits
enterprisedoesnothavetheresourcestodoso.Anyother
variationscanonlybeinstructedwiththeconsentofthecontractor
dependingonthenatureoftherequestedchange.(9)
Ofcourse,theabilitytochangethescopeoftheworksisnormally
matchedbyanobligationtoadjustthecontractor'sremuneration
and,ifappropriate,tograntanextensionoftimetotheagreed
completiondateifrequiredtocompleteanyadditionalworks.
Variationordersgenerallyrequireadditionalwork,inwhichcasethe
contractorisusuallyentitledtoadditionalpaymentandtimeto
completetheworks.Negativevariationordersoromissionsinvolve

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deletingworkfromtheoriginalscopeofworksand,therefore,
usuallyinvolveareductioninthecontractor'spaymentand
programme.Forthisreason,thereareusuallylimitsonthe
circumstancesinwhichanemployermayissueanegativevariation
orderforexample,itisonethingtodeleteworksifthoseworks
arenolongerrequiredfortheprojectbutitisquiteanotherforthe
employertotakeworkoutofthehandsofthecontractorforthesole
purposeofawardingittoanother.
Oneadditionalconstraintontheexerciseofthepowertoorder
variationsisnotimmediatelyobviousandariseswherethe
contractoriscarryingoutthedesignandhasagreedtomeet
specifiedperformancecriteria.Inadditiontograntingthecontractor
additionaltimeandmoney,theeffectofthechangeontheabilityof
thecontractortomeettheperformancecriteriashouldbetakeninto
account.Accordinglyturnkeycontractsoftencontainaprovision
permittingthecontractortoflagupanyproposedchangeswhich
wouldaffectitsabilitytomeetthecontract'sperformance
requirements,givingtheemployertheopportunitytowithdrawor
modifythevariationorder.Ofcourse,ifthecontractordoesnot
exercisethisright,theusualconsequencewouldbeforittobe
requiredtomeettheperformancerequirementsregardlessofthe
effectofanyvariationorder.
page"30"
[B].ControllingVariationsandTheirCosts
Variationordersmayonlybegivenbytheemployer(thoughinsome
casesthecontractormayinitiateaproposedvariation).Sincetheir
effectisusuallyforthecontractortobecomeentitledtoadditional
payment,themannerinwhichvariationsmaybeinstructedor
authorisedisnormallycloselycontrolledandinvolvesadegreeof
formality.Variationordersareusuallyrequiredtobeinwritingand
givenbyspecifiedindividualsinaccordancewithanagreed
procedure.
Aswellascontrollingtheissueofvariationorders,construction
contractsusuallyensurethattheissueofthevariationordersis
madeonaninformedbasissothat,atthetimeofissue,the
employerisawareofthetime,costandotherconsequenceswhich
willflowfromthevariation.Contractsfrequentlyprovidefora
procedurewherebythecontractoris,saveinurgentcases,required
toprovideanestimateofthelikelycostofaproposedvariationand
thelikelyimpactonthetimetableforcompletionoftheproject.The
employercanthendecide,inthelightofsuchinformation,whether
itwishestoimplementthevariation.
Generally,acontractwillrequirethecontractortogivenoticeofa
claimforadditionalpaymentpromptly,forexamplewithintwenty
eightdaysofissueofthevariationorder,togetherwithfull
supportingparticularsastothesumclaimed.Ifthevariationis
acceptedinwholeorinpart,theneitherthewholeoftheadditional
paymentwillbeincludedinthenextpaymentcertificatetobe
issuedtothecontractorortheamountwillbepaidtothecontractor
progressivelyasthevariationworksarecarriedout.
Alternatively,acontractmayprovidethatthevariationorderwillbe
implementedonanagreedbasisasregardstimeandcost,withno
opportunitytoclaimadditionalimpacts.Ifthepartiescannotagree,
theemployerisnormallyentitledtoorderthecontractortocomply
withthevariationorderwhilstthematterisreferredtodispute
resolutioninaccordancewiththeagreedprocedure.Theemployer
mayberequiredtopaysomecostsagainstthevariationorderto
thecontractorintheinterim.
[C].VariationOrdersandDisputes
Variations,togetherwithextensionoftimeclaims,arethemost
commonsourceofconstructiondisputes.Occasionallyapoorly
definedspecificationisatfault,butjustasoftenitisthe
administrationofthevariationclauseorthefinancialpressuresof
thecontractasawholethatgiverisetovariationdisputes.Ona
lumpsumcontract,variationclaimsareoneofthefewopportunities
forthecontractortorecoveradditionalmoney.
Disputesinrelationtovariationsconcerninthefirstinstance
whethertheallegedvariationisintruthwithintheoriginalscopeof
thecontract(inwhichcasethecontractorisnotentitledtoany
additionalpayment).Thesecondissueisdeterminationofthe
appropriateadjustmenttothepricethisthrowsupquestionsof
applicabilityofcontractratesandpricesandtheappropriatemark
upforoverheads.Thethirdissueistheimpactofthevariationon
thecontractprogramme.
page"31"
Lesscommonaredisputesoverwhethertheemployerisentitledto
issuethevariationatallforexampleifthesubjectofthevariation
orderisoutofproportionwiththescopeofworksfortheprojectorif
anegativevariationorderismadeforanapparentlyimproper
purpose.
Disputesalsoariseinrelationtothenotificationorotherprocedural
requirementsofthecontractregardingvariationordersfor
example,employerscommonlyrelyonthecontractor'sfailureto
complystrictlywiththevariationprocedureindefenceofaclaimfor

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additionalpaymentswheresuchrequirementsaresaidtobe
conditionsprecedenttoanyclaim.Aswellasdebatingwhether
therewasinfactcompliancewithsuchrequirements,disputes
frequentlyinvolveallegationsbythecontractorthattheformal
requirementswerewaivedorthattheemployerisotherwisenot
entitledtorelyonstrictrequirementsforcompliancewithconditions
precedent.
2.09.Completion,ExtensionsofTimeandLiquidated
Damages
[A].RoleofCompletion
Completionisacriticalstageintheproject.Worksarenormallysaid
tobecompletewhentheyachievepracticalcompletion(also
knownassubstantialcompletion).Practicalcompletionisaterm
ofartusedinconstructioncontractstorecordsubstantial
completionoftheworkssaveinrespectofminoritemswhichdonot
affecttheuseoftheworksforwhichtheyareintended.
Typicallyithasthefollowingconsequences:
itisthepointatwhichthecompletedworksarehandedoverto
theemployerandriskintheworkspassesfromcontractorto
employer
itstopstheclockrunningforthepurposesofthecontractor's
liabilitytopayliquidateddamagesforlatecompletion
ittriggersthestartofthedefectsliabilityorwarrantyperiod,
whichisessentiallyaperiodduringwhichthecontractorhasan
obligationtoreturntothesitetoremedyatitsowncostany
defectswhichappearintheworksandwhicharenotifiedtothe
contractorpriortotheexpiryofthedefectsliabilityperiodand
italsogenerallytriggersthereleaseofhalfofanyretentionwhich
hasbeendeducted(orsecuredbyabond)fromamountsdueto
thecontractorunderinterimpaymentcertificatesbytheemployer
oranyotherreductioninthesecuritylevel(amountscoveredby
bondsorsureties)providedbythecontractorfortheproper
performanceofitsobligationsundertheconstructioncontract.
Theterminologyanddefinitionsusedinconstructioncontractsto
determinecompletionoftheworksvariessignificantly.Giventhe
aboveconsequencesusuallylinkedtothecompletionoftheworks,
i.e.,acceptanceoftheworksasbeingsubstantiallyinaccordance
withthecontract,careshouldbetakentosetoutasclearlyas
possiblethe
page"32" requirementsthatneedtobesatisfied
fortheworkstobeconsideredcompleted.Inplantconstructionfor
exampleitwouldberiskyfortheemployertoaccepttheworksonce
theyaremechanicallycompletewithoutanyevidenceoftheplant
satisfyingtheagreedperformanceparametersinadequatetesting
andcommissioningprocedures.Inconsistenciesoralackofclarity
insuchtakingoverprovisionsareanothersourceofdisputes.
[B].DefectsLiabilityPeriod
UnderEnglishlawandincontractsderivedfromEnglishlaw
followingpracticalcompletion,theworkswillnormallybesubjectto
adefectsliabilityperiodorwarrantyperiod.Thisistheperiod
usuallyrangingbetweentwelvemonthsandfiveyearsdependingon
thecomplexityoftheworksoranypartthereofduringwhichthe
contractormustreturntositeandrepairanydefectsthatare
discovered,orarise,intheworks.Itisattheendofthedefects
liabilityperiodwhen,ifalldefectshavebeenadequatelyremedied,
thecertificateofmakinggooddefects'maybeissued.The
employerwillgenerallyretainaportionusuallyhalfofthe
retentionorothersecuritytosecureperformanceofthecontractor's
defectsliabilityperiodobligations.Asnotedabovesomesystems
oflawprovideastatutorydefectsliabilityandremediation
obligations(e.g.,Germanlaw),hencecontractualmachineryisnot
required.
[C].Date(s)forCompletion
Aconstructioncontractmaystateasingledateforcompletionby
whichthecontractormustpracticallycompletethewholeofthe
projectworks.Morecommonlyonlargeorcomplexprojects,there
willbeaseriesofdatesbywhichthecontractorwillberequiredto
completeandhandovertotheemployervarioussectionsorstages
oftheworks.Forexample,amultiunitpowerstationmaybe
handedoverunitbyunitoranofficebuildingmaybehandedover
floorbyfloor.Thisisknownassectionalcompletion(orstaged
completion).Sectionalcompletionmayenabletheemployerto
commenceoperations,fitoutorstafftrainingonthosepartsofthe
projectcompletedearly.Orsectionalcompletioninacivilworks
contractforexampleonawaterfiltrationplantmayberequired
toallowstructuralandM&Econtractorsprogressivelytocommence
theirworksontheproject.Sectionalcompletioncanalsobean
advantagetothecontractorwhowouldusuallybeentitledon
completionofasectiontotransferliabilityforinsuranceand
securitytotheemployerandberelievedfromliabilitytopay
liquidateddamagesinrespectofthecompletedsection.
[D].CompletionCertificate(s)

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Giventhecriticalityofcompletion,itisusuallymarkedbyissueofa
completioncertificateissuedbythecertifierthatstatesthedateon
whichpracticalorsubstantial
page"33" completionoftheworks
wasachieved.Practicalcompletioncertificatesareinvariably
issuedsubjecttoalistofoutstandingitemsordefectsthathave
beenidentifiedoninspectionpriortoissueofthecertificate.This
listofdefectsissometimesknownasthesnagginglistorpunch
list.Inacontractwhichprovidesforsectionalcompletiontherewill
beapracticalcompletioncertificateforeachsectionoftheworks.
[E].CompletionTests
Onanysophisticatedprojecttherewillbearegimeoftestson
completion.Inthecaseofapowerplant,forexample,therewillbe
aseriesoftestsculminatinginareliabilityrun,whichinvolvesthe
unitsrunningcontinuallyforaperiodof,say,thirtydays.Thetests
oncompletionwilldefinethestandardsthattheplanthasto
achieve,forexampleinthecaseofapowerplantinrelationto
electricitygeneration,fuelconsumptionandlevelsofheat
production.Inthecaseofatransportationsystemthetestswillturn
onlevelsofservice,noise,powerorfuelconsumption,forexample.
[F].LiquidatedDamagesforDelay
Constructioncontractsinvariablyprovideforthepaymentof
liquidateddamagesbythecontractorforfailuretoachieve
completionbytheagreedcompletiondate,orsectionalcompletion
dates.Liquidateddamagesarecommonlypayableinaspecific
amountonadailyorweeklybasis.Theyshouldincludeaprofit
element.Onlargerprojectsthetotalamountofliquidateddamages
forwhichacontractorcanbeliableisoftencapped.Contracts
normallymakeitclearthatpaymentofliquidateddamagesdoesnot
relievethecontractorfromitsobligationtocompleteorperformany
ofitsotherobligations.
Liquidateddamagesserveanumberofpurposes.Mostnotablythey
typicallyavoidanyneedfortheemployertoprovelossintheevent
ofcontractordelay(althoughthisisnotuniversalassome
jurisdictionsrequireproofofactuallosses,forexample,Malaysian
law).Forcontractors,liquidateddamagesprovidecertaintyasto
theirexposuretodelaydamagesand,wherethedamagesare
capped,alimitofliabilityfordelay.Forbothparties,liquidated
damagescanalsooperateasagoalorincentiveforproject
completion.
Incommonlawjurisdictions,liquidateddamagesmustrepresenta
genuinepreestimateofloss,otherwisetheymaybesubjectto
attackbythecontractoronthegroundsthattheyrepresenta
penaltyandarethereforeunenforceable.(10)Occasionally,liquidated
damagesclausesarepoorlydraftedsothatthedraftingratherthan
thespecifiedraterenderstheliquidateddamagespenal.Contracts
thatprovideforsectionalcompletionareparticularlypronetosuch
errors,forexample,ifthecontract
page"34" onlystatesa
singlefigureforliquidateddamagesorwheretheeffectof
cumulativedelaysacrosssectionshasnotbeenappropriately
addressed.(11)
IncivillawjurisdictionssuchasGermany,forexample,itis
possibleandcommonplaceforconstructioncontractstocontain
penaltiesclauses.Otherthanliquidateddamagesapenaltyisnot
usuallytheexclusiveremedyfordamagesresultingfromthebreach
(delay)bywhichitistriggered.Itallowstheinnocentpartytoclaim
fordamagesinexcessoftheagreedpenaltyamountprovidedthat
partycanprovethatitactuallyincurreddamagesinanamount
exceedingtheagreedpenalty.(12)Penaltiesarefrequentlyusedin
relationtothetimelyachievementofkeymilestonedatespriorto
theexpiryoftheoveralltimeforcompletionworkingasincentives
forthecontractortoconstantlykeepuptheworks'progress.The
contractormaybereleasedfromanysuchliabilityifitfinally
achievesoverallcompletionintime.Itshouldbenotedthatunder
Germanlawtheemployermustexpresslyreserveitsrightsand
claimsinrespectofpenaltiesuponacceptanceoftheworksasit
willotherwisebeconsideredtohavewaivedthem.(13)
[G].ExtensionsofTime
Constructioncontractsinvariablyprovidethatthecontractoris
entitledtoanextensionoftimetothedateordatesforcompletion
andanyinterimmilestonesifitcandemonstratethattheprogress
oftheworkshasbeendelayedbyoneormorespecifiedevents
(EOTevents),forexample:
changestotheworksintroducedbytheemployer
eventsofforcemajeure(totheextentwiderthanemployer's
retainedrisks)and
unforeseengroundconditions(totheextentthatthisriskisnot
bornebythecontractorunderexpresstermsofthecontract).
Essentiallythegroundsforentitlementtoanextensionoftime
agreedbetweenthecontractingpartiesreflecttheallocationofrisk
betweenthepartiesforeventswhicharelikelytocausedelaytothe
project.FurtherexamplesofcommonEOTeventsareexceptionally
inclementweather,industrialdisputes(strikes,lockoutsetc.)and
unforeseeableshortagesinavailabilityofpersonnelorgoods

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causedbyepidemicorgovernmentaction.
Onitsface,anextensionoftimeclauseisforthebenefitofthe
contractor.However,incommonlawjurisdictions,thechangeis
alsoanessentialrequirementtoensurethataliquidateddamages
provisionwillbeenforceablewheredelaysarecausedbythe
employer,orthoseforwhomitisresponsible.Theemployerwillnot
be
page"35" abletorelyonitsownwronginattemptingto
recoverliquidateddamages.Iftheemployerhascausedthe
contractor'sdelay,andthereisnoadequatemechanismprovided
forinthecontractforextendingtimetoreflectsuchdelay,the
liquidateddamagesprovisionbecomesunenforceable.Thetimefor
completionisthensaidtobeatlarge,i.e.,thecontractoris
requiredtocompletewithinareasonabletime.Theemployerisnot
leftwithoutaremedyitwillbeentitledtogeneraldamagesas
opposedtoapredeterminedliquidatedsum.(14)This,however,isa
highlyunsatisfactorysituationthereisnofixedtimefor
completionand,becausethereisnopreagreedfigurerepresenting
theemployer'sloss,therewillinevitablybedisputesastothe
employer'srighttosetoffunliquidatedsumsagainstsumscertified
duetothecontractorinanysubsequentpaymentcertificate.
Exclusiveremediesclausesorcapsorexclusionsofcertainheads
ofloss,suchaslossofprofitorbusiness,mayalsooperatetolimit
orexcluderecoverieswhichwouldotherwisefallwithinthescopeof
anagreedliquidateddamagesprovision.
Typicalfeaturesofextensionoftimeclausesinclude:
timelynoticeofclaimsasanexpressconditionprecedent(to
preventthecontractorstockpilingclaimsandinhibitingthetimely
investigationofthereasonsfordelay)
arequirementthatthecontractorshouldusebestendeavoursto
avoidorreducedelaysand
theabilityfortheemployertoorderaccelerationoftheworksin
lieuofagrantofanextension,sometimescoupledwith
proceduresforobtainingquotesofcostandlikelytime
consequences.
[H].TheRoleoftheProgramme
Progressofworksisplannedandmeasuredagainstanagreed
programme,whichmayormaynotbespecifiedasacontract
document.Theprogrammemapsoutthecontractworksandshows
theorderinwhichtheworkswillbecompletedandtheexpected
durationofeachactivity,allinorderthattheworks(oreachsection
thereof)willbecompletedbythedateforcompletionstatedinthe
contract.Turnkeycontractprogrammeswillalsoincludethedesign
periodoftheproject.Theprogrammewillidentifygenerallythe
criticalpathorpathsthroughtheworksthecriticalpathisthe
linkagebetweenactivitieswhichthecontractorisrequiredto
completeinordertoavoidingdelayingthedateforcompletion.
Programmescomeinvariousformsandlevelsofdetail,depending
onthesizeandcomplexityoftheprojectandtherequirementsof
thecontract.Programmingisasophisticatedscienceandnormally
utilisesastandard,commerciallyavailablesoftwarepackage,first
togenerateaprogrammeattheoutsetoftheprojectandthento
manipulateitduringtheprojectperiod.Inadditiontotheinformation
describedabove,
page"36" programmesmayshowdatesby
whichtheemployerisrequiredtoprovidethecontractorwith
requiredinformationandmilestonesortargetdateswithbonuses
payableonthecontractormeetingthosedates.Contractsfrequently
obligethecontractortoupdatetheprogramme,eitherperiodicallyor
upontheoccurrenceofdelayevents,inordertoensurethatthere
alwaysexistsacurrentprogramme.
TheroleoftheprogrammeisconsideredinmoredetailinChapter
10.
[I].CriticalPathAnalysis
Thecontractorwillnotbeentitledtoanyextensionoftimeunless
thedelayiscriticaltocompletionoftherelevantworks.Inother
words,thedelaymustaffectworksonthecriticalpathsothatdelay
tothoseworkswillcausedirectdelaytothedateforcompletionof
theworks(ortherelevantsectionofworks).Forexample,adelayto
landscapingworksisunlikelytobecriticaluntiltheveryendofthe
constructionperiod,asitisnormallyoneoftheverylasttaskstobe
completedanddoesnotusuallyhaveotheractivitiesdependenton
itscompletion.Thequestionwhethertheworksarecriticalto
completionisdecidedbyreferencetoanuptodatecontract
programmeshowingactualprogresstodate,theactivitiesstilltobe
completedandtheirinterrelationship.Thistopicisdiscussedin
detailinChapter10.
[J].ConcurrentDelays
Concurrentdelayariseswheretwoeventsoccurinthesametime
period,oneofwhichisadelayunderthecontractthatentitlesthe
contractortoanextensionoftime,andtheotherisnot,andeach
event,wereittohaveoccurredinisolation,wouldhavecausedthe
worktobedelayed.Trueconcurrencyisrare.Analysingwhat
appeartobeconcurrentdelayswiththeaidofprogrammingtools
thatallowanalysisoftheimpactoftheeventsonthecriticalpath
oftenrevealscoexistingeventsthatmayhavebeenconcurrent,but

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arenotcoeffective.
Thereexistvariousapproachestoresolvetrueconcurrency.One
approachisthedominantcauseapproachi.e.,iftherearetwo
eventscausingadelay,thecontractorwillsucceedinitsclaimfor
anextensionoftimewhereitcanestablishthattheEOTevent(as
opposedtotheeventforwhichitisnotentitledtoanextensionof
time)istheeffective,ordominant,causeratherthanmerelythe
occasionfordelay.Thequestionofwhichisthedominantcauseis
aquestionoffact.Thegenerallyheldview,though,isthatwhere
therearetwoequallyoperativecausesandoneisanEOTeventthe
contractorshouldgetanextensionoftime,althoughthe
cost/damagesconsequencesmaydifferinthesecircumstances.
ConcurrentdelaysarealsoconsideredinmoredetailinChapter10.
[K].WorkAroundMeasures
Acontractsometimescontainsanexpressobligationonthe
contractortoemployworkaroundmeasures'inordertoavoida
delay.Thisissometimesseenasasimple
page"37" obligation
tomitigate.Othercontractsprovidethatthecontractor'sentitlement
toanextensionoftimewillbesubjecttothecontractor
demonstratinguseofallreasonablemeasurestoovercomethe
delay.Foracontractorwhowantsanextensionoftime,thereis
effectivelylittledifferencebetweenthesetypesofprovisions
workaroundmeasuresaremandatory.
Alternatively,workaroundmeasuresmayberequiredattheoption
oftheemployer.Inthiscase,acontractreservestotheemployer
therighttoorderworkaroundmeasuresasanalternativetoan
awardofanextensionoftimewherethecontractor'sentitlementhas
beenmadeout.Additionalcostsassociatedwithanysuch
measuresshouldbefortheemployer'saccount.
[L].Acceleration/ConstructiveAcceleration
Contractsalsosometimesreservetotheemployertherighttoorder
accelerationofworksinlieuofgrantinganextensionoftimewhere
thecontractor'sentitlementtoanextensionoftimehasbeenmade
out.Thesimplestaccelerationmeasuresareoutofhoursworkand
employmentofadditionallabour.Additionalcostsassociatedwith
anysuchmeasureswouldnormallybefortheemployer'saccount.
Constructiveaccelerationisnotanaccelerationorderfromthe
employerbutaclaimbythecontractorthatitwasentitledto
accelerate.Forexample,claimsforconstructiveaccelerationare
seenwhenacontractorisorderedtotakemeasurestoachievethe
originalcompletiondatewheninfactanextensionoftimeshould
havebeengranted.
Evenwhereitisclearthataccelerationhasbeenordered,
quantificationofaccelerationclaimsunderlumpsumcontractscan
sometimesbefiercelydisputedparticularlyifonepartofthe
projecthasbeenacceleratedattherequestoftheemployeratthe
sametimeasthecontractorisindelayonanotherpartofthe
project,inwhichcaseitmaynotbecleartowhoseaccount(orin
whatproportions)theadditionalcostsshouldfall.
[M].ExtensionofTimeClaimsandDisputes
Claimsforextensionsoftime,alongwithvariationclaims,arethe
mostcommoncauseofconstructiondisputes.Extensionoftime
claimsinvariablyinvolvedifficultfactualquestionsofcausation,as
illustratedbythediscussionofcriticalpathanalysisandconcurrent
delaysaboveandinChapter10.
Asinthecaseofdisputedvariationclaims,formalnotificationand
documentationrequirementsarealsofrequentlyatissuein
extensionoftimeclaimdisputes.
[N].LiquidatedDamagesforPerformanceFailures
Liquidateddamagesmaybeagreednotonlyinrespectofdelaybut
alsoinrespectoffailuretoachievethespecifiedperformance
standards.Forexample,inthecaseofapowerplantwherethe
electricityoutputdoesnotmeetthepreagreedthreshold,
page
"38" liquidateddamagesmayapplyasafactoroftheguaranteed
grossoutput.Inthecaseofatransportationsystem,theremaybe
afailuretoachieveapreagreedrunningtimewheretheworkshave
failedtopassthetestsoncompletion.Thecontractwillthen
generallyprovidetheemployerwiththeoptionof:
orderingrepetitionofthetests,iftheperceptionisthatthefailure
hasbeenaoneoffbecauseofteethingproblemsliquidated
damagesfordelaycanbeclaimedwhererepetitionofthetests
delayscompletionbeyondthecompletiondate
rejectingtheworksintheirentirety,wherethefailuresareoutside
agreedtolerancesor
takingovertheworksnotwithstandingthefailuretoachievethe
preagreedstandardsandclaimingliquidateddamagesonthepre
agreedbasisbywayofcompensationasaoneoffhitora
reasonablereductionofthecontractprice.
Whileliquidateddamagesworktotheadvantageoftheemployerin

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avoidingtheneedtoproveitslossandprovidingaclearrouteto
setoffagainstsumsduetothecontractor,asnotedabovethey
mayalsoworkinfavourofthecontractorasalimitonliabilitywhere
thelevelofliquidateddamagesiscapped.
2.10.Liability
Therearethreeobviousareaswhereacontractorisexposedto
liabilityunderaconstructioncontract.Theseare:
delayincompletion
failuretomeetspecifiedperformancestandardsand
defectsintheworks.
[A].LimitationsofLiability
Incommonlawjurisdictions,thegeneralpositionisthatbreachof
contractclaimsareavailableunlesstheyareexcludedbyclear
wordsforexample,statingthattheremediesprovidedinthe
contractaretheonlyremediesavailabletotheparties(orthe
contractor)totheexclusionofallotherremediesatlaw.
Atcommonlaw,thecontractorisinprincipleliabletopaydamages
onaccountofalltheemployer'slossesthatflowdirectlyand
naturallyfromthebreachofitsobligations.(15)Inpractice,the
contractor'sexposureisnotasextensiveasthis,asaresultofthe
agreementoflimitationsonitsliability.Limitationsofliabilityoften
reflecttheavailabilityofinsurancetocoverparticularrisks,suchas
negligentdesignorenvironmentalcontamination.
page"39"
Thegeneralprincipleoffullcompensationisthesameincivillaw
jurisdictionsandpartiessimilarlylooktolimittheirliabilitiesin
accordancewithmarketpractice.Theexclusionofindirect
damagesandacapontheoverallliabilityofthecontractorarethe
mosttypicalexamples.
Itisimportanttonoteinthiscontextthatterminologyandlegal
definitionsofwhichlossesordamagesarerecoverablevary
considerablyandconstitutepotentialpitfallsfortheparties.The
termofindirectandconsequentialdamages'e.g.,hasaspecific
commonlawmeaning.Itreferstosuchdamagesthatdonotflow
directlyandnaturallyfromthebreachandareonlyrecoverableto
theextenttheywerereasonablyforeseeablebytheotherpartydue
toknowledgeofspecialcircumstancesatthetimeofcontracting.(16)
UnderEnglishlawthelossofordinaryprofitwhichflowsnaturally
fromabreachofcontractwouldusuallybeconsideredadirectloss
thatisrecoverablyunlessexpresslyexcluded.Theperceptionof
thetermindirectandconsequentialloss'oftencopiedintoEnglish
languagecontractsgovernedbyGermanlawisusuallydifferent.
AnindirectorconsequentiallossinaGermanlawcontractisoften
consideredtorefertopureeconomiclossesnotdirectlyresulting
fromanydamagetothephysicalworks.Wherethecontractor
seekstolimititspotentialexposureundertheconstructioncontract
byexcludingpotentiallysignificantprofitlossesonthepartofthe
employer,theuseoftheEnglishterminologywillnotachievethe
contractor'saim.Caremustbetakentoensurethepartiesfully
understandtheimplicationsofterminologyusedunderthegoverning
lawofthecontract.
[B].DelayandPerformance
Asmentionedabove,thepartiesfrequentlyagreethepaymentof
liquidateddamagesiftheprojectisdelayed.Liquidateddamagesfor
delaywillgenerallybecalculatedonadailyorweeklybasis.
Liquidateddamagesforfailuretomeetperformancestandardswill
varywiththedegreeofthefailure.Forexample,inaconstruction
contractforthedesignandbuildofapowerstation,liquidated
damagesmaybeappliedatanagreedrateperunitofheatproduced
overandabovetheagreedtolerances,andaseparaterateforeach
unitshortfallinpowerproduced.Intransportinfrastructure
contracts,liquidateddamagesmaybeimposedifspecifiednoise
levelsareexceeded,forfailuretoachievespecifiedride
characteristics,orifthetraveltimesarelongerthanspecified.
Thecontractorwilllookforsuchliabilitiestobecapped(inrespect
ofindividualperformancerequirementsand/oroverall)ataparticular
level.Thishastheeffectnotonlyoflimitingtheliquidateddamages
payablebutalsoofcappingthecontractor'sliabilityforbreachesof
thetypecoveredbythepaymentofliquidateddamages.(17)Thisis
becausealiquidateddamagesclausewillgenerallybeconstruedas
reflectiveofthe
page"40" parties'intentionthatliquidated
damagesaretobetheexclusiveremedyinrespectofaparticular
headofloss.(18)
[C].Defects
Withregardtodefects,alimitinmonetaryterms(usuallypartofan
overallcaponliability)canoftenbefound.Moreusually,the
contractorwillhavenegotiatedtoexcludeparticulartypesofloss,
mostobviouslyconsequentialloss.However,assetoutabove,in
somejurisdictions,themeaningofconsequentiallossisunclear
andmaycausesurpriseastheexclusionofconsequentialloss'

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maynotinfactexcludeverymuchforexample,underEnglish
law,consequentiallosshasbeenconstruedtocoveronlydamages
whichwouldnot,butfortheexpressknowledgeofthecontractor,be
regardedaslossesflowingdirectlyandnaturallyfromanybreach.
(19)
Itissensibletoidentifytheparticularcategoriesoflosssought
tobeexcluded,ratherthanrelyingongeneralterminology.
Accordingly,acontractmayprovideforliabilitytobelimitedtothe
costsofrepairorreinstatementoftheworks,excludingliabilityfora
listofspecifiedlosses,suchaslossofuse,lossofproduction
and/orlossofcontract.
[D].EntitlementtoLossandExpenseDuetoDelayand
Disruption
Constructioncontractsmayentitlethecontractortoclaimforloss
andexpenseduetodelayanddisruption.Delayanddisruption
claims(alsocalledprolongationclaims')typicallyaccompany
claimsforextensionsoftime.Whereasthelatterconcernthe
contractor'sclaimtoextendthedatebywhichitmustcompletethe
works,lossandexpenseclaimsareforthecostsassociatedwith
havingtotakelongertoachievecompletion.Mostcostsclaimed
willbenomorethanthecontractor'sordinarycostsofbeingonsite
andcarryingouttheprojectforalongerperiodthanwouldhave
beenthecasehadthedelayanddisruptionnotoccurred.
Prolongationcostitemsthatarecommonlyclaimedinclude:extra
labourtime,additionalplanthirecosts,overheads,profit,financing
charges(suchasmaintenanceofbondsoroverdrafts),lossof
opportunityandalteredworkingconditions.Contractsmay
expresslyexcludesomecategoriesofloss,suchaslossofprofit
andlossofopportunity.
Incommonlawjurisdictions,theabsenceofanexpresscontractual
righttoclaimfordelayanddisruptioncostsleavesacontractorwith
onlyitscommonlawrighttosueforbreachofcontractwherethe
employerisresponsibleforadelaytothecontractor'sworks.Where
thedelayisnottheemployer'sfaultthen,evenwherethereisa
contractualrighttoanextensionoftime(e.g.,exceptionalinclement
weather),thereisgenerallynocorollaryrighttodelayanddisruption
costsassociatedwiththatdelay.
page"41" Again,different
jurisditionstakevaryingapproachestoentitlementstotherecovery
ofcostsassociatedwithdelay.UnderGermanlawthecontractor
hasarighttoclaimdamagesiftheemployeromitsanact
necessaryfortheperformanceofthework,thecontractorhas
offeredtheperformanceowedunderthecontractandiftheomission
causesthedelayoftheperformance.WheretheGermanstandard
termsforconstruction(VOB)applythecontractorhastonotifythe
employerofeventscausingdelayandwillloseanyentitlementifit
failstodosounlesstheemployerwasdemonstrablyawareofthe
delayevents.(20)
Thecontractor'sentitlementtorecoverlossandexpenseon
accountofdelayanddisruption(ifany)isusuallysubjecttoa
varietyofconditionsprecedentandotherproceduralrequirements.
Forexample,thecontractmayrequirethatthecontractormustfirst
haveestablishedanentitlementtoanextensionoftime,mitigated
itsloss,providedtimelynoticetotheemployerofboththedelay
andtheclaim,andadequatelysubstantiatedtheamountsclaimed.
Typicalconditionsprecedenttoclaimsareaddressedinmoredetail
inChapter4.
[E].AConclusiveFinalCertificate?
Anothermeansbywhichthecontractmaylimitthecontractor's
liabilityfordefectsisbyprovidingforthefinalcertificatetobe
conclusiveastothesatisfactoryexecutionofworksinaccordance
withthecontractualrequirements.Contractsformechanicaland
electricalwork,forexample,generallyfavouraconclusive
certificate,saveinrespectofanarrowclassoflatentdefects.(21)In
contrast,thestandardformcivilandengineeringcontracts(suchas
ICEandFIDIC)havemovedawayfromconclusivefinalcertificates.
Thedifferenceinapproachliesinthenatureofthework.Defectsin
mechanicalandelectricalplantsarelikelytoemergeon
commissioningorsoonthereafter.Defectsinbuildingsorcivilworks
arenotoriouslydifficulttodetecthencethereluctancetoexclude
claimsfollowingissueofthefinalcertificate.Inaddition,the
continuedperformanceofmechanicalandelectricalworkafter
commissioningisheavilydependentontheoperationand
maintenanceregimes,therebyquicklyreducingtheresponsibilityof
theoriginalsupplierforanyfailures.
2.11.ProjectSecurity
[A].TypesofSecurity
Theconstructioncontractusuallyprovidesforsecuritytobegiven
tosupportthecontractor's(andveryoccasionallytheemployer's)
obligations.Thismaybetangible
page"42" security(the
creationofacashreservebywayofretention)orthirdparty
security,eitherbywayofaparentcompanyguaranteeorthirdparty
securityintheformofbankguaranteesorbonds.Themost
commonformsofsecurityareconsideredbrieflybelow.
[B].AdvancePaymentBonds

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Wherethecontractorreceivesasizeableadvancepaymentinorder
tomobiliseortoorderlongleadtimeequipment,itiscommonto
securerepaymentoftheadvancebywayofdeductionfromsums
earnedoverthelifeofthecontract.Itisalsocommonforthis
repaymentobligationtobebackedbyathirdpartyguaranteeinthe
formofanondemandbond.Anondemandbondisonewhichcan
becalledbyasimplewrittendemandinstrictcompliancewith
formalrequirementsbutwithouttheneedforproofofbreachbythe
contractororoflossordamagesufferedbytheemployer.
Intheory,anadvancepaymentbondshouldbeareducingbond,
initiallysecuringthewholeoftheadvancebutreducinginsizeas
theadvancegetsrepaidbywayofdeductionfromthevalueofwork
carriedout.However,wherethislevelofsophisticationisnot
addressedthecontractorcarriesthecostoftheadvancepayment
bondforthewholelifeoftheproject.Whilethisobviouslygivesthe
employeradditionalsecurity(andmaybeinlieuofaperformance
bondorleadtoasmallerperformancebond)thismaybean
unnecessaryprojectcostifitaffordsmoresecuritythanisrequired.
Thiscostisultimatelycarriedbytheemployerasthecontractorwill
includethecostsofobtainingandmaintainingthebondinitsbid
price.
[C].RetentionFunds
Theemployergenerallyhastherighttoretainapercentage
usuallythreetofive%ofthevalueofworkscertifiedasbeingdue
ineachpaymentcertificateuptopracticalcompletiontoforma
retentionfund.Theretentionfundisavailabletotheemployerto
meetvalidclaimsagainstthecontractor,includingclaimsfor
defects.Iftherearenooutstandingclaims,typicallyhalfofthe
retentionfundwillbereleasedoncertificationofcompletionandthe
balanceoncertificationofmakinggooddefectsorexpiryofthe
defectsliabilityperiod,whicheveristhelater.
Inparttoimprovecontractorcashflowthepracticehasevolved
andisnowcommoninmajorinfrastructureprojectswherebythe
contractorprovidesabondtocoverallorpartoftheretentioninlieu
ofthedeductionofsuchsumsbytheemployer.Sincearetention
fundisasubstituteforacashsum,againstwhichtheemployerhas
unlimitedrecourse,thereisnoreasonwhytheretentionbondshould
notbeondemand.Intheorythisshould,untilcompletion,bean
increasingbond,mirroringthebuildupoftheretentionfundit
replacesbutthisisrarelythecaseinpracticeasbondstypicallyare
takenoutfortherelevantpercentageoftheestimatedcontractsum
atthestartoftheproject.Itiswisehowevertoprovidea
requirementtoincreasethevalueofthebondtoreflectincreasesto
thecontractpriceduetovariationsor,inatotalcostcontract,
increasedactualcosts.
page"43"
[D].PerformanceBondsandGuarantees
Thepurposeofperformancebondsandguaranteesistosecurethe
dueperformancebythecontractorofitsobligationsunderthe
contract.Inpractice,therealvalueofthesebondsiswherethe
contractorbecomesinsolventastheythenprovidetheonlydirect
access(intheabsenceoftrustfunds)torecoverywithoutprovingin
theliquidation.
Performancebondsandguaranteesmaybeondemand(described
above)orondefault.Anondefaultbondoperatesasaguarantee
andrequiresproofofdefaultonthepartofthecontractor.
Contractorsoftenstronglyresistprovidingondemandbondsdueto
theriskofwrongfulcalls.Adegreeofcomfortmaybegivenby
requiringtheformofdemandtobesignedbyaseniorofficerofthe
holderofthebond,whocertifiesabonafidebeliefthatthe
circumstancesjustifyingthecallonthebondhavearisen.
Performancebondsarefrequentlysoughttoavalueofupto20%of
thecontractprice.Inmanycircumstances,theguaranteewillbein
additiontoanadvancepaymentbond(whichmayormaynot
reducesoastohaverealvalueoverthecontractperiod)anda
retentionfundorbond.Thecostsofobtainingbondsandguarantees
willbeincludedaspartofthecontractor'stenderandsoeffectively
theemployerwillbepayingforthebenefitofsuchaddedprotection.
Inaddition,insomejurisdictions(e.g.,Germany),bondsand
guaranteesmustbeshownasliabilitiesonthecontractor'sbalance
sheet,whichdiscouragescontractorsfromofferingthem.
[E].ParentCompanyGuarantees
Aparentcompanyguaranteeprovidestheemployerwithsecurity
fromtheparentcompanyofthepartytotheoriginalconstruction
contract.Parentcompanyguaranteesareusuallyrequiredfromthe
ultimateparentcompanyoranotherparentcompanyinthechain
dependingonthefinancialstabilityoftheentitiesinquestion.Ifthe
ultimateparentcompanyisforeigntothejurisdictionwherethe
projectisbeingconstructed,thismayinfluencethechoiceof
guarantorand/oraffectthedocumentationrelatingtotheguarantee.
Wheneveraparentcompanyguaranteeisrequested,thegroup
structureneedstobereviewedtoassessthevalueoftheadditional

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securitybeingprovided.Iftheparentcompanyisitselfasubstantial
operatingcompanywithitsownrevenuestreamandassets,the
guaranteemaybeofconsiderableadditionalbenefit.However,ifthe
parentcompanymerelyownssharesinoperatingandassetowning
subsidiaries,thevaluemaynotbesignificant,asanyclaimonthe
parentcompanyiseffectivelysubordinatedtotheclaimsofallthe
creditorsofallthesubsidiaries.Despitethis,parentcompany
guaranteesarefrequentlyrequestedastheguaranteeisnotusually
limitedtoaspecifiedpercentageofthecontractsum(asisabond)
andisusuallyoflongerdurationthanabond.Theentityproviding
theguaranteemay,however,seektonegotiatealimittotheperiod
oftimeduringwhichtheguaranteemaybecalled.
Sometimesconstructioncontractsrequirethecontractortoprovide
aparentcompanyguaranteeandabond(whichmayormaynot
actuallybenecessary).
page"44" Normallythetwodoserve
differentpurposes.Thebondisforalimitedsumandtimeperiod
(oftenuptocompletiononly)andprotectsagainsttheriskthatthe
contractormayfailtocompleteduetoinsolvencyorotherwise.The
parentguaranteeusuallylastslongerandmainlyprovidescomfortin
relationtodefectsthatmayarise.
[F].PaymentGuarantees
Apaymentbondorguaranteemaybesoughtbythecontractorfrom
aninsubstantialemployer.Commonly,suchbondsorguarantees
willcoverafractionofthecontractsum,forexample,10%20%.
Thisisgenerallysufficienttoprotectthecontractorinrelationto
workithascarriedoutbutwhichithasnotbeenpaidfor.The
contractorcanthentakethedecisionwhethertowalkawayfromthe
projectandnottoincurthecostsofanyadditionalworkswhere
thereisasignificantriskofnonpaymentbytheemployer,where
thebondorguaranteehavebeenexhausted.
Provisionofabondofthisnaturewillgiverisetoanadditional
projectcost.Therefore,alternativemethodsofprovidingsecurityfor
thecontractorcanandhavebeendevised.Forinstance,inthe
ChannelTunnelproject(seeabove),thepaymentmechanism
providedforthecontractortomakemonthlyestimatesoffuture
coststwoorthreemonthsahead.Subjecttoscrutinybythe
employer,thissumwasplacedintoanescrowaccountandwas
availabletomeetactualcostsincurredwhenthecontractorhad
carriedoutthework.Whilethismechanismobviouslyhasafunding
costtotheemployer,itmaybemoredesirabletoprovidecomfortto
thecontractorinthiswaythantopurchasethirdpartysecurityinthe
formofabondorguarantee.
[G].OtherFormsofSecurity
Projectsecuritymayalsobeprovidedinotherformssuchas:
lettersofcreditused,forexample,inrelationtothepurchaseof
highcostmaterialsorothersuppliesand
trustfundsforexample,inthecaseofthefinancingoftheIraq
TransSaudipipelinewheretheproceedingsofoilsaleswerepaid
intoatrustaccountearmarkedforpaymenttothecontractoron
presentationofdocumentsandinvoicescertifiedbytheCentral
BankofIraq.(22)
2.12.ProjectFinancedConstructionProjects
[A].Introduction
Theessenceofprojectfinanceisthatthereisno,oronlylimited,
recoursetoanyparticipantotherthantheprojectcompany.The
equityanddebtcushionprovidedby
page"45" the
shareholdersoftheprojectcompanywilloftenbeinsignificant.
Loansfortheconstructionofthefacilitywillessentiallyberepaid
throughtherevenuestheprojectcompanyiscreatingoncethe
facility(apowerplant,tollroadetc.)hasbeenputintooperation.To
afundamentalextent,therefore,thelenderswillcallthetuneonkey
termsoftheconstructioncontractaswellastheconductand
resolutionofdisputestomakesurethat,totheextentpossible,
risksaredirectedawayfromtheprojectcompanyandany
difficultiesduringtheconstructionphaseareresolvedaseffectively
aspossible.Intheseprojects,theinterestsofthelenders/other
financiersareparamountas,whateverthewishesoftheproject
company,itssponsorsorthecontractor,theconstructioncontract
hastobebankableotherwisetheprojectsimplyisnotfeasible.
Thecontractorisoften(thoughnotinvariably)oneoftheproject
company'sshareholders,orperhapstwoormoreoftheproject
company'sshareholders(ortheiroperatingsubsidiaries)acting
togetherinajointventure.Thecontractorwillbelookingforaswift
exitwithaprofitandwhereverpossibletoleaverisksintheproject
company.Inthiscontexttheprojectcompanyandthelenders'
interestsarenormallyalignedasneitherwillacceptriskstobeleft
intheprojectcompanythatcannotbemanagedandtheywillinsist
onacompletebacktobackpassthroughofconstructionrisks.The
extenttowhichthishasorhasnotbeenachievedinthedrafting
cangiverisetodisputes.
Mostofthediscussioninthischapterappliesequallytoproject
financedprojects.Thedifferenceisreallythepresenceofan

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additionalinterest(thelenders)andthereforeanadditionallayerof
contractadministrationanddisputemanagement.Someofthese
differencesareaddressedfurtherbelow.
[B].TheLendersEngineer
Lenderswillusuallyappointtheirownindependentengineer(or
technicaladvisor)withresponsibilityforreviewingthetechnical
specificationandreportingtothelendersonprojectprogresswith
rightstoinspecttheworksandoffsitefacilities.Thelenders'
engineerisalsogenerallygivenresponsibilityforcertifyingthe
completionofmilestones,thetriggerforpaymentstothecontractor
undertheconstructioncontractandthetriggerforthedrawdownof
financingundertheloanagreements.
Anemployerwillnotwanttohaveamismatchbetweencertification
undertheconstructioncontractanddrawdownundertheloan
documents.Therefore,asolutionoftenseenisthatthelenders'
engineer'scertificationisaconditionprecedenttocertificationunder
theconstructioncontract.Analternativeistoprovideforjoint
inspectionbythelenders'engineerandemployer'srepresentative,
witharequirementtohavedueandproperregardtoany
representationsmadebythelenders'engineerastowhetherornot
toissueacertificateundertheconstructioncontract.Theemployer
thentakestheriskofmismatchincertificationundertheloanand
constructioncontracts.
page"46"
[C].LendersStepInRights
Lenders'stepinrightsareanotherimportantinvestmentprotection
mechanism.Lenderstoaprojectcompanywillusuallyhavestepin
rightsundertheconstructioncontracttoprovidethemwiththe
opportunitytorectifyanyprojectcompanybreachesorotherwise
performtheconstructioncontractwheretheprojectcompanyis
unableorunwillingtodoso.Typically,beforeacontractorisentitled
toterminatetheconstructioncontractforprojectcompany'sbreach,
theprojectcompanyisallowedaspecifiedperiodinwhichitis
required(orentitled)torectifythebreach,afterwhichthelenders
havetheirownseparateperiodinwhichtheyhavetheopportunityto
remedythebreach.
Lenderswillnormallyhavesimilarstepinrightsundertheproject
company'sconcessionagreementorheadcontractwiththe
governmentorotherauthorityforwhichitiscarryingouttheproject.
Again,theseoperatesothatthegovernment/authority'sabilityto
terminatetheconcessionagreement/headcontractissubjecttothe
lendershavingtheopportunitytorectifytheprojectcompany's
breachorotherwiseperformtheprojectcompany'sobligations.
Lenders'stepinrightsareoften,butnotalways,limitedtothe
extentnecessarytorectifythebreach.
[D].VariationOrders
Lendersarealsotypicallyconcernedtocontroltheissueofvariation
ordersandcontractsmayprovidefortheirparticipationinthe
authorisationprocedure(eitherdirectlythroughthelenders'engineer
undertheconstructioncontractorindirectlybyagreementwiththe
projectcompany).
[E].LiquidatedDamages
Alender'sliquidateddamageswishlistmaybeforliquidated
damagestocoveruptosixmonths'interestpaymentsonthe
projectdebttobepaid/deductedataratesufficienttocoverinterest
payments.(23)Contractors,however,willresistacceptingfullriskof
debtservicecostsanddelaydamagesaregenerallycappedat
about15%20%ofthetotalcontractvalue.Thecontractor'sprice
willreflectthelevelofexposureforexample,liquidateddamages
withacapabove20%ofthecontractvaluewillgenerallytranslate
intoaninflatedprice.
page"47"
[F].ProjectSecurity
Inprojectfinancedprojects,lenderslookforaguaranteedmethodof
paymentofdebtservice.Thistendstomeanthattheperformance
bondisseennotsimplyasprotectionagainstthecontractor's
ultimateinsolvencybut,asimportantly,asameansofproviding
instantcashtocoveranyperiodwheretheprojectisnotrevenue
producing.Thishasconsequencesforthetypeofbondor
guarantee.Astherealpurposeofbondsinaprojectfinanced
projectisnotsomuchtomeetthedemandsofastrongly
capitalisedemployer,buttomeetthepeculiardemandsofaproject
companydependentonthecontinuingsupportoflenders,thenorm
isforperformancebondstobeondemand.Thesefallawayon
completionwhentheoperationalphasestarts,withrevenuestreams
comingonlinetomeetdebtservicepayments.Insomemarkets
(suchastheUKPPPmarket)theneedtobalancethelenders'
desirefornearimmediatecashagainstthesurety'sconcernsabout
wrongfulcallshasbeenmetbyadjudicationbonds'.Theseare

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bondswhichrespondonthedeliveryofanadjudicator's
determinationthatsumsareduetothebeneficiary.Aswith
adjudicationgenerally,theadjudicator'sdecisionisnotfinaland
whilethesuretyisobligedtopaythesumfoundtobeduebythe
adjudicatorimmediately,theamountfinallydue(whethermoreor
less)willbedeterminedoragreedlater.Bondsofthisnaturearenot
oftenusedininternationalprojects.

Seesection2.12below.
See:FEinbinder,TheRoleofanIntermediarybetween
ContractorandOwneroninternationalConstructionProjects:a
FrenchContractor'sViewpoint,ICLR11,175(1994)TKreifels,
ConstructionorProjectManagementinGermanyTheStructure
anditsImpactonProjectParticipantsAnOverview,ICLR10,326
(1993)SNicholson,EffectivenessoftheFIDICContractunder
ArgentineLaw,ICLR9,261(1992)andF.Nicklisch,TheRoleof
theEngineerasContractAdministratorandQuasiArbitratorin
InternationalConstructionandCivilEngineeringProjects,ICLR7,
322(1990).
3
Forexample,inBalfourBeattyv.DocklandsLightRailway
Limited[1996]78BLR42.
4
NorthernRegionalHealthAuthorityv.DerekCrouchConstruction
Co.Ltd[1984]26BLR1.
5
BeaufortDevelopments(N.I.)Ltdv.GilbertAshN.I.Ltd[1998]2
AllER778.
6
SeeIanDuncanWallace,Hudson'sBuildingandEngineering
Contractsvol.I,797(12thed.,Sweet&Maxwell2010).
7
ThegeneralprincipleofTreuundGlauben(s.242oftheGerman
CivilCode)appliestoallcontractualrelationships.
8
Section305seq.oftheGermanCivilCodewhichalsoapplyto
B2Brelationships.
9
SeevonRinteleninKapellmann/Messerschmidt,VOBTeileA
undBrecital60ff(3ded.,C.H.Beck2010).
10
Incontrast,Dutchlaw,forexample,doesnotrequireliquidated
damagestorepresentcompensationforloss.
11
SeeGleeson(MJ)(Contractors)Ltdv.LondonBoroughof
Hillingdon[1970]215EstatesGazette165Zornow(Bruno)
(Builders)Ltdv.BeechcroftDevelopmentsLtd[1989]51BLR16
StanorElectricLtdv.RMansellLtd[1988]CILL399andBramall&
OgdenLtdv.SheffieldCityCouncil[1983]29BLR73.
12
Seess.339seq.oftheGermanCivilCode.
13
Section341para.3oftheGermanCivilCode.
14
PeakConstruction(Liverpool)Ltdv.McKinneyFoundationsLtd
[1970]1BLR114RapidBuildingGroupLtdv.EalingFamily
HousingAssociationLtd[1984]29BLR5.
15
Thisistherequirementofremoteness'aslaiddowninthecase
ofHadleyv.Baxendale[184360]AllERRep461.
16
Hadleyv.Baxendale[184360]AllERRep461.
17
Itis,however,aquestionofconstructionoftheparticular
contract:BaesePtyLtdv.RABrackenBuildingPtyLtd[1989]52
BLR130SurreyHeathBoroughCouncilv.LovellConstructionLtd
andHadenYoungLtd(thirdparty)[1990]48BLR108.
18
CelluloseAcetateSilkCoLtdv.WidnesFoundry(1925)Ltd
[1933]ACTemlocLtdv.ErrillPropertiesLtd[1987]39BLR30.
Similarlyinsomecivillawjurisdictionsliquateddamagesis
consideredasubstituteforanylosssufferede.g.,Art.1152(1)
FrenchCivilCode,Art.1382ItalianCivilCodeandArt.6.1.8.17(2)
theDutchNewCivilCode.
19
SeeBritishSugarplcv.NEIPowerProjectsLimited[1997]87
BLR42.
20
Sees.6(1)oftheVOB.
21
See,e.g.,StandardModelFormofGeneralConditionsof
Contractforthesupplyofelectrical,electronicormechanicalplant
witherectionMF/1(revision5,2011)(IET/IMechE,2011)
recommendedbytheUKbasedInstitutionofMechanicalEngineers,
InstitutionofElectricalEngineersandAssociationofConsulting
Engineersforuseinconnectionwithdomesticorinternational
contractsfortheconstructionofelectrical,electronicsand
mechanicalplants.
22
SeeSaipemSpA&Orsv.RafidainBank&Ors[1994]CLC252.
23
Whilstlendersthinkinthisway,liquidateddamagesshouldbe
determinedbyreferencetothelosssufferedasaresultofthe
delay,notthedebtservicelevel.Inmostprojectsprofitswillexceed
thedebtservicelevel,butnotinallandnotnecessarilyduringand
shortlyafterfirststartup.

Chapter3:DisputeAvoidanceand
Resolution
3.01.Introduction
Whyaredisputeresolutionprovisionsimportant?Thisisnota
rhetoricalquestion.Partiesfrequentlyspendsignificantlylesstime

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Chapter3:Dispute
Avoidanceand
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andeffortdraftingandnegotiatingthedisputeresolutionprovisions
intheircontractsthantheydoonthecommercialandfinancial
terms.Suchprovisionsareoftenfoundtowardstheendofthe
contract.Partiessometimessimplyuseboilerplatedispute
provisionsorprecedentlanguagefromanothercontract,without
consideringwhetherthatlanguageisappropriateforthe
agreement/projectinquestion.Inothercases,theymayfail
altogethertoincludedisputeresolutionprovisionsintheircontract.
Alackofattentiontodisputeresolutionprovisionsmaybecaused
byavarietyoffactors,includingareluctancebythepartiesto
acknowledgethatproblemsmightariseintheirrelationshipinthe
futureand/orpressuretofinalisethenegotiationsandexecutethe
contract,whichmaypreventpartiesfromundertakingaconsidered
reviewandanalysisofwhattypeofdisputeresolutionprovisions
wouldbemostappropriateforthecontract/projectinquestionand
whetherdecisionswillbecapableforenforcementagainstavailable
assets.

Jenkins,International
ConstructionArbitration
Law(SecondEdition),
ArbitrationinContext
Series,Volume3
(JaneJenkinsKluwer
LawInternational2013)
pp.4984

Whateverthereason,apartymayfindthatitisseriously
disadvantagedasaresultofhavingspentlittle(orno)timewhen
thecontractwaspreparedaddressingtheappropriatenessofthe
disputeprovisions.Thisisparticularlytrueifthecontractis
internationalinnature,asapartymayfinditselfexposedto
disputesbeingresolvedinthelocalcourtsofforeignjurisdictions.
Thelawsandproceduresofthatjurisdictionmaybeverydifferent
fromthosethepartyisfamiliarwith,orwouldwishtoapplytoits
dispute.
3.02.DisputeAvoidance
Owners,employersandcontractorsinvolvedininternational
constructionprojectsgenerallyallwanttoseeworkdeliveredon
timeandwithinbudget.Iflendersare
page"49" financingthe
project,theytoowillwantworkcompletedontimeandwithin
budget,toensurethattheprojectwillgeneratetheanticipated
revenuesduringthefinancerepaymentperiod.Avoidingdisputesby
identifying,investigatinganddiscussingproblemsatanearlystage
isonemeansofachievingtheseobjectives,andpartieshave
increasinglyrecognisedthatdevelopingandusingmultitiered
disputeresolutionprovisionstailoredtotheprojectinquestioncan
assistby:
allowingpartiestheflexibilitytoresolvelowvalueand/orless
importantproblemsmoreswiftly,andwithlessdrainoncostand
managementtime,thanwouldbepossibleinlitigationor
arbitration
enablingpartiestokeeptheprojectgoing,whilstavoidingor
minimisingdisruptiontotheprojectanditscompletionwithinthe
requiredtimeand
ensuringthatthereareappropriatemeansavailable,ifnecessary,
forresolvingdisputesthat:(i)requireamorerigorousand
comprehensivereviewofthecircumstancesgivingriseto,and
consequencesflowingfrom,theeventsinquestionandtheir
impactontheparties'contractualandlegalrightsand/or(ii)may
becapableofbeingresolvedonlybymeansofthelitigationor
arbitrationprocess.
Partiesmaydecidetocreatetheirownbespoketiereddispute
resolutionprovisions(used,forexample,fortheconstructionofthe
ChannelTunnelduringthe1980s).Alternatively,manyofthe
standardformcontractsusedoninternationalconstructionprojects
nowincludemultitiereddisputeresolutionprovisions.Forexample,
eachofthemostrecenteditionsofFIDIC'sthreemainstandard
formcontracts(theRedBook,YellowBookandSilverBook)
providesfordisputes(includingdisputesrelatedtotheengineer's
determinationsofclaims,or,inthecaseoftheFIDICSilverBook,
determinationsmadebytheemployeroritsrepresentative)tobe
determinedinthefirstinstancebybindingadjudication.Thisis
followedbyICCarbitrationintheeventthatonepartyisdissatisfied
withtheadjudicationdetermination.Aflowchartillustratingthe
disputeresolutionprocedureundertheFIDICsilverbooksissetout
atAnnex1.
Totakeanotherexample,theENAAmodelformsforpowerplant
constructionandprocessplantconstructionprovidefordisputesto
beresolvedbymutualconsultationbetweentheparties,followedby
(incertainspecifiedcases)referencetoanexpert,whosedecision
isfinalandbindingunlesseitherpartyrefersthedisputetoICC
arbitration.Again,theAIAA2012007GeneralConditionsofthe
ContractforConstructionalsoprovidefortiereddisputeresolution
provisionswherebyclaims(withtheexceptionofthoserelatingto
hazardousmaterials)areinthefirstinstancereferredeithertoan
individualagreedbytheparties(knownasanInitialDecisionMaker)
or,ifnotagreedotherwise,tothearchitectforhisdecision.Aparty
dissatisfiedwiththatdecisionmay,withinthirtydaysofreceiving
thedecision,providenoticethatitintendstoreferthematterto
arbitration.Priortoarbitration,thepartiesarerequiredtoendeavour
toresolvetheclaimbymediation(inaccordancewiththe
ConstructionIndustryMediationRulesoftheAmericanArbitration
Association(AAA)).Ifmediationdoesnotresolvethedispute,and
providedthepartieshaveselectedarbitrationasthe
page
"50" methodforbindingdisputeresolution,themattermaybe
arbitratedinaccordancewiththeAAA'sConstructionIndustry
ArbitrationRules.

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Settlinganydoubtsabouttheenforceabilityoftiereddispute
resolutionclauses,theEnglishcourtshaveenforcedprovisions
wherebypartieshavecontractuallyagreedtosubmittosomeform
ofalternativedisputeresolution(ADR)asastageoftheirdispute
resolutionprocesses.Inparticular,theCourtshaverequiredparties
toundertakeaparticularstageoftheirdisputeresolutionprocesses
(e.g.,mediation,orreviewbyadisputeboard)beforeallowingthem
toproceedwithcourtorarbitrationproceedingsthatareintendedto
finallyresolvethedispute.(1)CourtsintheUnitedStateshavealso
enforcedcontractualprovisionsrequiringpartiestoengageinan
agreedADRprocesspriortopursuingotherremedies.(2)
Althoughmultitierdisputeresolutionprovisionsarenowthenormin
majorinternationalconstructionprojects,suchprovisionsneedtobe
tailoredtoeachindividualprojectastheydonotallrequirethesame
number,ortypes,oftiers.Includingmoretiersthanthenatureof
theprojectrequiresmaybecounterproductive,inthatit:(i)
unnecessarilyincreasesthecostandtimerequiredtoresolve
disputesand/or(ii)hindersfinalresolutionofthematterbyunduly
complicatingand/orprolongingthedisputeresolutionprocess.
Determiningwhichtiersofdisputeresolutionproceduresmaybe
appropriatetoaparticularprojectwilldependonanumberof
factors,including:
thesizeoftheprojectfromamonetaryperspective
thescopeandexpecteddurationoftheproject
thejurisdictionsinwhichthepartiesarebased
thelocationoftheproject
whetherthepartieshaveanexisting(ordeveloping)longterm,
ongoingrelationshipand
whethertherearemultipleparties(e.g.,subcontractors,lenders)
and/ormultipleagreementsinvolvedintheproject.
Forexample,ifaprojectinvolvesalongtermconcession,the
partiesmaywanttoincludeseniormanagementdiscussionsand
someformofADRasproceduresintheirdisputeresolution
provisions,asthesecanprovideacontractualframeworkthat
supportstheabilitytomaintainandimprovetheparties'ongoing
workingrelationship.However,ifanagreementissimplyforthe
constructionofafacility,withnoongoingoperatingormaintenance
relationshipbetweentheparties,partiesmightconsideritless
usefultoincludemandatorymanagementdiscussionsandADR
provisions.Theymayinsteadwanttoensurethatdisputescanbe
quicklyreferredtoadjudicationsothat
page"51" thedispute
canberesolvedrelativelyswiftlywiththepartiesobligedto
implementthedecision(andgetonwithcompletingtheproject)
pendingfinalresolutionofthedisputethrougharbitrationorlitigation.
Whatevertier(s)ofdisputeresolutionprocedurespartiesincludein
theircontracts,theyshouldalsoincludeexpressprovisionthatthe
partiesareobligedtocontinuetoperformtheirobligationspending
resolutionofanydispute.(3)
Theprimaryadvantagesanddisadvantagesofthevariousformsof
disputeresolutionproceduresarediscussedbrieflybelow.The
proceduresarediscussedingreaterdetailinlaterchapters.
3.03.OptionsforTieredDisputeResolutionProcedures
[A].MandatoryDiscussions
Concernabouttheadversarialnatureofconstructioncontractshas
ledtotheindustry'soperationsbeingexaminedinanumberof
jurisdictions.Forexample,reportsintheUKsuchastheReading
report,TrustingtheTeam,(4)andtheLathamreport,Constructingthe
Team(5)(ajointindustryandgovernmentreviewoftheconstruction
industry),advocateddisputeavoidanceinthefirstinstanceand
calledforproblemstobeidentifiedearly.(6)
Inparticular,thesereportsencouragedparticipantsinthe
constructionindustrytoavoidresortingtoanyformaldispute
resolutionprocedures,bytakingstepstoresolveproblemsatthe
lowestpossiblelevelwithintheirownorganisationsasquicklyas
possible.Onlyifnosolutioncanbefoundistheproblemthen
referredtohigherlevelsofmanagement.Interestingly,thisconcept
conflictswiththeintroductionofthecompulsoryadjudication
provisionsoftheUKConstructionAct1996(discussedindetail
laterinthischapter)andotherjurisdictionswhichprovidearightto
referdisputestoadjudicationatanytime.Theresultofthisisthat
eitherpartycanalwaysleapfrogthenegotiationsprocessand
immediatelyreferdisputestoadjudication.
Ofcourse,partiesarealwaysfreetonegotiateatanytime,sowhy
shouldtheyincludespecificprovisionsintheircontract?Onemain
reasonisthatifsuchaprovisionwerenotincluded,somemight
perceiveaparty'srequesttonegotiateasasignofweakness.
page"52"
Theprimaryadvantagesofcontractuallyspecifyingthatpotential
disputesmustinthefirstinstancebereferredformandatory
discussionsatseniormanagementlevel(e.g.,managingdirectors
orchairmen)arethat:

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itrequirespartiestoturntheirmindstoaproblemearly,perhaps
beforetheproblembecomessubstantialinnature
involvingseniormanagementmayovercomeanydeadlockover
theproblemorentrenchmentofpositionsthatmayhave
developedattheprojectmanagementoroperationallevel
seniormanagementmaybeawareofbroaderissues,orinterests,
relatedtothedispute,theprojectand/ortheparties'relationship,
whichmayberelevanttothatparticularparty'sapproachtothe
problemanditspossibleresolutionand
ifseniormanagementareabletoresolvetheproblem,itisa
muchfasterandcheaperwayofresolvingthedisputethan
commencingcourtorarbitrationproceedings.
Theprimarydisadvantagesofmandatoryseniormanagementlevel
discussionsare:
Theremaybenomeansofforcinganotherparty'srepresentative
toengageinameaningfulandeffectivediscussion.Under
Englishlaw,forinstance,suchagreementstonegotiateare
unenforceableas:(i)theagreementlacksthenecessary
certainty,sothatthecourtshaveinsufficientobjectivecriteriato
determinewhetherapartyhadcompliedwithitsobligationto
negotiateand(ii)thecourtsrefusetopolicethecircumstancesin
whichapartymaywithdrawfromsuchnegotiations.(7)Successful
operationofsuchprovisionsinthesecasesis,therefore,largely
dependentonthegoodwilloftheparties.
Inevitably,suchdiscussionswillnotresultindeterminationof
legalquestionsofprinciple,butwillbeaimedatsecuringa
commercialcompromise.Accordingly,theoutcomemaynot
provetobeasusefulinresolvingfuturedisputesofasimilarkind
asabindingdeterminationimposedinformaldisputeresolution
proceedings.
Onepartymaytrytothwarttheprocessbyrefusingtomake
itselfavailabletoparticipateinthediscussionsortoattendwith
norealcommitmenttoengaginginmeaningfuldialogue.However,
theriskthatdisputeresolutionprocedureswillbestymiedinthis
mannercanbeavoidedbyensuringthatthecontract:(i)includes
alimitonthetimeforholdingsuchdiscussionsand(ii)allows
disputestobereferredtothenextstageoncethatperiodoftime
hasexpired,evenifthemanagementleveldiscussionshavenot
occurred.
Finally,itmaybeappropriateoncertainprojectstocreatea
standingboardofseniormanagementrepresentativesthatremains
inplaceforthedurationoftheproject/contract,ratherthanarranging
adhocmeetingswheneveradisputearises.Thistechniqueisoften
adoptedwherepartneringoralliancingarrangementsareinplace
page"53" (seeChapter4)orthecontractisforasubstantial
periodoftime.Theboardmemberswillusually:
meetregularlytotrytoidentifyandresolveproblemsbeforethey
developintodisputesand
whennecessary,engageinmandatorydiscussionstoattemptto
settledisputes.
[B].ADRAlternativeDisputeResolution
Othermeansofresolvingdisputes(inadditiontoadjudication,
arbitrationorlitigation)areavailableifprincipaltoprincipal
negotiationsfail.Typicallythisinvolvesthepartiesengaginga
neutralthirdpersontohelpthemreachanacceptablesettlement.
Suchprocedures,generallyknownasADR,aimtoencouragethe
partiestoacknowledgetheweaknessesoftheirowncaseandthe
strengthsoftheiropponent'scase,andtorecognisethewider
commercialimplicationsofthedispute.ADRisnotnecessarily
intendedtodecideonthemeritsoftheissueortolayblameatone
party'sdoor.Itisessentialtorecognisethatthisproceduredoesnot
attempttoachieveacomprehensivereviewoffactsorlegalor
technicalissuestheaimissimplytoreachacommercialsolution.
Forthisreason(amongothers),ADRisoftenconsideredtowork
bestwherethepartieslackanunderstandingoftheother'scaseand
wherethepartieshaveagenuinedesiretoremaininalongterm
relationship.Inconsequence,ADRwilloftenprovemoresuccessful
atthestartofaprojectthanattheend,whentheremaybeno
ongoingcommercialconnectionorprospectofanongoing
relationship.
TerminologyusedtodescribethevaryingformsofADRisnot
universal,andcansometimesbeinterchangeable.However,the
maintypesofADRusedoninternationalprojectsareasfollows.
[1].MediationandConciliation
Thepartiesmayengageanimpartialthirdpartytoactasmediator
orconciliator.Thereisnoconsistentlyrecogniseddistinction
betweentheprocessesofmediationandconciliation.Totheextent
thatthereisadifference,aconciliatormaybemorelikelytoissuea
nonbindingrecommendationtotheparties.Becauseofthislackof
differentiation,thetermmediatorisusedinthisbooktoinclude
conciliators.
Amediatordoesnotmakedecisionsfortheparties,butinstead
meetswiththepartiestoassistthemtonegotiatetheirownsolution
tothedispute.Thepartiescanagreewhetherthemediatorshould

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consultwiththemseparatelyand/orjointly.Themediatorcannot
compelthepartiestoreachasettlement,buthemaytakeavery
persuasiveapproach.
AsdiscussedinmoredetailinChapter6,theprocedurefora
mediationorconciliationwillgenerallyinvolve:
page"54"
appointmentofasuitablyqualifiedmediator,inwhombothparties
haveconfidence
exchangeofashortsummaryofeachparty'scase,appending
onlykeydocuments
arelativelybriefmeeting(e.g.,onetotwodays),withthe
opportunitytoaddressthemediatorintheabsenceoftheother
party
anopportunityforthepartiestonegotiatefacetoface,withor
withoutthemediatorpresentand
themediator'sassistanceindrawingupanyagreementreached
bytheparties.
Theadvantagesofmediationoverlitigationandarbitrationisthatit
is:
Swift,withthewholeproceduredesignedtoproduceagreement
withinweeks/monthsratherthanmonths/years,thusprovidingan
opportunitytoavoidanantagonisticdrawnoutdisputethattiesup
managementresourcesanddamagesonthejobrelations.
Relativelycheap,principallyasaresultofthelengthoftime
takenandthelesseremphasisontheproofofrights.
Flexible,asmediationenablesthepartiesandthemediatorto
takeaccountofmattersotherthanthestrictcontractualposition,
suchasthefuturecommercialrelationshipoftheparties.Forthis
reasonmediationissometimesdescribedasbeinganinterest
based,asopposedtorightsbased,methodforresolving
disputes.
Confidential,withanyofferstoresolvethedisputemadeona
withoutprejudicebasis,sothattheoffermaynotbedisclosedin
anysubsequentformaldisputeresolutionprocedure.
However,therearealsodisadvantages,including:
Theriskthatproposingmediationwherethereisnocontractual
requirementtoaskforADRwillbeperceivedasignofweakness:
thethinking(historically)beingthataclaimantwithastrongcase
willwanttoproceedstraighttoabindingdetermination.
Mediatorshavenoteeththemediatorcannotrequireeither
partytotakeanystepssuchasdisclosingrelevantdocuments
damagingtoitscase.
Theoutcomeisnonbindingeitherpartycanrefusetoreachan
agreementorrejectanyrecommendationthatthemediatormay
make.
Thereisnoeffectiveprecedentvalueofaresultinmediation,
whetherforfuturesimilardisputesbetweenthesamepartiesorin
relationtodisputeswiththirdparties,suchassubcontractors.
Afrankearlydisclosureofeachparty'scasecanbedamagingas
itgivestheotherpartytheopportunitytoreceiveandevaluate
informationthatmaynototherwisehavebeenavailableuntila
muchlaterstageinformalproceedings.Suchearlydisclosure
maypermitapartytoprepareitscasebetterforarbitrationor
litigation.Accordingly,sometimesapartymayagreetoa
mediationwithouteverhavinganyrealexpectationofreachinga
settlement.
page"55"
Ifitfails,itwillbeawasteoftimeandmoney.
Itwillnotproducealegallycorrectresultthesolutionalways
representsacompromise.
Thenoninvestigatorynatureoftheproceduresmaymakethem
illsuitedtocomplex,technicaldisputeswhichrequireanindepth
forensicexaminationofevidencetobreakthedeadlock.
Inadditiontomediation,othertypesofADR(alsodiscussedin
moredetailinChapter6)include:
[2].Minitrial/ExecutiveTribunal
Hereapaneliscreated,usuallyconsistingofaseniorexecutiveof
eachparty,withaneutralchairmansuchasaretiredjudgeorother
seniorlawyer.Thepartiesmakelimitedrepresentationstothe
panel,whichisresponsibleforreachinganegotiatedsettlement.
Thechairmanmaymerelyensurefairplayormaybecomeinvolved
intheprocessmuchasamediator/conciliatorwouldtoassist
thepartiestoresolvetheissue.ThisformofADRmayinvolvea
moredetailedexaminationoftheparties'legalpositionsthan
mediation,andisconsideredbysometobebestemployedwhen
therehasbeenexchangeofpleadingsanddisclosureofdocuments.
[3].EarlyNeutralEvaluation
Asanalternativetorequestingassistanceinthereachingofan
agreement,thepartiescanobtainanindependentevaluationofboth
thetechnicalandlegalissuesoftheircasebyanindependent
expertorinthecontextofexistingproceedingsperhapsajudgeor
arbitrator.Theintentionistoprovidethepartieswitharealisticview
oftheprospectsofsuccess,therebyencouragingsettlement.

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However,ifthisprocesstakesplaceclosetothescheduledtrial
date,substantialcostswillalreadyhavebeenincurredbythe
parties.Thatsaid,itmaystillbepreferabletoattempttoresolve
disputesthroughthismeansthanproceedtoafulltrial.Theperson
whoprovidestheevaluationwillreceivewrittensubmissionsin
advance,whichwilloften(thoughnotinvariably)besupportedby
shortoralsubmissionsbythepartiesatahearing.Thisprovidesan
opportunitytoquestiontheparties.Oncetheevaluationhasbeen
given,heisdisqualifiedfrombeinginvolvedinthecasefurtherifit
shouldcontinue.
[C].FactorstoConsiderinDraftingADRProvisions
Ifpartiesdecidetoadoptmediationorconciliationaspartofagreed
disputeresolutionprovisions,theyhavetheoptionofconductingthe
procedurethroughaninstitution,oronanadhocbasis.
Mediationandconciliationserviceswithstandardproceduresare
offeredbyinstitutionsthroughouttheworld,suchas:
page"56"
theCentreforEffectiveDisputeResolution(CEDR)
theInternationalChamberofCommerce(ICC)
theAmericanArbitrationAssociation(AAA)
theCharteredInstituteofArbitrators(CIA)
theHongKongInternationalArbitrationCentre(HKIAC)and
theLondonCourtofInternationalArbitration(LCIA).
Suchinstitutionsusuallyhaveastandardformofprocedureanda
methodofappointingtheneutralthirdparty(mediatororconciliator)
intheabsenceofagreementbetweentheparties.Forexample,
CEDR,basedinLondon,hasforanumberofyearsspecialisedin
providingmediationservicesinbothdomesticUKdisputesand
internationaldisputes.Therearealsoanumberofspecialised
mediationserviceprovidersintheUSandotherpartsoftheworld.
Forexample,in2001theICC(basedinParis)introduceditsown
setofrules(theICCADRRules (8))dealingwithADRprocedures.
Additionally,theUnitedNationsInternationalTradeLawbranch
(UNCITRAL)haspublishedConciliationRulesthatpartiescanagree
toadopt.Aspectsofcommonmediationrulesareconsideredfurther
inChapter6.
Alternatively,partiescandeveloptheirownrulesconcerningthe
selectionoftheneutralthirdpartyandtheconductoftheADR
procedure.Indeed,manycompanieshavetheirownbespokeADR
procedures,whichareintroducedintotheircontractsasthefirst
stageofthedisputeresolutionprocess,sometimeswithanoption
toleapfrogstraighttolitigationorarbitrationifbothpartiesagree
thatADRisnotappropriate.
Finally,itshouldberememberedpartiescanalwaysagreeto
participateinanADRprocessonceadisputehasarisenevenif
thereisnoADRprovisionintheircontract.(9)
[D].AdjudicationandtheUseofDisputeReviewBoards
Inconstructionprojectsitisimportantthatthepartieshavea
meansofachievingbindingdecisionstoresolvetheirdisputeson
aninterimbasis,sothatworkontheprojectcancontinuewhilstthe
partiesawaittheoutcomeofformaldisputeresolutionprocedures
(whichcantakemonths,oftenyears,tocomplete).Manypartiesin
internationalconstructionprojectsachievethisobjectiveby
providingforadjudication.
Adjudicationcantakedifferentforms.Forexample,itcaninvolvea
singlepersonorapaneldecidingthedisputeonaninterimbasis.
Thedecisionmaker(s)willoftenbetechnicalspecialistsorexperts
intheirfields.Theuseofpanelsofexpertstoactasinterim
decisionmakershasbecomeincreasinglypopularininternational
constructionprojects.
page"57"
Inpart,thishasevolvedfromtheroleoftheengineerasdecision
makerinthefirstinstanceundervariousstandardformsof
constructioncontracts.Forexample,earliereditionsoftheFIDIC
contractsprovidedthat:(i)disputeswouldinthefirstinstancebe
determinedbythepersonappointedasengineerunderthecontract
and(ii)hisdecisionwouldbebindinguponthepartiesuntilsuch
timeasitwasreversedbyarbitrationheldinaccordancewiththe
ICCRulesofArbitration(ICCRules).
Sometimescontractorsdevelopedcynicismastotheengineer's
impartiality.Thisisperhapsnotsurprising,asfrequentlythedispute
willconcernadecisionmadebytheengineerintheadministration
ofthecontract,forexampleastotheamountofadditionalpayment
duetothecontractorinrespectofvariations.Inaddition,the
engineeris,ofcourse,onthepayrolloftheemployer.A
contractor'scynicismislikelytobeevenmoreacutewherethe
contractprovidesfordisputestobedeterminedinthefirstinstance
bytheemployer'srepresentative,whoisamemberofthe
employer'sownorganisation.Lenderstoprojectsalsoincreasingly
hadconcernsoverthepotentiallackofindependenceofthe
decisionmakerandpressedforalternativemeansofdecision
makinginthefirstinstance.

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Asaresultpanelsofexpertswithparticularskills,expertiseand
familiaritywiththetypeofprojectorindustryinquestionbeganto
beusedduringthe1980sand1990s.Oftenthesepanelswere
chosenbythepartiesandappointedattheoutsetforthedurationof
theproject.Panelmemberswerepaid(withthecostsshared
equallybytheparties)regardlessofwhetherornotanydisputes
wereactuallyreferredtothem.Effectively,thepartiescreateda
standingpanelofdecisionmakerswhowouldbeavailableshould
thepartiesneedtocalluponthem.
Internationalconstructionprojectswheresuchpanelshavebeen
usedinclude:
TheChannelTunnelProject,whichhadastandingpanel(the
DisputesReviewBoard)offivemembers,ofwhomthreewould
formatribunaltomakeaninterimbindingdecisionconcerninga
particulardispute.
TheChannelTunnelRailLinkProjectintheUK,whichhadtwo
standingpanelsthatdeterminedisputesbasedontheirsubject
matter.Thetechnicalpanel(comprisedofengineers)dealtwith
constructionrelateddisputes,andthefinancepaneldealtwith
disputesconcerningthefinancialprovisionsoftheconcession
agreement.
TheSydneyDesalinationPlantProject,whichhadastanding
disputereviewboardformedofthreemembers(comprisedofan
engineerandtwolawyers).Thepanelhadanongoingrolein
monitoringprogressoftheproject,andhadthepowertocompel
thedisputantstoreferthedisputetothedisputereviewboardfor
arecommendationiftheissuecouldnotberesolvedbydirect
negotiationbetweentheparties.Thesuccessofthisdispute
reviewboardwasdemonstratedbythefactthatnodisputeswere
referredtotheformaldisputeresolutionprocedure.
Theconstructionofvenuesforthe2012LondonOlympicand
ParalympicGames,whichseparatedthefunctionsbetweenan
independentdisputeavoidancepanel(madeupofeleven
constructionprofessionalswithexperienceinmajorprojects)and
theadjudicationpanel.Theindependentdispute
page
"58" avoidancepanelfocusedonfindingsolutionstoproblems
whicharosebeforetheybecamedisputes,withanyissuesnot
satisfactorilyresolvedbyitbeingreferredtotheadjudication
panel.
IntheUnitedStates,theconceptofusingastandingpanelof
impartial,qualifiedpeopletoprovidenonbindingrecommendations
forresolvingdisputesdevelopedduringthe1970sand1980s,when
suchboardswereusedonvariousconstructionprojects,including
thesecondboreoftheEisenhowerTunnel(Colorado),theMount
BakerRidgeHighwayTunnel(Washington)andtheChambersCreek
Tunnel(Washington).
Historically,suchboardswereusedintheUnitedStateslargelyfor
tunnelprojects,butbythemid1990stheywerebeingusedonother
typesofheavyconstructionwork(forinstance,highways),and
buildingandprocesscontracts,involvingavarietyofemployers,
includingAmericanTelephone&Telegraph,theHawaiian
DepartmentofTransportationandtheInternationalMonetaryFund.
(10)

Certaininstitutionsandorganisationsnowincludeadjudication
provisionsintheirstandardformcontractsortermsandconditions
applicabletointernationalconstructionprojects.Forexample,inthe
mid1990sFIDICintroducedadjudicationasapossibletierof
disputeresolutioninitsvariousstandardformcontracts,andeach
ofthecurrenteditionsofFIDIC'sRedBook,YellowBook,Silver
BookandGoldBooknowincludeadjudicationastheprimarymeans
ofdisputeresolution.(11)
TheNEC3suiteofcontracts(currentlyintheirthirdedition),
developedtofacilitatetheimplementationofsoundproject
managementprinciplesprovidesfortwoadjudicationoptions.Aflow
chartofeachappearsatAnnex2.Thesecontractshaveproved
popularforpublicworksintheUKincludingforexample,theHigh
SpeedLinkfromStPancrastoFolkestoneandtheOlympicPark
infrastructureworks.Theyaregainingpopularityinternationally
includingnotablyinSouthAfrica.NewZealand,AustraliaandHong
Kong.UptakeisalsoincreasingintheMiddleEastandAsiaPacific
region.TheWorldBankalsoincludesadjudicationprovisionsinits
StandardBiddingDocumentsProcurementofWorks(March
2012),whichisthestandardformofcontractusedonlargescale
civilworksprojectsfundedbytheWorldBankwheretheestimated
costsaremorethanUnitedStatesDollar(USD)10m.(12)
Additionally,theWorldBankandothermultilateraldevelopment
banksandinternationalfinancinginstitutionshaveprepareda
MasterBiddingDocumentforProcurementsofWorksandUser's
Guide(July2005,updated2008)whichisintendedtobeusedasa
modelforsuchorganisationsinissuingtheirownstandardbidding
documentsrelatingtoprojectsthattheydecidetofinance.That
documentalsoincludesadjudicationprovisionsthathavebeen
acceptedbyvariousdevelopmentbanks(forinstance,theAsian
DevelopmentBankandtheEuropeanBankforReconstructionand
Development)in
page"59" theirstandardbiddingdocuments.(13)
Furthermore,in2005FIDICandtheWorldBank(alongwithother
developmentbanks)publishedaspecialMultilateralDevelopment
Bank(MDB)harmonisededitionoftheConstructionContractfor
MDBs(thePinkBook)whichprovidesfortheuseofstanding
disputeadjudicationboards.

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TheAAAalsopublishesitsownConstructionIndustryDisputes
ReviewBoardProceduresthatpartiescanadopt.Additionally,the
ICCintroduceditsownDisputeBoardRulesinSeptember2004
(ICCDBRules).(14)TheICCrulesprovideforDisputeAdjudication
Boards'(panelsthatmakebindinginterimdecisions),Dispute
ReviewBoards'(panelsthatmakenonbindingrecommendations
thatbecomebindingifneitherpartyexpressesdissatisfactionwithin
thirtydaysofreceivingtherecommendation)andCombined
DisputeBoards'whichusuallyissuerecommendationsasaDispute
ReviewBoardbutmayincertainlimitedcircumstancesmake
interimbindingdeterminationsasaDisputeAdjudicationBoard
(e.g.,ifonepartyrequeststhatthepaneldoso,andtheotherparty
doesnotobject).
TheadjudicationprocedurespublishedbytheWorldBank,FIDIC,
theAAAandtheICCareconsideredinmoredetailinChapter5.A
tablecomparingthekeyfeaturesofeachprocedureisalsosetout
inChapter5.
Theinterimbindingnatureoftheadjudicationpanel'sdecision
resultsfromthepartiescontractuallyagreeingthattheywill
implementandabidebytheadjudicator'sdecisionuntilsuchtimeas
thedisputeisfinallyresolved.Thedecisionsarenotenforceableby
asummaryprocedureinthesamewayasarbitralawardsor
judgments.Instead,aclaimforbreachofcontracthastobebrought
againstadefaultingparty.Theenforcementandgroundsforattack
ofsuchdecisionsareconsideredfurtherinChapter5.
Commonfeaturesofadjudicationpanelsininternational
constructionprojectsinclude:
Apanelconsistingofthree(orsometimesfive)members,with
eachpartychoosingapanelmember(whoseappointmentis
approvedbytheotherparty)andtheparties,inconsultationwith
theotherpanelmembers,selectingathirdpersontoactaschair
ofthepanel.Sometimesasoleadjudicatorwillbeappointed
instead.
Arequirementthatpanelmembersbe(andremain)independent
ofthepartiesandimpartial.Thepanelmemberschosenbythe
partiesdonotactasadvocatesfor,orrepresentativesof,the
partythatnominatedthemember.
Provisionthatthepanel'sdiscussionsbeconfidentialinrespect
ofanynonpartiesorsubsequentlitigationorarbitration
proceedings.
Arequirementthatthepanelmemberskeepthemselvesregularly
informedoftheprogressoftheproject,forexamplebyreading
progressreportsandother
page"60" materialsprovided
jointlybytheparties,andmakingregularvisitstosite(e.g.,every
threemonths).
Arequirementthatpanelmembershaveexpertiseandskillsin
thetypeofproject/industryinquestion.
Provisionforthepaneltotaketheinitiativeininvestigatingand
ascertainingthefactsandlawrelatedtothedispute.
Arequirementthatthepanelrenderdecisions(usuallywritten)
withinarelativelyshortperiodoftime(oftenwithinthreemonths
ofadisputebeingreferredtothepanel).
Anumberofdifferenttermsmaybeusedtodescribeadjudication
panels.Forexample,theFIDICstandardformcontractsreferto
DisputeAdjudicationBoards',whilsttheWorldBankrefersto
DisputeReviewBoards'.Boththesepanelsmakeinterimbinding
decisions.
ThetermsDisputeBoardandDisputeReviewBoardmayhave
differentmeaningstopartiesfromdifferentjurisdictions.Thusitis
importanttounderstandtheeffectthattheboard'sdecisionwillhave
ontheparties.Thisdetermineswhethertheproposedpanelorboard
isanadjudicationpanelimposingabindinginterimdecisiononthe
parties(asprovidedforinthestandardformcontractsofFIDICand
theWorldBankandDisputeAdjudicationBoardscreatedpursuant
totheICCDBRules),orsimplymakesanonbinding
recommendation(asiscommonintheUnitedStatesandwith
DisputeReviewBoardscreatedpursuanttotheICCDBRules).Itis
expectedthattheparties'acceptanceandimplementationofthe
nonbindingrecommendationwillfollowfromtheirconfidenceinthe
boardinquestion,thetheorybeingthatrecommendationsbya
boardcomprisedofimpartialmemberswiththeappropriate
expertiseandunderstandingoftheprojectinquestionshouldbe
persuasive.Ithasalsobeensuggestedthatinsomecasesaparty
willbeencouragedtoacceptandimplementanonbinding
recommendationwherethecontractualprovisionsestablishingthe
boardanditspowersandproceduresprovidethatits
recommendationsareadmissible,totheextentpermittedbylaw,as
evidenceinsubsequentlitigationorarbitrationproceedings
concerningthedisputeinquestion.(15)
Referencetoadjudicationpanels/boardsintheremainderofthis
chapterare(unlessindicatedotherwise)topanels/boardsmaking
bindinginterimdecisions.
[E].AdvantagesandDisadvantagesofAdjudication
Theadvantagesofadjudicationcanbesummarisedasfollows:
Itprovidesthepartieswithadisputeresolutionprocessthatis

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relativelyswiftandlesscostlythancourtorarbitration
proceedings(ofcoursesuchproceedingsmaybeavoidedonly
temporarilyifapartyisdissatisfiedwiththedecisionofthe
adjudicationpanel).
page"61"
Itallowsthepartiestocontinuewiththeirproject/contractwhile
thedisputeisbeingresolved.Thiscanbeparticularlyimportant
onmajorconstructionprojectswherethepartieswillnormallyall
wanttoensurethatworkcontinues,particularlyinlightofthe
significantcoststhatmaybeincurredifworkissuspended.
Itprovidesthepartieswiththeopportunitytoselectdecision
makerswithappropriateskills,technicalexpertiseandexperience
fortheproject/contractinquestion.Thisprovidesthebenefitof
havingdecisionsmadebytechnicallyqualifiedpeoplewhowill
understandandbefamiliarwiththeoftencomplextechnical
issuesthatariseininternationalconstructionprojects.Atthe
sametime,thepartieshavethecomfortofknowingthatifthe
panelofexpertsmakesaflaweddecision(onafactualorlegal
basis),itwillstillbepossibletohaveacourtorarbitraltribunalre
examineandpossiblysetasidethepanel'sdecisionatalater
stagefollowingamorecomprehensivedisputeresolution
process.
Thedrawbacksofadjudicationare:
Althoughthepartiesgainthebenefitofhavingdecisionsmadeby
peoplewithtechnicalexpertise,sometimessuchpanelsmake
decisionsthataremoretechnicalthanjudicialinnature.That
maynotbeappropriateforthefinaldeterminationofthedispute.
Similarly,panelmemberswithtechnicalexpertisemaynotbe
bestsuitedtodecidingmixedquestionsoffactandlaw.(These
disadvantagesaretoanextentalleviatedbythefactthatthe
panel'sdecisionmaylaterbereviewedandpossiblysetasidein
arbitrationorlitigation).
Panelsarecommonlyrequiredtoprovidedecisionswithina
relativelyshortperiodoftime(typicallywithinthreemonthsofa
referral).Thismeansthepanelmaynotbeabletoconductanin
depthandrigorousanalysisofalltheissues(factualandlegal)
thatthepartiesconsidertoberelevanttotheirdispute.
Thepaneldoesnothavetheability(absentagreementofthe
parties)torequiredisputesarisingunderdifferentcontractstobe
joinedorconsolidatedwithdisputesarisingunderthecontractin
question,evenifthesamepartiesareinvolvedinbothdisputes
orthedisputesariseoutofthesameeventsorcircumstances
(e.g.,disputesinrelationtoamaincontractandasubcontract
dispute).Partiesmayattempttoovercometheriskof
inconsistentdecisionsbyincludingprovisionsintheircontracts
forjoinderand/orconsolidationofrelateddisputesbeforeone
panel.Alternatively,theymightenterastandaloneumbrella
disputeresolutionagreementaddressingallofthecontractsand
allowingrelateddisputestobeheardbeforeoneadjudication
panel.
Thedecisionofthepanelisenforceableonlyasamatterof
contract,notasajudgmentofthecourtorawardofanarbitral
tribunal.Itcanthereforebemoretimeconsumingandcostlyto
enforcethepanel'sdecisionintheeventthatonepartydoesnot
complywithit.
page"62"
Althoughthepanel'sdecisionsmayhavepersuasivevalue,they
arenotbindingprecedentsforsimilardisputesthatmightarise
betweenthepartiesinfuture.
Thepanel'sproceedingsmayprovedifficulttocontrolduetothe
widefreedomgenerallygiventothepaneltoactasexpertsand
investigatethefacts.Forexample,underEnglishlaw,expertsare
notboundtofollowrulesofnaturaljusticeandmaymaketheir
owninvestigationsandreachdecisionswithoutreferringbackto
thepartiesfortheircomments,andthereisnostatutory
frameworksuchasexistsforarbitration,(namely,theEnglish
ArbitrationAct1996),whichappliestocheckperceived
proceduralunfairness.Theseissuesareaddressedinmoredetail
inChapter5.Suchriskscanbemitigatedtoanextentbydrafting
proceduresdesignedtoprovidepartieswithgreatercontrolover,
oratleastinvolvementin,theprocessoffactfindingand
determination.Forexample,asaminimumitisprudenttoprovide
thatallcommunicationsthateachpartyhaswiththepanelbe
simultaneouslycopiedtotheotherparty.Also,occasionally
provisionismadeforapaneltoprovideadraftofitsdecisionfor
commentbytheparties.
[F].FactorstoConsiderinDraftingAdjudicationProvisions
Assumingpartieswanttoincludeadjudication(i.e.,aninterim
bindingdecision)asatierofdisputeresolution,theywillneedto
considerandaddressanumberofissuesincluding:
(a) whetherthepartieswantasingleperson,severalpeople
(typicallythree)oroneormorepeopleselectedfromapanel
(typicallyfivetotenpeople)toactasadjudicator(s)and
(b) whetherthepartieswanttocreatetheirownbespoke
adjudicationprovisions,andifsowhattypeofpowerstheywant
togivetothepanel(e.g.,dothepartieswantthepanelorboard
toalsobeabletomakenonbindingrecommendationsandif
so,inwhatcircumstances)?Thereisnofirmprecedenthereto
assistinmakingthisdecision.Forinstance,theFIDICRed
Bookprovidesthatbindingdecisionswillgenerallybemadebut
permitspartiestoagreejointlytoreferamattertotheDispute

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AdjudicationBoardforitsnonbindingopinion(seeclause20.2).
Thisoptionisnot,however,foundinthebasicversionsofthe
FIDICYelloworSilverBooks.TheFIDICGoldBookallows
partiestoagreejointlytoreferamattertotheDispute
AdjudicationBoardforassistanceorinformaldiscussionto
attempttoresolveanydisagreements.Thepartiesarenot
boundbyanyadvicegivenduringtheseinformalmeetings(see
clause20.5).Anotherapproach(asdiscussedabove)isfound
intheICCDBRuleswhichallowpartiestocreateaCombined
DisputeBoardwhichprimarilymakesnonbinding
recommendations,butcaninspecifiedcircumstancesmake
bindingdeterminations.
page"63"
Accordingly:
willthepanelbeabletorenderadecisiononthebasisofa
majorityopinion,orwillitneedtobeaunanimousdecision?
whattypeofproceduresrelatingtotheadjudicationdotheparties
wanttoincludeinthecontract(e.g.,willthepartieshavearight
torequestahearing)?
Alternatively,thepartiesmightdecidetoadoptexistingadjudication
provisions,suchasthosethathavebeendevelopedbyFIDIC,the
WorldBank,theAAAortheICC(seeChapter5foracomparisonof
thekeyfeaturesoftheinstitutionalrules)relatingto:
Theallocationofthecostsandexpensesofthepanel.
Theextenttowhichthepanelwillhavethepowertotakethe
initiativeinascertainingandinvestigatingthefactsandlaw
relatedtothedispute.
Whetherthepanelmayappointitsownadviserstoassiston
mattersoflegalinterpretationorareasoutsideitsexpertise(andif
so,whetherthepriorconsentofthepartiesisrequiredinadvance
ofthepanelmakinganysuchappointment).
Thetimescaleforthepaneltoprovideitsdecision.
Whetherthepanelwillhavepowerstoawardinterestand/or
costs.
Confidentiality.
Whetherthepanelmemberswillbebarredfromactingas
witnessesinanysubsequentlitigationorarbitration.
Thepanel'spowersintheeventthatonepartyrefusesto
participateinareference(e.g.,canthepanelproceedtoa
determinationifapartyisabsentorrefusestoparticipate).
Willthesoleadjudicatororpanelbeappointedfromthetimethat
theparties'agreementisenteredinto(orshortlythereafter)until
theendoftheconstructionoftheproject(i.e.,astanding
adjudicator/panel),orwillanadjudicatororpanelonlybe
appointedonlyifandwhenadisputearises(i.e.,adhoc)?The
primaryadvantageofstandingpanelsisthatwheneveradispute
doesarisethemembersofthepanelwillhaveahighdegreeof
familiaritywith,andunderstandingof,theprojectanditsprogress
andthepanelwillgenerallybereadilyavailabletorendera
decisionwithinarelativelyshortperiodoftime.(16)Practically,a
standingpanelmayalsobeable,ifsodesiredbytheparties,to
actasaninformalsoundingboardwhenissuesfirstariseand
beforetheyareformallyreferredtodisputeresolution.
page"64"
Disadvantagesofstandingpanelsinclude:
Thefactthatalthoughthepartiescaninitiallyselectpanel
memberswithexpertisefromarangeofdisciplines,itisof
coursepossiblethatthepanelmaylacktheexpertisetodealwith
aparticulardisputethatarises.Onewaytoaddressthisisto
providethatthepanelhasthepowertoobtainexternalexpert
adviceifrequiredhowever,theassociatedcostswillhavetobe
bornebytheparties.
Theriskthatthepanelmembersmayfinditdifficulttoapproach
freshdisputeswithanentirelyuncolouredviewofthemerits,in
lightofinformationreceivedinrelationtopreviousdisputesonthe
project.
Thefactthattheuseofastandingpanelcanbecostly,
particularlyiftheprojectisofasignificantduration.
Thefactthattheincreasingpopularityanduseofstandingpanels
mayresultinitbecomingdifficulttofindsuitablyqualifiedpeople
whoareavailabletoacceptrelativelylongtermappointmentsas
panelmembers.
Finally,aswiththemethodsofdisputeresolutionwehave
previouslydiscussed,itisimportantthatpartieswhoinclude
adjudicationprovisionsintheircontractalsoincludeeitherlitigation
orarbitrationasthefinaltierofdisputeresolution,unlesstheywant
thedeterminationbytheadjudicator(s)tobefinalandbinding.
Additionally,itmaybeprudenttoprovidethatanydisputeregarding
noncompliancewithapanel'sdecisionwillbereferreddirectlyto
arbitration(orlitigation)toavoidhavingfirsttohaverecoursetothe
panel.
[G].StatutoryAdjudication:TheUKExperience

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Theadjudicationproceduresdescribedaboveinvolvea
contractuallyagreedformofdisputeresolution.IntheUK,radical
legislationinthelate1990s(theUKConstructionAct1996),
introducedmandatoryfasttrackadjudicationforconstruction
contractscarriedoutinEngland,Wales,andScotland.(17)Asa
result,evenifthepartieshavedecided,forwhateverreason,that
adjudicationisnotanappropriateformofdisputeresolutionfortheir
contractorproject,ifthatprojectfallswithintheambitofPartIIof
theUKConstructionAct1996,theymayneverthelesshave
adjudicationimposedontheminrespectofcertaintypesofdispute.
Thisisalsothecaseinsomeotherjurisdictions,includingNew
Zealand,SingaporeandanumberoftheAustralianstates,which
havealsointroducedlegislationimposingcompulsoryadjudication
onaspectsoftheconstructionindustry.Inaddition,compulsory
adjudicationintheconstruction
page"65" industryisbeing
consideredinHongKong,SouthAfrica,andsomestatesinthe
UnitedStates.
Adjudicationwasnot,ofcourse,anewconcepttotheUK
constructionindustryfamiliesofstandardformconstruction
contractsinthedomesticmarket,suchasthosepublishedbythe
JointContractsTribunal(JCT),includedadjudicationprovisionsin
relationtopaymentdisputesintheirsubcontractspriortothe
enactmentoftheUKConstructionAct1996.Adjudicationwasalso
seenonlargerprojects(e.g.,theChannelTunnel)withtheuseofa
panelofexpertsasdiscussedabove.
WhatwasradicalaboutPartIIoftheUKConstructionAct1996was
mandatoryregulationbyParliament,focusedonaspecificindustry
andimposingproceduresonpartiestoconstructioncontractsthat
theymightnotwishtoadopt.Thisoccurredagainstthebackdropof,
amongstothermatters,theLathamreport(referredtoabove).
Compulsoryadjudicationwasoneofthepivotalrecommendationsin
thatreport.Theprimarypolicyconsiderationwasthatadjudication
wouldprovideaswift,cheapmechanismforsubcontractorsto
pursueclaims,therebypreventingperceivedabusebycontractors
(andtheirclients).
Essentially,PartIIoftheUKConstructionAct1996providesthat
fasttrackadjudication(decisionsaretobemadewithintwentyeight
daysofadisputebeingreferredtoadjudication)isavailableforall
constructionoperations'carriedoutinEngland,ScotlandorWales
(withcertainlimitedexceptions).Thetermconstructioncontractis
definedtoincludeagreementsforcarryingoutconstruction
operations',andbothconstructioncontractandconstruction
operations'arebroadlydefinedintheUKConstructionAct1996.In
particular,thesetermscapturemanyactivitiesthatpartiesmight
notinitiallyconsidertobecoreconstructionactivities.Forexample,
constructioncontracts'isdefinedtoincludecontractsforproject
management,constructionmanagement,architectural,surveying
andadvisoryservices.Constructionoperations'isdefinedto
include,amongstothermatters,providinglabourforthecarryingout
ofconstructionoperationsandexternalorinternalcleaningof
buildingsandstructurescarriedoutinthecourseofconstructing,
altering,repairing,extendingorrestoringabuildingstructure.
Ifanactivityfallswithinthestatutorydefinitionofanagreementfor
constructionoperations',PartIIoftheUKConstructionAct1996
providesthatanypartyisentitledtoreferadisputearisingin
relationtothoseconstructionoperationstoadjudicationatanytime.
(18)
Inthecaseofmultitiereddisputeresolutionprovisions,this
enablesapartytoleapfrogoverotherdisputeprocesses(e.g.,
mandatoryseniormanagementdiscussionsorADR)thatmightbe
providedforintherelevantagreement.
TheextremelybroadscopeofPartIIoftheUKConstructionAct
1996isoftensurprisingtoparties,eveniftheyhaveageneral
familiaritywithEnglishlaw.Indeed,theadjudicationprovisionsin
PartIIoftheUKConstructionAct1996wouldhave
page
"66" appliedtotheconstructioncontractfortheChannelTunnel,at
leastinsofarasthosepartsoftheworkscarriedoutinEngland,if
theUKConstructionAct1996hadbeeninforcewhenthetunnel
wasconstructed.
ItisnotpossibleforpartiestocontractoutoftheapplicationofPart
IIoftheUKConstructionAct1996.However,PartIIoftheUK
ConstructionAct1996isterritorialinthatitsapplicationislimitedto
constructionoperationscarriedoutinEngland,ScotlandorWales.
Forexample,itwouldnotapplytoconstructionprojectsinthe
MiddleEast,evenifthepartiesselectedEnglishlawasthe
governinglawfortheircontract.
PartIIoftheUKConstructionAct1996(19)setsoutaseriesofnine
minimumrequirementsthatmustapplytoanyadjudication
procedurerelatingtoconstructionoperations'fallingwithintheambit
oftheUKConstructionAct1996.Theseare:
(1) Eachpartyshallhavetherighttogivenoticeatanytimeofits
intentiontoreferadisputetoadjudication.
(2) Atimetablemustbeprovidedwiththeobjectofsecuringthe
appointmentoftheadjudicatorandreferralofthedisputetohim
withinsevendaysofsuchnotice.
(3) Theadjudicatorisrequiredtoreachadecisionwithintwenty
eightdaysofreferralorsuchlongerperiodasisagreedbythe
partiesafterthedisputehasbeenreferred.
(4) Theadjudicatorisallowedtoextendtheperiodoftwentyeight
daysbyuptofourteendayswiththeconsentofthepartyby

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whomthedisputeisreferred.
(5) Theadjudicatorhasadutytoactimpartially.
(6) Theadjudicatormustbeabletotaketheinitiativein
ascertainingthefactsandthelaw.
(7) Thedecisionoftheadjudicatoristobebindinguntilthedispute
isfinallydeterminedbylegalproceedings,arbitrationor
agreement.Alternatively,thepartiesmayagreetoacceptthe
decisionoftheadjudicatorasfinallydeterminingthedispute.
(8) Theadjudicatormustbeallowedtocorrectthedecisionsoas
toremoveaclericalortypographicalerrorthathasarisenby
accidentoromission.
(9) Thecontractmustprovidethattheadjudicatorisnotliablefor
anythingdoneoromittedinthedischargeorpurported
dischargeofhisfunctionsasadjudicatorunlesstheactor
omissionisinbadfaith(andanyemployeeoragentofthe
adjudicatorissimilarlyprotectedfromliability).
Intheeventthatpartiesfailtoprovideforadjudicationinwriting(20)
intheiragreement(ortheydoprovideforadjudicationbutfailintheir
contractualprovisionstoprovide
page"67" foranyoneofthese
ninecompulsoryrequirements),astatutoryschemeofadjudication
setoutintheSchemeforConstructionContracts1998(21)(the
Scheme)willautomaticallyapplytothepartiesandtheirdispute.(22)
TheadjudicationprocessrequiredbytheUKConstructionAct1996
isextremelyfastandtheadjudicatormustreachhisdecisionwithin
twentyeightdaysunlessbothpartiesagreetoextendthetimeafter
thedisputehasbeenreferredortheclaimantagreestoanextension
offourteendays.Itisalsoweightedinfavouroftheclaimant.For
example,theclaimantcanprepareitssubmissionsatleisureand
thenrefuseanextensionoftime,puttinggreatpressureonthe
respondenttoprepareitsdefenceeffectively.
TheSchemeprovidesaframeworkfortheadjudicationbutdoesnot
setoutdetailedproceduralsteps,forexample,specifyingwhenthe
respondentmustdeliveritssubmissions.Italsodoesnotprovide
thatapartyisentitledtoahearing.Otherconcernsincludethefact
thattheUKConstructionAct1996andtheSchemedonot
expresslycontemplateadjudicationbyapanel.Further,whilethe
Schemedoesprovideforjoinderofrelateddisputesifallparties
agree,thatmayprovedifficulttoachieveonceadisputehasarisen
andhastobedeterminedwithintheapplicableshorttimetable.
ThereareanincreasingnumberoforganisationsintheUKwiththeir
ownadjudicationprocedures,includingtheConstructionIndustry
CouncilModelAdjudicationProcedures(CICMAR),Technologyand
ConstructionCourtSolicitorsAssociation(TeCSA)(formerlyknown
astheOfficialReferees'SolicitorsAssociation),theJCT,theICE
andtheTechnologyandConstructionCourtBarristersAssociation
(TeCBar).Somemayprefertoincorporateoneofthese
organisation'sprocedures(possiblywithamendments)(23)orto
prepareselfstandingadjudicationprocedurestailoredtomeetthe
requirementsoftheparticularproject,ratherthanrelyingonthe
Scheme.
TheprovisionsofPartIIoftheUKConstructionAct1996applyonly
sofarasthecontractrelatestoconstructionoperations'.(24)This
canresultinsomeaspectsofacontractbeingsubjectedtotheUK
ConstructionAct1996,butnotothers.Forexample,inaturnkey
contractforcivilandprocessplantworks,thelatterpartofthe
workswillgenerallybeexcludedfromthedefinitionofconstruction
operationsbyvirtueofsection105(2).Similarly,aservicescontract
whichincludes,asoneelement,maintenanceofabuilding,willonly
partlycomewithinPartIIoftheUKConstructionAct1996.
Differentdisputeresolutionprovisionsmaythereforeapply,
dependingonthecategoryoftheworksconcerned.Thissituationis
clearlyunattractiveasitmayresultinjurisdictiondisputesoverthe
correctmethodofdisputeresolution.Clientsandcontractorsalike
maythereforeprefertoadoptadjudicationproceduresthatare
page"68" compliantwiththeUKConstructionAct1996forall
disputesarisingundersuchacompositecontract.Thisavoidsthe
prospectofdifferentproceduresoperatingdependingonthenature
oftheunderlyingdispute.Indeed,incaseswhereitisimpossibleto
distinguishbetweentheelementsofthedisputefallingwithinand
outsidetheUKConstructionAct1996,thismaybeanecessity.
[H].ExcludedActivitiesandContracts
AnumberofspecificactivitiesareexcludedfromPartIIoftheUK
ConstructionAct1996,including:
(1) Drillingfor,orextractionof,oilornaturalgasandtheextraction
ofminerals.
(2) Assembly,installationordemolitionofplantormachineryona
sitewheretheprimaryactivityisnuclearprocessing,power
generationorwateroreffluenttreatment.
(3) Supplyonlycontractsformanufactureordeliverytositeof:
(a) buildingorengineeringcomponentsorequipment
(b) materials,plantormachineryor
(c) componentsforsystemsofheating,lighting,air
conditioning,ventilation,powersupply,drainage,sanitation,
watersupplyorfireprotection,orforsecurityor
communicationsystems.

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However,supplyandfitcontractswhichalsoprovidefor
installationofsuchequipmentarenotexcluded.
Additionally,certainclassesofconstructioncontractareexcluded
bytheConstructionContracts(England&Wales)ExclusionOrder
1998(SI1998/648)(ExclusionOrder),whichexcludesconcession
styleagreementsenteredintowiththegovernmentorapublicbody
underthepublicprivatepartnershipinitiativeprovidedcertain
requirementssetoutintheExclusionOrderaremet,andthe
ConstructionContracts(England)ExclusionOrder2011(SI
2011/2332)forconstructioncontractsenteredintoonorafter1
October2011.
Thepolicydecisionsbehindcertainoftheexemptionsweredebated
inParliament.Theexemptionsfornuclearprocessingandpower
generation,forexample,werejustifiedonthebasisthatprojectsof
thiskindaregenerallyforanidentifiedclientandwellfunded.
RelationshipsintheseindustriesintheUK,wheretherearea
relativelysmallnumberoflongtermplayers,aregenerallyperceived
tobegoodandgenerallytherearenotthesameproblemsinrelation
tononpaymentdownthecontractualchainasthereareonciviland
buildingprojects.Thedistinctionsdrawninparliamentarydebates,
however,havenotalwaysbeenwellreflectedinthelegislation.
Designobligationsinrelationtoplantormachineryforpower
generation,forexample,arenotexcluded.
Itwouldbeprudentforapartywhointendstoengagein
constructionprojectsinEngland,ScotlandorWales,andisnot
familiarwiththeprovisionsinandapplicationofPartIIoftheUK
ConstructionAct1996toobtainspecialistadviceconcerningthe
page"69" applicationoftheUKConstructionAct1996.Ideally,
suchadviceshouldbesoughtatthetimethatthedisputeresolution
provisionsinthecontractinquestionarebeingdraftedand
negotiated.
[I].TheFinalTier:LitigationorArbitration?
Inmajorinternationalconstructionprojects,partiestypicallyselect
arbitration,ratherthanlitigation,asthefinaltierofdispute
resolution.Thereareavarietyreasonsforthis,includingthe
following.
Arbitrationavoidsrecoursetothecourtsofanyonejurisdiction,
whichisoftenimportantwhentheprojectinvolvespartiesfrom
differentcountries(withtheproject/facilitiesinquestionpossibly
beinglocatedinyetanothercountry).Arbitrationisoftenseen,
therefore,asprovidinganeutralforumfordecidingdisputesbefore
animpartialtribunal.
Inaddition,theenforcementofarbitrationawardsisgreatly
facilitatedbytheNewYorkConvention,(25)whichprovidesforwhat
iseffectivelyafasttrackprocedureforenforcingarbitralawardsas
comparedtojudgmentsfromforeigncourts(seeChapter13for
moredetail(26)).
Arbitrationalsoprovidesthepartieswiththefreedomtochoosean
arbitrationfriendlyvenuefortheseat(orlegalplace)ofthe
arbitration.Ideallythearbitrationlawoftheseatwillprovidethatthe
localcourtsaretoexerciserestraintininterferingwiththeconduct
ofanarbitrationandprovideasupportingrole,interveningonlyin
limitedcircumstances(e.g.,tocheckalackofproceduralfairness
orbiasonthepartofanarbitrator).Oneindicationofwhethera
jurisdictionthatisbeingconsideredastheseatofthearbitrationis
arbitrationfriendlyisitsadoptionoftheUNCITRALModelLawon
InternationalCommercialArbitration,adoptedbytheUnitedNations
in1985andupdatedinJuly2006(theUNCITRALModelLaw).(27)
TheobjectiveoftheUNCITRALModelLawistohavenumerous
jurisdictionsadoptit(subjecttoanyspecialoruniquerequirements
oftheparticularlegalsysteminquestion)andbydoingsotocreate
anarbitrationlawthatisrecognisedandappliedinternationally.The
UNCITRALModelLawispremisedontheprinciplethatlocalcourts
intheplacewhereaninternationalarbitrationisbeingheldshould
support,butnotundulyinterferewith,thearbitralprocess.
Accordingly,theUNCITRALModelLawprovides,amongother
things,that:
thecourtsplayalimitedroleinthearbitralprocess(e.g.,ordering
interimreliefsubpoenaingwitnessesordocumentsdeciding
challengestotheimpartialityorindependenceofarbitrators)
page"70"
courtssupportthearbitralprocessbyorderingastayofcourt
proceedingsbroughtinbreachofavalidarbitrationagreement
anyinherentjurisdictionofacourttointerfereinarbitral
proceedingsbeexcluded
nationalityshouldnotprecludeapersonfromactingasan
arbitratorand
thepartiesallreceiveequaltreatmentandbegivenaproper
opportunitytopresenttheirrespectivecases.
Todate,oversixtyfivejurisdictionshaveadoptedtheUNCITRAL
ModelLaw,includingAustralia,Bahrain,Canada,Egypt,Germany,
HongKong,Mexico,SingaporeandsomeoftheUnitedStates
(Texas,California,Oregon,Connecticut,Illinois,Floridaand
Louisiana).However,insomecasesajurisdictionhasadoptedthe
UNCITRALModelLawbutmadesignificantamendmentsit,for

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example,permittingantiarbitrationinjunctionstobemade(asin
India)oraddingsubstantivegroundsforreviewofarbitralawards(as
inEgypt).Accordingly,ifyouarenotfamiliarwiththelocallawsof
theplacethatyouareconsideringselectingastheseatofyour
arbitration,itisprudenttoobtainadvice(priortoselectingthat
jurisdictionastheseatofthearbitration)fromadvisorswhoareboth
qualifiedin,andexperiencedwith,thelawsofthejurisdictionunder
consideration.Thisisadvisableevenifthejurisdictionhasadopted
theUNCITRALModelLaw.
Theseatofthearbitrationisalsorelevanttoenforceabilityofthe
awardideallythecountryselectedwillbeasignatorytotheNew
YorkConvention.Again,thisshouldbecheckedpriortoagreeing
thelocationoftheseat.
Arbitrationalsoprovidesafinalandbindingaward,generallynot
subjecttoanyappeal.Thereareexceptionstothisprinciple,
dependingonthelawoftheseatofthearbitration.InEngland,for
example,undertheEnglishArbitrationAct1996thereremainsa
limitedrightofappealtothecourtsonaquestionoflaw.(Grounds
forchallengeandappealsfromanarbitralawardarediscussedin
moredetailinChapter13.)Arbitrationprovidesthepartieswiththe
advantageofprivacyarbitralhearingsareconductedinprivate.It
isoftenassumedthatpartiestoanarbitration(andthetribunal
members)areboundtokeepinformationconcerningthearbitration,
andanyresultingaward,confidential.However,thelawsofdifferent
jurisdictionsmaytreattheexistenceofanimpliedobligationof
confidentialitydifferently.Accordingly,ifanarbitrationagreement(or
theproceduralrulesofaselectedinstitution)doesnotexpressly
imposeanobligationofconfidentiality,nationallawsgoverningthe
arbitrationbecomerelevanttodeterminewhethersuchanobligation
exists.Forexample,inEsso/BHPv.Plowman,(28)theAustralian
HighCourtrejectedtheprevailingEnglishlawviewthatpartiesare
subjecttogeneralimplieddutyofconfidentiality.
Partiesshouldalsobeawarethatnationallawsmayconsiderthere
tobeexceptionstoanimpliedgeneraldutyofconfidentiality.For
example,inHassnehInsuranceCoofIsraelv.Mew,(29)theEnglish
courtsheldthataparty(whowasnotsubjecttoanexpress
confidentialityobligation)coulddiscloseanawardandthe
page
"71" reasonsbehindtheawardtoathirdpartyagainstwhomithad
aclaim,inordertoestablishthebasisoftheparty'srighttoclaim
againstthethirdparty.
Additionally,evenwhereinstitutionalarbitrationrulesimposeaduty
ofconfidentialityontheparties,someinstitutionsmaynevertheless
publishcertainlimitedinformation(redactedoreditedtopreserve
theparties'anonymity)concerningarbitralawards.Forexample,the
ICCpublishessummariesofarbitralawards,althoughitwillnot
providecopiesoftheaward(Article34(2)ICCRules).Article27(8)
oftheAAA'sInternationalArbitrationRules(AAARules)provides
thattheAAA/InternationalCentreforDisputeResolution(ICDR)
maypublishorotherwisemakepubliclyavailableselectedawards,
decisionsorrulings(editedtoconcealtheparties'namesorother
identifyingdetails),unlessagreedotherwisebytheparties.Article
34(5)oftheUNCITRALArbitrationRulesprovidesthattheconsent
ofthepartiesisrequiredinorderforanawardtobemadepublic.
Finally,thepartiesarefreetochoosetheirtribunalbyagreement.
This,intheauthors'view,isaverysignificantadvantageover
litigation.Partiescanmakeaselectionbasedonanumberof
criteria,includingtheirownpastexperienceofanarbitrator,knowing
howheislikelytoapproachlegalandproceduralissues.For
example,theircasemaybemorelikelytofindfavourbeforea
commerciallymindedarbitratorasopposedtoatechnical,black
letteracademiclawyer.
However,arbitration(likeallotherformsofdisputeresolution)can
haveitsdrawbacks.Inparticular:
Itisnotnecessarilyafasterorcheapermeansofresolving
disputesthanlitigation.Infactarbitrationmayinsomecasesbe
morecostlyaspartiesmustpaythefeesandexpensesofthe
arbitraltribunal,aswellasadministrativeinstitutionalcostsifthe
arbitrationisadministeredbyaninstitution.Additionally,the
membersofthearbitraltribunalmayhavelimitedavailability(due
toothercommitments)toholdandconducthearingsanddraft
decisions.Thiscanbeparticularlydifficultifthereisathree
personarbitraltribunalanditisnecessarytofindtimeswhenall
threemembersofthepanelareavailable.Asaresult,some
arbitralinstitutionsareactivelyseekingtoaddresstheissueof
thetimetakentocompleteanarbitralproceeding.Forexample,
theICDR(theinternationaldivisionoftheAAA)claimsthatby
carefulselectionofarbitratorsandmanagementoftheprocess,
certainarbitrationscanbestartedandcompletedwithin
approximatelyoneyear.
Arbitralawards(whicharebasedoncontractualagreement)are
notbindingonnonpartiestothecontract,andgenerally
arbitratorsdonothavepowertojoinorconsolidaterelated
proceedingsunlessalloftherelevantpartiesinvolvedagreetodo
so.Asindicatedabove,thiscanbecuredbyprovidingforjoinder
andconsolidationinallrelevantcontracts(orhavingallparties
enterintoanumbrelladisputeresolutionagreement).
Alternatively,adegreeofprotectioncanbeobtainedbysuitable
selectionofinstitutionalarbitrationrules.Inparticular,Article
22.1(h)oftheLCIARulesprovidesthatanarbitral
page
"72" tribunalhasthepower(unlessagreedotherwisebythe
parties)toorderthatathirdpartybejoinedinthearbitrationasa

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party,providedthatboththethirdpartyandperson(s)applyingto
havethethirdpartyaddedtotheproceedingsagreetothejoinder.
TheICCRulesprovidethattheICCInternationalCourtof
Arbitrationmay,attherequestofaparty,consolidatetwoormore
arbitrationsintoasinglearbitrationwhere:thepartieshaveagreed
toconsolidationorthealloftheclaimsinthearbitrationare
madeunderthesamearbitrationagreementorwheretheclaims
inthearbitrationsaremadeundermorethanonearbitration
agreement,thearbitrationsarebetweenthesameparties,the
disputesinthearbitrationsariseinconnectionwiththesame
legalrelationship,andtheCourtfindsthearbitrationagreements
tobecompatible(seeArticle10).
Enforcementoftheawardwillbeproblematicincountriesthatare
notsignatoriestoatreatyrecognisinginternationalarbitralawards
(includingtheNewYorkConventionortheRiyadhConvention
providingforenforcementofawardsmadeinarbitrationshaving
theirseatinanArableaguestate).Moreover,thepractical
difficultiesofenforcinganawardinahostileenvironmentshould
notbeoverlooked.Itisprudenttoseeklocallawadvicein
respectofprospectsforenforcementofanawardinjurisdictions
whereprincipalassetsarelocated.
Somemajorinternationalconstructionprojectsdoincludelitigation
ratherthanarbitrationasthefinaltierofdisputeresolution.The
primaryadvantagesoflitigation,ascomparedtoarbitration,are
that:
statecourtsoftenhavethepowertoorderthatrelated
proceedingsbejoinedorconsolidatedandheardtogether(evenif
thepartiesdonotagreetodoso),thusminimisingtheriskof
inconsistentdecisionsbeingmade
statecourtjudgmentsmaybindthirdpartiesand
statecourtsoftenalsohaveotherpowersthatanarbitraltribunal
doesnothave,includingthepowertoorderinterimreliefandto
subpoenawitnesses.
Thechoiceofarbitrationversuslitigationtoresolvedisputeson
internationalconstructionprojectswilldependtoanextentonthe
particularnatureoftheproject.Generally,however,themain
disadvantagesofchoosinglitigationratherthanarbitrationtoresolve
internationalconstructiondisputesarethat:
itisoftenmoretimeconsumingandcostlytoenforceacourt
judgmentinaforeignjurisdictionthananarbitralaward,
particularlyiftheforeignjurisdictionhasratifiedtheNewYork
Conventionorotherapplicableenforcementtreaty
useofnationalcourtsmaygiveapartyahomecourtadvantage
courtproceedingsareusuallypublic
page"73"
partiesusuallyarenotabletoensurethatthejudge(s)whowill
decidetheirdisputeiseitherexperiencedin,orknowledgeable
about,constructionrelatedmatters(30)
generally,partiesmustfollowprescribedrulesofprocedurethat
cannotbeadaptedtofitanyspecificneedsofthedisputeor
particularobjectivesofthepartiesand
thedisputemaybesubjecttoappeal(s)inrelationtoanypretrial
rulingsmadebythecourtand/orthetrialcourt'sjudgmentonthe
meritsoftheclaim.
Flowchartsofthekeystepsofarbitrationproceedingsunderthe,
ICC,LCIAandUNCITRALrulesaresetoutatAnnex3.
[J].FactorstoConsiderinDraftingArbitrationProvisions
Partieswhooptforarbitrationratherthanlitigationmustconsidera
numberofissueswhendraftingthearbitrationprovisions.In
particular,suchpartieswillhaveto:
decidewhethertohaveaninstitutionaloradhocarbitration
choosetheseatandlanguageofthearbitration
determinethenumberofarbitrators(onepersonorapanelof
three)
determinewhetheranyrightstoappealanarbitralawardshould
bepreserved
considertheabilitytoseekinterimandinjunctiverelief
addressmultiplepartyand/ormultiplecontractsituationsand
considertheimpactoflimitationperiodsifthecontractprovides
formultipletiersofdisputeresolutionprocedures.
Theseareeachaddressedbrieflybelow.
[1].InstitutionalVersusAdHocArbitration
Anarbitraltribunalcanbeappointed,andthearbitrationconducted,
eitherinaccordancewithinstitutionalrulesadoptedbythepartiesin
theircontract(e.g.,thearbitrationrulesoftheLCIA,(31)the
ArbitrationInstituteoftheStockholmChamberofCommerce,(32)the
AAA(33)ortheICC(34)),oronanadhocbasis.
Anadhocarbitrationisonewherethepartieseither:(i)draft
bespokerulesfortheappointmentofthearbitraltribunaland
conductofthearbitration(whichallowsthemtotailortherulesto

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theirparticularrequirements)or(ii)adoptmodelrulessuch
page
"74" astheUNCITRALArbitrationRules,(35)whicharethebest
knownandmostwidelyusedrulesdevelopedforadhoc
arbitrations.
Theprincipaldisadvantageofapurelyadhocarbitration(i.e.,one
thatdoesnotprovideforanappointingauthorityorinstitutional
supportormodelrulesofprocedure)isthat,practically,its
effectivenessdependsonthewillingnessofthepartiestoco
operateinreachingagreementontheappointmentofthearbitral
tribunalandconductofthearbitration.Inparticular,therewillbeno
institutiontopolicetheproceedingsbeforethearbitraltribunalis
appointedortoruleonapplicationstoremovearbitrators.Thus,if
onepartydoesnotwishtocooperate,itcanresultintheearly
administrationofthearbitrationbeingdifficultandtimeconsuming.
Indeed,costlycourtapplicationsmayberequiredinordertoensure
thatatribunalisappointed,thoughwheretheadhocarbitrationis
conductedinaccordancewiththeUNCITRALArbitrationRules,this
canbeavoidedsincetheSecretaryGeneralofthePermanentCourt
ofArbitrationattheHaguecanbeaskedtodesignateanappointing
authority.
Incontrast,choosingtoconductthearbitrationinaccordancewith
institutionalrulesmeansthattherewillbeaprofessional
organisationavailabletoadministerandsupervisetheproceedings.
Ofcourse,institutionsrequirepartiestopayforsuchadministrative
andsupervisoryservices.Theinstitutionswillalsousuallyhavea
scheduleofthefeesandcoststhatarepayabletothemembersof
thearbitraltribunal.TheICC,forexample,fixestheamountofthe
ICC'sadministrativeexpensesandthefeesofthearbitrator(s)inall
casesadvaloremonaslidingscalebyreferencetotheamountin
dispute.Otherinstitutions(e.g.,LCIA)simplyhaveafixedschedule
offeesandcosts.
Theothermainadvantageofadoptinginstitutionalrulesforan
arbitrationisthattheproceduralrulesdevelopedbytheinstitutionin
questionwillusuallyhavebeentested,bothinpreviousarbitrations
andininternationalenforcementproceedings.Thisshouldprovide
somecomforttoapartyconcerningtheconductoftheproceedings
anditsabilityultimatelytoenforceanarbitralaward.
Ofcourse,beforeadoptinganysetofinstitutionalrules,theparties
needtoreviewtherulesbeforeagreeingtothem.Suchareviewis
necessarytoensurethattheproceduresprescribedbytherulesare
acceptabletothepartiesand/orappropriateforpotentialdisputes
arisinginrelationtotheproject/contractinquestion.Partieswillalso
sometimeswanttomodifyaninstitution'sproceduralrules.The
parties'abilitytomodifyinstitutionalrulesandhavetheinstitutionin
questionagreetoadministerthemodifiedproceduralruleswill
dependinlargepartontheparticularproceduralrules,andthe
attitudeoftheinstitution,inquestion.Forexample,boththeLCIA
RulesandtheICCRulesexpresslycontemplatethatcertainrules
canbemodifiedbytheparties.(36)Thereare,however,clearlylimits.
Itisdifficulttosee,forinstance,howanyinstitution
page
"75" couldagreetopartiesattemptingtodisapplyitsfeestructures
ortheICC(forinstance)agreeingthatitsprocessofreviewof
awardsbeforeissueshouldnottakeplace.Wheremajorchanges
arebeingcontemplatedtoaninstitution'srulesitissensibleto
approachthatinstitutionbeforecontractinginordertomakesure
thattheamendedprocedureswillbeacceptabletoit.
[2].TheSeatoftheArbitration
Asmentionedabove,theseatofthearbitrationisgenerallythe
placewherethearbitrationhearingsareheld(unlessagreed
otherwisebythepartiesandarbitraltribunal),andtheselectionof
theseatisimportantasitdetermineswhatadditionalprocedural
rulesmayapplytothearbitrationbyvirtueofthelocalarbitration
laws.Theseatofthearbitrationisalsoimportanttothe
enforceabilityoftheaward,sopartiesshouldconsiderwhetherthere
arereciprocalenforcementarrangementsbetweenthejurisdictionin
whichthearbitrationisseatedandthelikelyplace(s)ofenforcement
(inparticular,whethertheyhavebothratifiedtheNewYork
ConventionorotherapplicableenforcementTreaty).
Otherfactorsthatshouldbeconsideredindecidingtheseatofthe
arbitrationaretheconvenienceofthevenuefortheparties,
witnessesandarbitrators,andthegeographicalneutralityofthe
venueifthepartiesarefromdifferentjurisdictions.Ideally,the
partiesshouldspecifytheseatofthearbitrationinthearbitration
clause.
[3].TheLanguageoftheArbitration
Thelanguageofthearbitrationshouldalsobeaddressedinthe
arbitrationclause.Factorstoconsiderwhenchoosingthelanguage
ofthearbitrationincludethelanguage(s)ofthecontractual
documentation,thelawgoverningthecontract,andthelanguages
spokenbythepartiesandanylikelywitnesses.
[4].NumberofArbitrators
Aprimaryadvantageofchoosingapanelofthreearbitratorsisthat
itprovidesmoreopportunitytoobtaintheappropriatemixofcultural,
legalorlinguisticattributesand/ortechnicalexpertisethatmaybe
relevanttoaninternationalproject.Additionally,havingthree

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arbitratorsratherthanonemayprovidepartieswithsomelevelof
comfortthatitislesslikelythatallthreearbitratorsmightfailto
understand,orfailtotakeaccountofalloftherelevantfactualand
legalissuesinreachingtheirdecision.Ofcoursetheadditional
costsandpotentialdelayinvolvedinhavingathreepersontribunal
maynotbewarrantedifthecontractinquestionisnotofa
particularlysignificantvalue.
page"76"
[5].RighttoAppeal
Partiesmaychoosearbitrationoverlitigationbecauseitgenerally
resultsinadecisionthatisfinal,asthelawsofmanyjurisdictions
permitarbitralawardstobeappealedonlyinlimitedcircumstances,
forexamplewherethereisfraud,lackofproceduralfairnessorthe
arbitraltribunaldidnothavejurisdictiontodeterminethedispute.
UndertheEnglishArbitrationAct,partiescancontractoutoftheir
righttoappealanawardonapointoflaw,althoughtheycannot
contractoutoftherighttochallengeanawardonthebasisof
substantivelackofjurisdictionofthetribunalorseriousirregularity
affectingthetribunal,thearbitralproceedingortheaward.(37)
Partieswillneedtoconsiderwhethertoincludeprovisionsthat
expresslyexcludetheparties'righttoappealanyarbitralaward.If
thepartieshavechosentoapplythearbitrationrulesofan
institution,theinstitution'srulesoftendealexpresslywiththeability
ofthepartiestoseekrecourseconcerninganaward.(e.g.,boththe
LCIARulesandtheICCRulesprovidethatparties,byadoptingthe
rules,waivetheirrighttorecourseinsofarassuchawaivercanbe
validlymade(38)).TheAAARulesprovidethatawardsarefinaland
bindingontheparties(Article27(1)).
Theeffectivenessofsuchanexclusion(whetherinthecontractor
institutionalrules)willneedtobeconsideredinthecontextofthe
lawofboththeseatofthearbitrationandwheretheawardislikely
tobeenforced.
[6].ContinuingPerformance
Standardformcontractscommonlyusedininternational
constructionprojectsfrequentlyprovidethatthepartiesshall
continuetoperformtheirobligationsunderthecontractdespitea
disputebeingreferredtothedisputeresolutionprocedures.(39)As
mentionedabove,ifpartiesareusingabespokecontract(ortheir
standardformdoesnotincludesuchaprovision),thepartieswill
usuallywanttoincludesuchaprovision,inordertoensurethat
workcontinueswhilstdisputesarebeingresolved.However,the
lawsofthejurisdictionchosentogovernthecontractand/orthelaw
oftheplaceofperformancemaynonethelessentitlethecontractor
tosuspendworkincertainsituations,forinstancefornonpayment.
See,forexample,section112oftheUKConstructionAct.Such
rightsalsoexistunderFrench(40)andDutchlaw.(41)Somestandard
formcontractsalsoincludesuchsuspensionrights.(42)
Employers,ownersandlenderswillalsogenerallywanttoensure
thatthecontractorcannottreatareferenceofadisputetothe
disputeresolutionproceduresasanevententitlingthecontractorto
anextensionoftimeand/oradditionalcosts(e.g.,onthebasisthat
failurebytheemployertoacceptthecontractor'sclaimisanactor
page"77" omissioncausingdelaytotheworks).Partiesmay
wanttoexpresslyprovideforthisintheircontracts.
[7].InterimandInjunctiveRelief
Partiesneedtoconsiderwhetheritisnecessary,ordesirable,to
includeexpressprovisionsallowingthepartiestoseekinterimor
interrogatoryrelieffromnationalcourtsinaidofarbitrationorin
connectionwitharbitrationproceedings,andifso,howthecourts
mighttreatsuchaprovision.Thiswilldependonthelawgoverning
thecontract,thelawoftheseatofthearbitrationandthelawofthe
jurisdiction(s)wherethepartiesmightseektoobtainsucha
remedy.Forexample,inEnglandthecourtswillnottreatsucha
provisionassupplantingarbitrationastheagreedmethodofdispute
resolution,butasentitlingthemtoactonlytosupportthearbitration
incircumstanceswherethearbitraltribunaldoesnothavethe
necessarypowertoactinurgentcases.(43)Thismaynotbethe
situationinotherjurisdictions,andthereforespecialisedadvicewill
usuallyberequired.Inaddition,thearbitrationrulesofcertain
institutionsincludeprovisionsthatcontemplatecourtapplications
priortotheconstitutionofthetribunalor,inexceptionalcases,after
thetribunalisinplace.(44)Further,antisuitinjunctionsmaybe
availabletorestraincourtproceedingsbroughtinbreachofan
arbitrationagreementevenwhereanarbitrationhasnotbeen
initiated.(45)
[8].MultiplePartiesorContracts
Asdiscussedabove,onmajorinternationalconstructionprojects
thereareoftenmorethantwopartiesinvolvedintheprojectand/or
morethanonecontractrelatedtotheproject.Insuchsituations,
anotherissuethatmustbeconsideredwhendraftingarbitration
provisionsis,joinderorconsolidationofdisputes.Forexample,a
maincontractorwithaseriesofsubcontractsorbacktoback

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supplyagreementsmaywanttoprovidefordisputesunderthe
subcontractstobeconsolidatedwithdisputesunderthemain
contract(andviceversa)insituationswherethedecision
concerningadisputeunderonecontracthasdirecteffectsonthe
othercontract(s).Theadvantageofbeingabletoconsolidate
disputesinsuchcircumstancesandhavingthemheardbyone
arbitraltribunalisthatitavoidsthecostandtimeofarguingthe
sameissuesindifferentarbitrations.Italsoavoidstheriskthat
differentarbitraltribunalscouldrenderinconsistentdecisionsonthe
samefacts.
However,employersandownersoftenresistsuchprovisions,on
thebasisthattheydonotwanttobecomeembroiledindisputes
furtherdownthecontractualchain.
page"78"
ThearbitrationrulesoftheLCIAandICCpermitatribunaltoorder
joinderorconsolidation,butinverylimitedcircumstances.(46)The
ConstructionIndustryArbitrationRulespublishedbytheAAAallow
forjoinderorconsolidationuponthewrittenrequestofapartywhich
outlinesthereasonsforsuchrequest(Rule7(a)(i)(ii)).
Ifjoinderorconsolidationorsimilarprovisionsareagreed,theyneed
tobeaddressedineachofthevariousrelevantcontracts.
Alternatively,asmentionedabove,partiesmayagreetoenterinto
one,standaloneumbrelladisputeresolutionagreementthatdeals
withdisputesarisingunderthevariouscontractsandaddresses,
amongstothermatters,whenandhowconsolidationofdisputescan
occurundertherelevantagreements.Boththepreparationand
draftingofconsolidationprovisionsinvariouscontractsanddrafting
ofaseparateumbrelladisputeresolutionagreement,willusuallybe
verycomplexinnatureandusuallyrequiresspecialistadvice.
Itwillalsobenecessarytoensurethatanyconfidentiality
provisionsinthecontractsinquestionarenotcompromisedasa
resultoftheconsolidation/joinderprovisionsorstandalonedispute
resolutionagreement.
Onepossiblealternativetojoinderorconsolidationincircumstances
involvingsubcontractsistoprovideforaprocedurewhereby:
thesubcontractorisentitledtomakerepresentationsandpresent
submissionsinthenameofthecontractorintheproceedings
againsttheemployerorowner
thesubcontractormustcomplywithallrelevanttimelimitsin
presentingsuchsubmissionsandevidence,andshallbeentitled
tocopiesoftheevidenceandsubmissionssuppliedbythe
employerorowneronlywheretheyarerelevanttoissuesraised
inthedisputebetweenthecontractorandsubcontractor(the
abilitytodothiswillneedtobeaddressedinanyconfidentiality
provisionsinthemaincontractinordertoallowthecontractorto
passsuchinformationalongtothesubcontractor)and
itisagreedthattheoutcomeofthedisputeproceedingsunderthe
maincontractwillbebindingbothasbetweentheemployer/owner
andthecontractorandasbetweenthecontractorandthe
subcontractor.
Suchproceduresaresometimesreferredtoasnameborrowing.
Thepartieswillneedtoseekadviceontheenforceabilityof
procedureslikethisunderthelaw(s)applicabletotheircontracts.
Partieswillalsoneedtoconsiderhowtodealwiththeappointment
ofarbitratorswhenmorethantwopartieswill,asaresultof
consolidationorjoinder,beinvolvedinparticulararbitration
proceedings.Ofcourseevenifthereisonlyonecontract,butmore
thantwoparties,itwillbenecessary,whendrafting,toconsiderand
addresstheappointmentofthearbitraltribunalinsuchsituations.
Oneparticularissuethatarisesisthebalancingofparties'rightsto
participateinappointingthearbitraltribunalandtheneedtobalance
thenumberofparties.Someoftheinstitutionalarbitrationrules
page"79" expresslyaddressthisissue,inpartasaresultof
thedecisionin1992oftheFrenchSupremeCourtinSiemensv.
BKMIandDutco(onwhichseeChapter8).
[9].LimitationPeriods
Finally,inpreparingmultitiereddisputeresolutionprovisions,the
partieswillusuallyprovidethatthevariousprocesses/proceedings
providedforineachtiermustbecompletedbeforeapartyisentitled
toreferadisputetothenexttier(e.g.,byrequiringcompletionof
ADRproceedingsbeforearbitralorjudicialproceedingscanbe
commenced).Forinstance,asnotedabove,thecourtsinEngland
andtheUnitedStateswillgenerallyrequirepartiestofollowagreed
proceduresandnotpermitapartytoleapfrogtothenextstageifthe
chosenmethodofdisputeresolutiondoesnotsuittheirpurposes.(47)
Thismaycausedifficultiesifalimitationperiodmayexpirepriorto
thetimethatapartywillbeabletocommencearbitralorjudicial
proceedingsasthefinaltierofthedisputeresolutionprocedures.A
solutiontothisproblemistoincludeaprovisioninthedispute
resolutionclausewhichallowsthatinsuchcircumstances
arbitration(orlitigation)maybecommencedontheconditionthat
thearbitral/judicialproceedingsthenbestayeduntilsuchtimeas
thepartieshavecompletedalloftheearliersequential
processes/proceedingsprovidedforintheirdisputeresolution
clause.

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[K].DrafterBeware
Generally,partieswillwanttobeabletorelyonthearbitration
provisionsthatwereincludedintheiragreement.Theenforceability
ofanarbitrationclausewilldependonanumberoffactors(including
thelawapplicabletothecontract)thatneedtobeconsideredwhen
draftingthearbitrationclause.Therearecertainthingsthatyou
shouldorshouldnotdowhendraftingyourclause,inordertoavoid
someofthemainpitfallsthatcanariseconcerningthe
enforceabilityofarbitrationclauses,includingthefollowing:
Donotequivocatemakeitclearwhetherornotarbitrationisthe
exclusiveremedy.Donot,forexample,includelanguagethatcan
leadtoasituationwhereitappearsthatthepartieshavenotin
factmadeachoicebetweenlitigationorarbitration(e.g.,Inthe
caseofarbitration,theXRulesofArbitrationapplyincaseof
litigation,anydisputeshallbebroughtbeforethecourtsofY).
Similarly,avoidusingshorthand(e.g.,Arbitration,ifany,byICC
RulesinLondon)asitmayleadtoambiguitythatcanlaterbe
exploitedbyyouropponent.
Beforeyouagreetoadopttherulesofaninstitution,checkthe
rulestoconfirmthattheyareacceptabletoyou,andensurethat
youcorrectlyidentifythe
page"80" institution(e.g.,Disputes
toberesolvedthrougharbitrationbytheAAA,nottheAA).
Also,itisgenerallybesttoadoptthatinstitution'smodel
arbitrationclause.Aselectionofmodelclausesissetoutin
Annex2.Amendingsuchmodelclausesisoftenunnecessary,
andcanbeunwiseunlessyouhavetakenspecialistadvice.
Moreover,thereisariskthataninstitutionmaylaterrefuseto
administerthearbitrationifyouhaveamendeditsmodelclause.
Ifyouaredesignatinganappointingauthority,ensurethat
authority'swillingnesstoaccepttheresponsibility,otherwiseyou
mayfindthatthearbitrationagreementbecomesinoperable
becausethedesignatedauthorityisunwillingtoundertakethe
roleyouenvisaged.Thatcouldleadtohavingtolitigateyour
dispute,possiblyinajurisdictionthatyouwouldnothavechosen.
Itisusuallybesttoavoidtryingtocombinetheproceduralrules
ofvariousjurisdictions.Forexample:Disputesrelatingtothe
validityorinterpretationofthisAgreementshallbegovernedby
theArbitrationRulesofXinstitutioninCountryA,inaccordance
withthelawsoftheEuropeanUnionandfederallawsapplicable
therein.Thereisariskthatthelawsofonecountrymaycontain
mandatoryprovisionsthatareinconsistentwiththelawsof
anothercountrythatisreferredto,whichcouldleadtointractable
problemsinpractice.
[L].RelatedProvisions
Partiesdraftingandnegotiatingdisputeresolutionprovisionsin
agreementsconcerninginternationalconstructionprojectsalsoneed
toaddressseparate,butrelated,provisions,suchas:
thelawgoverningtheagreement
stateimmunityand
iflitigationisselectedtoresolvedisputes,provisionsconcerning
jurisdictionandserviceabroad.
Eachofthesetopicsraisesitsownuniqueissues,anddepending
onthenatureandlocationoftheproject,andthenatureand
nationalitiesofthecontractingparties,canrequireextensive
considerationofvariouspublicinternationallawandconflictsoflaw
questionswhicharebeyondthescopeofthiswork.However,ata
minimum,thefollowingissuesmayarise.
[1].GoverningLaw
Whenselectingthesubstantivelawtogovernthecontract(i.e.,the
lawthatwillapplytodeterminethesubstantiverights,obligations
andremediesunderthecontract),thepartiesshouldask
themselvesthefollowingquestions:
page"81"
Willthelocalcourts/governmentinthelocationoftheprojectbe
abletointerferewithorreviewthecontractterms,evenifthe
partieshavechosenthelawofanotherjurisdictionasthe
governinglaw?
Ifcontractingwithastateorstateagency/emanation(suchasa
statebankorstateownedoilmarketingorganisation),willitbe
possibleforittoagreethatthelawofanotherjurisdictionshall
governtheagreement?Ifso,arethenationalcourtsofthestate
(andjurisdictionswhereproceedingsmightbebrought)likelyto
upholdandenforcesuchcontractualprovisions?
Willcertainareasoflocallawbeappliedtothecontractonthe
basisthattheyaremandatory,evenifthelawofanother
jurisdictiongovernsthecontract?Forexample,thelawsofmany
jurisdictionsprovidethatpartiescannotcontractoutoflocallaw
provisionsrelatingtobankruptcy,licensingandadministrative
consentrequirements(suchasplanningandenvironmental
consents)orpropertyrights.
Isthelawofthechosenjurisdictionsufficientlydevelopedtobe
usedadequatelyinconnectionwiththeproject?Forexample,
currentlythelawsinsomeareasofEasternEuropeandthe
formerSovietUnionmaynotbeadequatelydevelopedtoaddress

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allofthelegalissuesthatmightariseinrelationtowhatare
commonlyknownaspublicprivatepartnership(PPP)style
infrastructureprojects.
Dothepartieswanttoconsiderincludinginternationalconcepts
intotheirgoverninglawprovisions?Forexample,partieswill
sometimesprovidethatthelawofachosenjurisdictionand
generallyacceptedprinciplesofinternationallawshallgovern
theagreement(althoughthismayleadtoproblemsof
interpretation).Similarly,partiesinsomeindustries(forinstance,
oilandgas)frequentlyagreethatinadditiontocomplyingwiththe
applicablelaw,partiesshallperformtheirobligationsin
accordancewithgoodinternationalindustrypractice.
Itisadvisabletoobtainspecialistlocallawandpublicinternational
lawadvice,inordertoproperlyconsiderandaddresstheseand
otherissuesrelatingtothechoiceofthegoverninglawforthe
contract.
[2].StateImmunity
Foreignstatesandtheiragencies/emanationsaregenerallyimmune
bothfromsuitandfromenforcementagainststateassets.
Accordingly,ifyourcounterpartyinaninternationalconstruction
projectisastateoritsagency/emanation,thenstateimmunity
issueswillneedtobeconsideredandaddressed.Inparticular,itis
necessarytoensurethatthecontractcontainseffectivewaiverof
immunityprovisionsbothinrespectofproceedingsbeingbrought
againstthestateoritsagency/emanationandinrespectof
immunityagainstenforcementofanarbitralawardorjudgment
madeagainstthatparty.
page"82"
[3].JurisdictionandServiceAbroad
Iflitigationischosenasthefinaltierofdisputeresolutionforan
internationalproject,ajurisdictionclauseshouldbeincludedinthe
contract.
Ajurisdictionclauseisintendedtodeterminewhichnationalcourts
willhearadisputebetweenthepartiesandapplythelawchosenas
thegoverninglaw.Itis,ofcourse,possibletogivejurisdictionofa
disputetothecourtsofonecountry(oralternativelyanumberof
countries)thatisdifferentfromthecountrywhoselawischosenby
thepartiestogoverntheircontract.
Draftingandnegotiatingjurisdictionclausesinvolvesaddressinga
numberofissuesthatcanoftenbecomplex.Theseincludewhether
thecourtsofachosencountryshouldhaveexclusiveornon
exclusivejurisdictionoverdisputesandhowcourtsinother
jurisdictions(e.g.,whereassetsmaybelocatedortheparties
projectmaybebased)willapproachtheenforceabilityofthe
jurisdictionclause.Specialistlegaladvicemayalsobeneededin
respectofconflictsoflawand/orpublicinternationallawissuesthat
ariseinconnectionwithjurisdictionclauses.
Additionally,itmaybeprudenttoprovideforanagenttoaccept
serviceofcourtproceedingswithinthejurisdictionoftherelevant
courtsiflitigationistobethefinaltierofdisputeresolutionandthe
partiesarefromvariousjurisdictions.Suchprovisionscanhelp
avoidpotentiallycostlyandtimeconsumingeffortsthatmight
otherwiseneedtobeundertakentoeffectserviceofcourt
proceedingsonthedefendant.Theywillbecriticalwherethereisno
meansofotherwiseeffectingserviceontheprospectivedefendant.
Forexample,ifserviceisrequiredbymeansofservicethrough
diplomaticchannels,andthosechannelshavebrokendown,
proceedingstoenforcelegitimatecontractualrightswilleffectively
bestymied.ThisoccurredwhensanctionswereimposedonIraq
followingtheinvasionofKuwaitin1990anddiplomaticrelations
weresuspendedbetweenEnglandandIraq.Itwastherefore
impossible,intheabsenceofanagentforserviceclause,toserve
courtproceedingsonIraqistateentities,astheEnglishrulesof
servicerequiredservicethroughdiplomaticchannels.
Thesameserviceissuesdonotariseinrelationtoarbitration
proceedings.Forexample,undertheICCRulesallthatisrequired
tocommencethearbitrationisdeliveryoftheRequestfor
ArbitrationtotheRespondent:nospecificmannerofserviceis
stipulated.However,itmaystillbeadvisabletoappointanagentfor
serviceofprocess,toavoidanydifficultiesthatmightotherwise
ariseifoneparty.seeksassistancefromalocalcourtinsupportof
thearbitration(e.g.,toobtaininterimrelief)andcannotservecourt
processontheotherparty.
[M].DraftingChecklist
Asdiscussedabove,therearemanyfactorsandissuesthatneed
tobeconsideredandaddressedwhendraftingdisputeresolution
provisionsforuseininternationalconstructionprojects.Setoutin
Annex4isanonexhaustivechecklistofsomeofthemore
importantofthesefactors/issuesandatAnnex5isasamplesetof
provisionsincludingnegotiations,expertdetermination,arbitration
andADR,togetherwiththeprocedureforexpertdeterminationand
termsofappointmentforapanelmember.

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SeeCable&Wirelessplcv.IBMUnitedKingdomLtd[2003]BLR
89andChannelTunnelGroupLtdv.BalfourBeattyConstructionLtd
[1993]AC334.Note,however,thatsuchprovisionsmustbeclear
astothecontentsoftheparties'obligationsincludingadefined
processandspecificADRproviderindefaultofagreement:Tang
ChungWahv.GrantThornton[2012]EWHC3198inwhichan
arbitrationawardwaschallengedincircumstanceswherereferralof
thedisputefirsttoapanelofboardmembershadnotoccurred.
2
SeeHIMPortland,LLCv.DevitoBuilders,Inc.,211F.Supp.2d
230(1stCir.2002)andKemironAtlantic,Inc.v.Aguakem
International,Inc.,290F.3d1287,1290(11thCir.2002).
3
However,asdiscussedlaterinthischapter,insomejurisdictions
acontractormaybeentitledtosuspendperformanceofits
obligationsinsituationswhereithasnotbeenpaidmoniesthatit
claimsareowingtoitunderthecontract.
4
JohnBennett&SarahJeyes,TrustingtheTeam:TheBest
PracticeGuidetoPartneringinConstruction(ThomasTelford1995).
5
MichaelLatham,ConstructingtheTeam:FinalReportofthe
Government/IndustryReviewofProcurementandContractual
ArrangementsintheUKConstructionIndustry(HMSO1994).
6
Seealso:ConstructionIndustryReviewCommittee,Constructfor
Excellence(2001),areportonconstructionpracticesinHongKong,
availableat:
http://www.devb.gov.hk/filemanager/en/content_735/reporte.pdf
(accessed10Sep.2013)andConstr.Indus.Council&Dept.Envt.,
BuildingourFutureTogether:StrategicReviewoftheConstruction
Industry(StationeryOfficeDublin1997),areportonaninvestigation
intotheconstructionindustryintheRepublicofIreland.
7
Courtney&FairbairnLtd.v.TolainiBrothers(Hotels)Ltd[1975]1
AllER716Smith(Paul)Ltdv.H&SInternationalHoldingInc
[1991]2Lloyd'sRep127Walfordv.Miles[1992]2AC128.
8
NotethattheICCreferstoitsADRRulesasamicabledispute
resolutionrules,ascomparedtoalternativedisputeresolution
whichiswhatthetermADRisfrequentlyunderstoodtomean.
9
Asdiscussedabove,theadvantageofincludingmandatoryADR
provisionsinacontractisthatitremoveswhatcan(atleast
historically)sometimesbeaperceivedstigmaassociatedwithbeing
thepartytosuggestusingADR.
10
Matyas,Robertetal.,ConstructionDisputeReviewBoard
Manual1011(McGrawHill1996)andAppendixA.
11
Seeclause20ofeachofthecurrenteditionsoftheRedBook,
YellowBook,SilverBook(FirstEditions,1999)andGoldBook
(FirstEdition,2008).
12
SeetheWorldBank'sStandardBiddingDocumentfor
ProcurementofWorks(March2012)availableat:
http://siteresources.worldbank.org/INTPROCUREMENT/Resources/Works
EN22March12_Rev5.pdf(accessed10Sep.2013).
13
Forexample,seetheAsianDevelopmentBank'sProcurement
Guidelines(March2013),availableat:
http://www.adb.org/sites/default/files/GuidelinesProcurement.pdf
(accessed10Sep.2013).
14
Availableat, http://www.iccwbo.org/productsand
services/arbitrationandadr/disputeboards/disputeboardrules/
(accessed10Sep.2013).Formoreinformationseech.5.
15
Forexample,Art.25ICCDBRulesprovidesthata
recommendationmadebyaDisputeReviewBoardisadmissiblein
anysubsequentjudicialorarbitralproceedingsbetweentheparties.
16
Forexample,eachofFIDIC'sRedBook,YellowBook,Silver
BookandGoldBookprovidesfordecisionstobemadewithin84
daysofadisputebeingreferredtotheDisputeAdjudicationBoard
(seeclause20.4oftheRedBook,YellowBookandSilverBook,
andclause20.6oftheGoldBook).
17
TheUKConstructionAct1996wasextendedtoScotland
pursuanttotheSchemeforConstructionContracts(Scotland)
Regulations1998(SI1998/687)asamendedbytheSchemefor
ConstructionContracts(Scotland)AmendmentRegulations2011(SI
2011/371).Similarly,IrelandenactedtheConstructionContractsAct
2013whichimplementsstatutoryadjudicationforpaymentdisputes
arisingunderaconstructioncontract.
18
Subjecttoalimitednumberofexceptionswhichexcludethe
applicationofstatutoryadjudicationtodisputesarisingunder
specificacts,includingtheWaverleyRailway(Scotland)Act2006.
19
Section108(2)(4).
20
Althoughs.139(1)oftheLocalDemocracy,Economic
DevelopmentandConstructionAct2009repealedtheprovision
requiringconstructioncontractstobeinwriting,theSchemewill
applyunlesstherequiredadjudicationprovisionsaresetoutin
writing:section108(2)ConstructionAct2006.
21
AsamendedbytheSchemeforConstructionContracts(England
andWales)Regulations1998(Amendment)(England)Regulations
2011(SI2011/2333).
22
Section108(5).
23
Whereanorganisation'sadjudicationproceduralrulesarenot
adopted,thecontractneedstoaddress,inwriting,thenine
mandatoryrequirementsinSection108ofPartIIoftheUK
ConstructionAct1996.
24
Section104(5).
25
TheConventionontheRecognitionandEnforcementofForeign
ArbitralAwards(1958).
26
Seealso

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http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention.html
(accessed10Sep.2013).
27
UnitedNationsCommissiononInternationalTradeLawModel
LawonInternationalCommercialArbitration,availableat,
http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration.html
(accessed10Sep.2013).
28
[1995]128ALR391.
29
[1993]2Lloyd'sRep243.
30
However,somejurisdictionsmayhavespecialistcourts.For
instance,constructionrelateddisputesinEnglandandWalesare
generallyheardbytheTechnologyandConstructionCourtasub
divisionoftheHighCourt,QueensBenchdivision.
31
Availableat,
http://www.lcia.org/Dispute_Resolution_Services/LCIA_Arbitration_Rules.aspx
(accessed10Sep.2013).
32
Availableat, http://www.sccinstitute.com/skiljedomsregler
4.aspx(accessed10Sep.2013).
33
Availableat, http://www.adr.org/aaa/faces/rules(accessed10
Sep.2013).
34
Availableat, http://www.iccwbo.org/productsand
services/arbitrationandadr/arbitration/iccrulesofarbitration/
(accessed10Sep.2013).
35
Availableat,
http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration.html
(accessed10Sep.2013).
36
See,e.g.,Art.28(1)(ConservatoryandInterimMeasures)and
Art.38(ModifiedTimeLimits)oftheICCRules,andArt.15.1
(SubmissionofWrittenStatementsandDocuments),Art.22.1
(AdditionalPowersoftheArbitralTribunal)andArt.28.4(Awardof
ArbitrationandLegalCosts)oftheLCIARules.
37
Sections6769.
38
Article26.9LCIARulesArt.34ICCRules.
39
See,e.g.,clauses20.4ofFIDICRed,YellowandSilverBooks
respectivelyandclause20.6ofFIDICGoldBook.
40
Article1184oftheFrenchCivilCodeandthegeneralprincipal
exceptiond'inexcution.
41
Section6:262oftheDutchCivilCode(BurgerlijkWetboek).
42
See,e.g.,clause16oftheFIDICRedBook.
43
ChannelTunnelGroupLtdv.BalfourBeattyConstructionLtd,
supra.
44
Article25.3LCIARulesArt.28(2),ICCRules.
45
See,e.g.,theSupremeCourt'sdecisioninUstKamenogorsk
HydropowerPlanJSC(Appellant)v.AESUstKamenogorstk
HydropowerPlantLLP(Respondent)2013UKSC35.
46
Article22.1(h)LCIARulesArt.10ICCRules.
47
SeeChannelTunnelGroupLtdv.BalfourBeattyConstruction
Ltd,supraandKemironAtlantic,Inc.v.AguakemInternational,Inc,
supra.InEnglandthisissubjecttotheapplicationofPartIIofthe
UKConstructionAct1996(discussedabove).

Chapter4:ClaimsAdministration
4.01.Introduction
Ideally,aconstructioncontractshouldoperateasavaluableproject
managementtool.Itshouldincludeprovisionswhichfacilitate
disputeavoidanceandclaimshandling,inordertopreventdisputes
escalatingthroughformaldisputeresolutionprocedures.Effective
procedureswillideallyleadtoearlysolutions,lowercostsandfewer
delaystotheprojectoverall.
Ifthereistheopportunitytohaveinputinthedraftingstageofthe
constructioncontractitisvaluabletoinvolvetheprojectmanagers
orcontractadministrators.Itisfrequentlythecasethatacontract
draftedbylawyerswithoutanyinputfromthosewhowillberunning
theprojectdoesnotaccuratelyreflecttheprocedureswhichare
usedontheground.Frequently,commentsareexpressedwhen
disputesarisethatpracticessimplydonotfollowthecontract
procedures,whichareundulycumbersomeorsimplyinappropriate
fortheprojectinquestion.

Source
Chapter4:Claims
AdministrationinJane
Jenkins,International
ConstructionArbitration
Law(SecondEdition),
ArbitrationinContext
Series,Volume3
(JaneJenkinsKluwer
LawInternational2013)
pp.8598

Equally,itisimportantthattheprojectmanagersunderstandthe
extentandlimitsoftheiravailablepowersunderthecontractsothat
(i)theyexercisethosepowersforthebenefitoftheprojectand(ii)
theydonotpurporttogiveinstructions,waiverequirements,or
otherwisemakeagreementswhicharepotentiallyinconsistentwith
theexpresscontractualterms.Thatcanbechallenginggiven
projectmanagersaretheretogetthejobdone,ratherthanbe
expertsintheinterpretationofcontractualrightsandobligations.
However,aproperunderstandingoftheriskallocationandpowersin
thecontractcanavoidlaterdisputesastowhetheranydeparture
fromthecontractualprovisionswasintendedandiscontractually
enforceable.Inthiscontext,thedaytodayrelationshipbetween
thoseonsiteandinternallegalcounselcanbekeytoproperand
efficientimplementationofthecontract.
Thischapterfocusesonmanagementofincomingclaimsfromthe
contractor.Itlooksatanumberoftoolsforeffectiveclaims

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managementincluding:

page"85"

earlywarningprovisions
therequirementforprovisionofparticulars
conditionsprecedenttoclaims
rightsofaccesstoinformation
auditrights
keepworkingprovisions
identificationofcommunication/reportinglinesand
partneringandalliancingtechniques.
4.02.EarlyWarningProvisions
Acontractmayincludeprovisionsrequiringthecontractortogive
noticeofactualorpotentialdifficulties,soastoenabletheparties
toaddresssolutionsattheearliestopportunity.Theideaisto
encouragejointproblemsolvingandreducetheultimatecostsand
delaywhichbothpartiesmayotherwisesuffer.Sucharrangements
maybeformalisedbyanagreementtoreferproblemstoaproject
board,forexample,whichisapopulartechniqueinpartnering
arrangements(seefurtherbelow).Oneexampleofsuchaclausein
theFIDICSilverBookisasfollows:
Thecontractorshallpromptlygivenoticetoemployer
ofspecificprobableeventsorcircumstanceswhich
mayadverselyaffectordelaytheexecutionofthe
Works.(1)
TheIChemEInternationalRedbook(Clause14.1)andIMechE(2)
(Clause33.1)areexamplesofspecialisedinternationalstandard
formcontractsthatbothcontainearlywarningprovisions.
TheENAA'sstandardformforpowerplantconstruction,requiresthe
contractortomonitorprogressofallactivitiesspecifiedinthe
project'sprogrammeandtosupplyamonthlyprogressreporttothe
employer,indicatingwhereanyactivityisbehindtheprogramme
givingcommentsandlikelyconsequencesandstatingthe
correctiveactionbeingtaken.(3)
Thecontractmayprovideforconsequencesforfailingtoprovide
suchnotice,forexample,barringtheopportunitytopursueclaimsin
respectofsuchevents.Ifso,thecontractormusttakegreatcareto
ensurenoticeisgiventotheemployerincompliancewithsucha
clause.TheNEC3(referredtointhepreviouschapter)issuchan
example.Itobligesboththecontractorandtheemployer'sproject
managertonotifytheotheriftheybecomeawareofanymatter
whichcouldincreasethetotalcontractprice,delaycompletionor
impairtheperformanceoftheworks.(4)Thesanctionforfailureby
thecontractortogiveearlywarningofacompensationeventisto
reducethepaymentduetohimforanyrelatedclaimtothelevel
thathewouldhavebeenentitledtoifhehad
page"86" given
earlywarningandallowedcostsavingactionstobetaken.(5)There
areanumberofissuestoconsiderwhendealingwithsuch
provisions.Theseinclude,forexample,thepointatwhichnotice
shouldbegivenandtheextentofparticularsrequiredtoensurethe
noticerequirementissatisfied.Further,theremaybesome
practicaldifficultyassociatedwithdeterminingtheamountbywhich
aclaimshouldbediscounted,shouldthenoticenotbein
accordancewithrequirements.
4.03.RequirementsforProvisionofParticulars
Fromtheemployer'sperspectivetheconstructioncontractwill
ideallyrequireacontractortoprovideaccurateand
contemporaneousinformationinrespectofpotentialclaims.Third
parties,suchasprojectinsurers,financiers,governmental
authorities(e.g.,healthandsafetyorenvironmentalofficers,
dependingonthenatureoftheeventinquestion)maybeinterested
insuchinformation.Suchclausesusuallyrequireinformationtobe
provided,(withinacertaintimeofthecontractorbecomingawareof
theevent),astothefollowing:
theeventwhichgivesrisetotheclaim
itscontractualrelevanceintermsoftheriskallocationagreed
betweenthepartiesandtheagreedtreatmentofsuchrisk
theconsequencesoftheeventintermsofthetimeandcost
impacttotheproject
whetheritispossibletomitigatetheconsequencesoftheevent,
forexample,byadoptingworkaroundmeasuresorbyavariation
orderincircumstanceswhere,forexample,aparticularproductis
unavailabletopermittheuseofasuitablealternative.
Inaddition,theseclausesoftenrequirethecontractortocontinueto
updatetheemployerasthesituationdevelops.Anexampleofthis
isfoundinClause20.1oftheFIDICSilverBook.Clause20.1ofthe
FIDICRedandYellowBookscontainidenticalprovisions.
4.04.ConditionsPrecedenttoClaims
Requirementstogiveparticularsmayactasconditionsprecedentto
theentitlementtopursuetheclaim.Insuchcases,ifthenoticeor
particularsrequiredarenotprovidedwithinacertaintimeperiodthe

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claimisbarred.Thequestionwhetherarequirementtogivenotice
ofaclaimorparticularsinrelationtotheclaimisacondition
precedentisoneofthetrueconstructionoftheagreement.Some
areunambiguous.Forexample,asstatedabove,theFIDICSilver
Bookrequiresacontractortogivenoticewithintwentyeightdaysof
aneventorcircumstancewhichmaygiverisetoaclaim.Ifitfails
todosoitlosestherighttoclaimtimeand/orcost,andthe
employerhasnoliability
page"87" inthatrespect.Clause20.1
oftheFIDICRedandYellowBookscontainidenticalprovisions.A
lessblackandwhiteapproachistobefoundinclauses53(1)&(4)
oftheICED&C.There,ifacontractorfailstonotifytheemployerin
writingofanyclaimwithintwentyeightdays,itshallonlybeentitled
topaymenttotheextentthattheEmployer'sRepresentativehas
notbeenpreventedfromorsubstantiallyprejudicedbysuchfailure
ininvestigatingthesaidclaim.
Dosuchclauseshavetobereasonable?UnderEnglishlawthereis
nogeneraloverarchingprincipleofreasonableness.Theonly
exceptiontothisiswhereonepartyiscontractingontheother's
standardtermsofbusiness.InthesecircumstancestheUnfair
ContractTermsAct1977(UCTA)subjectstothetestof
reasonablenessclauseswhichrestrictliabilityinrespectofbreach
(includingclauseswhichrequirethepartytomakeaclaimwithina
certaintimelimit).(6)HowevertheUCTAwillonlyapplyina
constructionscenariowherethecontractisoneparty'sstandard
form.Itisoftenthecaseonmajorprojectsthatthetermsand
conditionsputforwardbytheemployeraspartofitstenderpackage
arenegotiatedbetweentheparties.Similarly,thestandardforms
suchasFIDIC,ICEandAAAdonotconstituteoneortheother
party'sstandardtermsofbusiness.Accordingly,onmajorprojects
UCTAhaslimitedapplicationtoconditionsprecedenttopursuing
claims.
Civillawcodesmayalsoimposeageneralrequirementof
reasonablenessoncontractualterms.Theirapplicationcanvary
greatlyfromjurisdictiontojurisdiction.Examplesofcivillawcodes
thatcontainsucharequirementinclude,forexample,theUAEand
EuropeanjurisdictionssuchasGermanyandItaly.InItalythe
reasonablenessrequirementcanresultinanoticeprovisionbeing
heldnullandvoidifitisdeemedunreasonable.Thatquestionin
turndependson,forexample,theactuallengthoftimefornotice
underthetermcomparedwiththeactivitytobecarriedoutbythe
defaultingparty.
4.05.RightstoAccesstoInformation
Acriticalissueforanemployerisaccesstoaccurate
contemporaneousinformationaboutthestatusoftheproject.If
lendersareinvolvedtherewillgenerallybearequirementforregular
progressreports.Theremayinadditionbeobligationstonotify
insurersinrespectofcertainevents.
Therearevariousdifferentsourcesofinformationaddressedin
constructioncontracts,forexample:
Statusreportstobeprovidedonamonthlyorotherspecified
periodicbasis.
Sitemeetingsagaintotakeplaceonaspecifiedperiodicbasis,
generallyweekly(acontractualclausemayspecifywhoisto
attendsuchmeetings).
Provisionsforshareddatabases,forexampleinrelationtodesign
information.
page"88"
Requirementsforupdatedprogrammestobeprovidedona
regularbasis.Forexample,theFIDICsilverbookrequiresrevised
programmestobesubmittedwherethepreviousprogrammeis
inconsistentwiththeactualprogressofthecontractor's
obligations.(7)
ThereisagoodgeneralclauseintheFIDICSilverBook,(8)which
specifiesthenatureofinformationrequiredtobeprovided:
adetaileddescriptionofprogress
photographs
thestageinmanufactureofmainitemsofplant
thecontractor'spersonnelandequipmentonsite
qualityassurancedocumentsandtestcertificates
alistofvariationsandnoticesofclaim
safetystatisticsandhazardousenvironmentalrelatedincidents
and
acomparisonofactualagainstplannedprogressandof
events/circumstanceswhichmayjeopardisecompletionandthe
measureswhichhavebeentakentoovercomedelay.(9)
Clause7.3oftheSilverBookalsopermitstheemployertohavefull
accesstothesitetobeabletoinspect/testandtocheckprogress
ofmanufactureofplantandmaterials.TheFIDICRedandYellow
Bookscontainidenticalprovisions.(10)
4.06.AuditRights
Rightstoauditcostswhichhavebeenincurredorwhichwillbe
incurredasaresultofordersorcontractsplacedwithsuppliers
and/orsubcontractorsarecriticalinanycostplusortargetcost

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contract.Invariably,thecontractor'sentitlementtorecovercosts
underthesecontractswillbesubjecttoatestofsuchcostsbeing
reasonablyandproperlyincurred(seeChapter2).Theremay,in
addition,bethenegativeconditionthatthecostshouldnotbe
incurredasaresultofawrongfulactoromissionbythecontractor.
Theemployerwillwanttohaveaccesstodetailedrecordsand
accounts,includinginvoices,orders,dayworkrecords,recordsof
paymentandchargesmade.Itisimportantthatthecontractshould
includerequirementsforrecordstoberetained
page"89" anda
contractorshouldinturnimposeidenticalrequirementsonits
subcontractorstoensurethatitcomplieswithitsobligationsunder
itscontract.Insomecircumstances,contractsprovideforan
independentaudit.Thisisincreasinglycommoninpartnering
arrangements,wherethephilosophyofcooperationandtheethos
ofgoodwillandmutualtrustareseentobeunderminedwherethe
employerretainstherighttoconducttheaudititself.Insuch
circumstances,thecostsoftheindependentauditaregenerally
sharedbetweentheparties.
4.07.KeepWorkingProvisions
Constructioncontractsmayincludeanexpressrequirementforthe
partiestocontinuetoperformtheirobligationsunderthecontract
despitetheexistenceofadispute.Thecontractmayexpresslysay
thatthereisnorighttosuspendworkortoterminatethecontract.
Theserightsmay,however,beinconsistentwithlocallaw.For
example,underEnglishlawthereisastatutoryrighttosuspend
workfornonpaymentwhichcannotbeexcludedbycontract.(11)
Thereisasimilarrightin,forexample,NewYorkstate.(12)UAElaw
andDutchlawalsoprovideforsucharight,althoughitcanbe
derogatedfrombycontract.Whatisthepositioniftheparty
suspendingperformanceisalsoindefault?Theanswerdiffers
dependingonthejurisdiction.Forexample,inNewYork,the
relevantprovisionsconferringsucharightonlyapplytoundisputed
debts.IntheUAE,breachbythecontractorwillnotaffectitsright
tosuspensionintheeventofnonpayment.Inthecontextof
variations,theemployermayhavetherighttorequireacontractor
toproceedwiththevariationdespitethetimeandcost
consequencesnothavingbeenagreedinadvance.Onafixedprice
lumpsumcontract,thiswillputthecontractoratasevere
disadvantageincircumstanceswheretheemployerdoesnotaccept
thattheworkinquestionisavariationatallbutisinsteadwithinthe
originalscopeofworkandthereforethatthereisnoentitlementto
additionalpayment.Arelaxationtothispositionthatissometimes
negotiatedisthattheemployershallpayaproportionofthe
contractor'scostsactuallyincurredincarryingoutthevariation
pendingtheresolutionofthedispute.
Onacostpluscontract,suchissuesarelesscontroversialasthe
contractorisentitledtorecoveryofitsreasonablyandproperly
incurredcostsinanyevent.Theissuebecomesmorecomplex,
however,wherethecontractincludestargetsandadjustmentsto
thosetargetsarerequiredwherevariationsareordered.
Whereadisputedoesarise,ideallytherewillbeanappropriate
disputeresolutionmechanismwhichwillprovideforearlyresolution
ofsuchdisputes(suchtechniquesareaddressedinChapter3
above).
page"90"
4.08.PartneringandAlliancing
BecomingincreasinglypopularinUS,UKandAustraliaistheuseof
partneringandalliancingtechniques.(13)Theseareaimedat
establishingjointworkingandcooperationwithvaryingdegreesof
formality.Atoneendofthespectrumisanonbindingpartnering
charter,wherebypartiesagreetoabidebyasetofbehavioural
principleswiththeintentthattheyshallconducttheirrelationshipin
aspiritofmutualtrustandcooperationandshallstrivetoavoid
disputesbyearlycommunicationofissuesandsharedproblem
solving.IntheUKitiscommonforsuchpartneringcharterstobe
drawnupfollowingafacilitatedworkshop,inorderthattheparties'
keyobjectivescanbejointlyagreed.Apartneringboardor
committeemaybesetuptoaddressinthefirstinstanceproblems
thatcannotberesolvedatprojectlevel.Ifdisputescannotbe
resolved,thepartieswouldthenproceedthroughtheformaldispute
resolutionprocedures.
Standardformcontractualdocumentationisavailabletointroduce
partneringprovisionsonindividualprojects.(14)Partieshavethe
optionofenteringintoasinglecontractincorporatingallterms
relevanttopartneringaswellasthedeliveryoftheprojector,
alternatively,tousetwocontracts,anagreementembodyingthe
partneringelementsthatsitsalongsidethetraditionalworks
contract.Inthesecircumstances,itisusualtoamendtheworks
contracttoreflectthetermsofthepartneringagreement.There
wouldthenbetheoption,ifthepartneringagreementweretobe
terminated,forthepartiestoreverttothetraditionalworkscontract.
Itiscommonforsucharrangementstoinclude:
thecreationofanintegratedprojectteam,identifyingthebest
personforeachrolefromthepartners.Mantomanmarkingis

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avoidedtoreducecosts
procedurestobreakdownformalhierarchiestocreateaflatter
structurefordirectcommunication,forexample,between
subcontractorsandtheemployeranditsconsultants
thecreationofacoregrouporteamcomprisingrepresentatives
fromall,orkey,membersofthepartneringarrangementsto
whomkeyissuesarereferred,including,forexample,the
approvalofavariationtotheprojectandconsequencesinterms
oftime/costandanyimpactonperformancecriteria
thecalculationofprojectcostsandanypainshare/gainshare
payments
theexclusionandadmissionofpartners
disputeresolutionand
proceduresforinformationsharingandjointworking,including,for
example,shareddatabases,secondmentsandarrangementsfor
officesharing.
page"91"
Anexampleofmodellingsoftwarewhichhasbeendevelopedto
facilitatecollaborativeworkingbetweenprofessionalconsultants
andcontractorsinvolvedindesignandconstructiononbothprivate
andpublicsectorprojectsisBuildingInformationModelling(BIM).
TherearedifferentlevelsofBIM,eachrepresentingwhatis
sometimesdescribedasthematurityofthemodel.Theseare:
0:UnmanagedComputerAssistedDesignusuallyin2Dformat,
withpaper(orelectronicpapere.g.,pdffiles)asthemaindata
exchangemechanism.
1:ManagedCADin2or3Dformatwithacollaborationtool
(extranet)providingacommondataenvironment,possiblyalso
usingsomestandarddatastructuresandformats.
2:Managed3DenvironmentheldinseparatedisciplineBIM
modelsandtoolswithattacheddata.Dataexchangeismainlyon
thebasisofproprietaryexchangeformats.Thisapproachmay
include4Dprogrammedataand5Dcostdata.
3:Fullyopenprocesswithasingleprojectmodelanddata
integrationandexchangeusingIndustryFoundationClasses
standardsandprocessismanagedbyacollaborativemodel
server.(15)
ItisunderstoodthatBIMlevel3isstillincourseofdevelopment.(16)
BIMsoftwareandservicesarewelldevelopedinNorthAmericaand
WesternEurope,withAsiaPacificquicklycatchingup.However
LatinAmerica,theMiddleEast/NorthAfricaandAfricaarenot
expectedtoadoptBIMuntilaround2020.(17)IntheUK,BIMhas
largelybeendrivenbygovernmentpolicy,anditistobe
implementedingovernmentprojectsaboveacertainsizeby2016.
(18)
Thereisresearchtosuggestthatstrongpublicsectorsupport
leadstoamorerobustBIMstructure.(19)UKengagementwiththe
BIMprocessiscurrentlytakingplaceacrossawidespectrumof
sectors,includingnuclear,theenvironmentandhighways,albeit
thatthisispredominantlyinthepublicsector.(20)
TheformalcontractualarrangementsforBIMenabledprojects'will
be:
ABIMprotocol,(21)whichwilldescribehowtheBIMwillbe
implemented,e.g.,thestructureofthemodelandhowdataisto
bedepositedbytheprojectteammembers.
page"92"
TheunderlyingcontractwhichshouldincorporatetheBIM
protocolasacontractdocumentand,wherenecessary,dealwith
anyotherlegalissues.
BIMenabledprojectswilladministeredbyaBIMinformation
manager,arolewhichmaybetakenonbyanexistingconsultantor
aspecificallyappointedspecialistconsultant.
ProponentsofBIMpointtothepotentialforimproveddesignwith
bettercoordinatedconstructiondocuments,whichremainupto
datethroughouttheprojectandthelifecycleofthebuilding.Itis
saidthatthiswillinturnreducecosts.Theseperceivedbenefits
alignwiththoseassociatedwithpartneringandalliancingon
constructionprojects.However,BIMdoesraiseanumberof
questions,including:
Intellectualproperty:e.g.,whowillowntherightsinthemodel?
Liability:e.g.,whoisresponsibleforerrorsinthemodel?
Insurance:e.g.,areexistinginsuranceprovisionsappropriatefor
BIMprojectsorarenewproductsrequired?
Contractualissues:e.g.,howtoensurethateachmemberofthe
professionalteamwillcomplywiththerequirementsoftheBIM
informationmanager?Further,astheprocessencompassesthe
storageandsharingofinformationduringtheentirelifecycleof
thebuildingincludingoperationandmaintenancethroughto
demolition,thispotentiallyimpactsonwhatareotherwiselooked
uponastraditionalmilestonesinconstruction,suchasthe
conceptofpracticalcompletionintheUK.(22)
Confidentiality:e.g.,wherewillcommerciallysensitivedatabe
held?
Procurement:e.g.,howwillpublictenderingencompassthe

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needforaBIMenabledteam?
Alliancingissaidtorepresentamorehardheadedapproachto
partneringbecause,aswellasthebehaviouralandorganisational
issuesaddressedabove,itinvolvesprofitsharingandoftenrisk
sharingschemes.Adistinctivefeatureofanallianceisan
incentivisedcontractwhichiscentraltothepartneringrelationship,
withsanctionsapplyingforfailuretoachievekeyperformance
indicatorsandtargets.Theschemewillusuallylinktherewardsof
allalliancememberstotheoveralloutcomeoftheprojectandnot
theirindividualperformance.Thefundamentalaimistoencourage
cooperationandreducethepotentialforadversarialconflict.With
incentivisationarrangementslinkedtotargets,thesametensionsin
relationtotheawardofvariationsasariseinfixedpricelumpsum
ortargetcostcontractswillapply.Itisthereforegenerallythecase
thattheallianceboardhastherighttodecidewhetheravariation
shouldbeadmittedtotheproject,andtheconsequencesuponthe
risksharingarrangements.
SurveyscarriedoutinboththeUSandtheUKreportsignificant
costsavingsasaresultofadoptingpartneringarrangements.For
instance,ananalysisofproject
page"93" performancefor
partneringprojectsintheUSArmyCorpsofEngineerscarriedoutin
December1992byDavidCharlesWesternconcludedthatthereisa
9%improvementincostand8%improvementintimeonpartnered
projects.Again,estimatespublishedintheUKbytheReading
ConstructionForumindicatethatcostsavingsof2to10%are
typicallyachievedwithprojectspecificpartneringandsavingsof
30%arerealisticovertimewithlongtermorstrategicpartnering.(23)
Thebenefitstobegainedwillturnlargelyonthetypeofpartnering
arrangementsemployedandthedegreeofpartyintegrationandrisk
sharing.Asthegreatestopportunityforinfluencingoutturncosts
andqualityoftheprojectarisesattheearlyplanninganddesign
phases,generallyspeakingitisconsideredtobemosteffectiveto
adoptpartneringtechniquesfromtheoutset.
Itisclearfromthediscussionofpartneringarrangementsabove
thattheyaredesignedtoavoidthetraditionalclaimsorientated
adversarialapproachadoptedontraditionalconstructionprojects.It
iscommon,forexample,tosuspendtherequirementtogivenotice
ofclaimsandtosubmitfullanddetailedparticularstosupporta
claimwithinagiventimeframeduringthecurrencyofthepartnering
arrangements.Avoidingthetimeandcostsassociatedwiththe
preparationandreviewofclaimsmaterialsisseenasoneofthe
principalbenefitsofadoptingpartneringarrangements.
Partiesneedtoconsider,however,whatwillhappenifthepartnering
arrangementfaltersandthepartiesresorttoclaimspursuanttothe
termsoftheworkscontract.Ideally,therewillbeexpressprovision
forsuchcircumstancesandtheconsequencesofterminationofthe
partneringarrangements.Intheabsenceofsuchexpressprovision
anemployermayarguethatthecontractorisoutoftimetopursue
claimswhichariseinrespectofcircumstancesduringanearlypart
oftheprojectwhenthepartneringarrangementswereinplace.In
response,acontractormaybeabletodemonstratethatthe
employerhaswaiveditsrighttoreceivesuchnoticesand
particularsonthegroundsthatthepartieswerevoluntarilyfollowing
thepartneringarrangements.Itispossiblethatthearrangements
maystopshortofaformalvariationofthecontract,dependingon
themannerinwhichtheyaredocumented.Forexample,ifthereis
merelyapartneringcharterwhichisexpressedtobenonbinding,an
argumentthattherehasbeenaformalvariationofthecontractmay
notsucceed.Instead,however,thecontractormaybeabletoresort
toanargumentbasedonwaiverbyestoppel.
Toavoidargumentsoverwaiverorestoppelpartiesmaywishto
providethat,ifthepartneringarrangementsareterminated,the
contractormaythenhaveaspecifiedperiodoftimewhichis,inall
thecircumstances,areasonableperiod,toprovideparticularsof
anyclaimsinrelationtoeventswhichhavetakenplaceduringthe
currencyofthepartneringarrangements.Wherethepartnering
agreementincludesrisksharingprovisions,increasedcostsand
delayssustainedduringthecurrencyofthepartneringagreement
mayberequiredtobetakenintoaccountwhencalculatinganexit
feeorpaymentforreleasefromthepartneringarrangements.
page"94"
4.09.EffectiveContractManagement
Effectivecontractmanagementmayassistinminimisingdisputes
thatdoproceedtoformaldisputeresolution.
[A].MaintenanceofRecordsandDocumentation
Bothpartieswillbeconcernedtotrackprogressanddelayonthe
projectandmonitorincreasedcosts.Inanyformaldispute,
contemporaneouscorrespondenceanddocumentationwillbecritical
toestablishingentitlementtoanyclaimsbroughtbythecontractor
andthelegitimacyofdefencesraisedbytheemployer.Documents
willneedtobestoredeitherinhardcopyor,increasingly,
electronically,toensureapartyisinthebestpossiblepositionto
proceedtoformaldisputeresolution.Obviouskeydocuments(for
eitherparty)are:
themostrecentversionofthecontractandanyamendmentsto

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thecontractagreedbetweentheparties
progressdocumentssuchasprogrammes,methodstatements,
informationreleaseschedules
onsiterecordsforexamplesitediaries,equipmentlists,
timesheets,dayworksheets,siteinstructions
inspection/investigationreportsinrelationtoincidentsorpotential
defects
maintenancerecords
inspectionreportsofequipment/plantbeingverifiedforservice
correspondenceandinformationexchangedbetweentheparties,
includingminutesofmeetings,whichwillideallybesignedto
reflectagreementtothetermsofthemeetings
internalcorrespondenceand
variationordersandinstructions.
Inotherwords,anydocumentofpotentialrelevancetothecontract,
itsinterpretation,performanceandclaims.Anumberofissues
shouldbeconsideredinthecontextofcontemporaneousdocument
managementduringthelifeoftheproject.Thiswillassistnotonlyin
managingclaimsduringtheproject,butincompilingthenecessary
documentationforuseinanylaterdispute.
Thoughtneedstobegiventoadocumentretentionpolicy.Itmay
bethateventstakingplaceatthebeginningofthecontractwillhave
relevancedirectlyorindirectlytofinalclaims.Onamajorproject
whichwilllastforanumberofyears,standardcorporatepolicymay
resultinthedestructionofmaterialsrelevanttotheearlystagesof
theprojectafteraspecifiedperiodoftime.Itissensiblewherea
projectisongoingandthereisthepossibilityofdisputesarisingto
preservealldocumentsinrelationtotheproject.Itisessentialto
liaisecloselywiththecompany'sITdepartmentinordertoensure
thatemailsarebackedupandretained.
Thereareanumberofwaysinwhichdocumentationcanbestored
andmuchwilldependuponthenatureandcomplexityoftheproject,
numberofpartiesinvolvedand
page"95" costandlocationof
theproject.Increasingly,electronicfilingtechniquesareusedandit
issensibletoprovideforuniquedocumentidentificationnumbers.
Scanningmaybeused,orstorageofinformationondatabasesor
intranets.
Careshouldbetakenwhenselectinginformationtobeincludedina
shareddatabase,asitmaybeinappropriateforsomeinternal
communicationsorcommerciallysensitiveinformationtobe
disclosedtotheotherpartytothecontract.
Fromtheperspectiveofmanagingdisputesitisveryhelpfulto
includeaspartofthedataentryprocess,ameansoftaggingkey
issuesforlatersearchandretrievalofthedocuments.Thisrequires
considerablethoughtinadvanceofsettingupanysuchdatabaseas
tothecomprehensivelistofissuesthatshouldbeincludedinorder
toachieveconsistencyindataentry.Issuescan,however,laterbe
addedasandwhentheyarise.
Bothpartiesneedtokeepinmindthenecessitytogainaccessto
documentationtoassisttheminpreparationforadispute.
Considerationshouldbegiventosecurityandthecontrolofaccess
toconfidentialdocuments.Itmaybepossibletograntwideraccess
inreadonlyformattoensurethatthoseaccessingthedocuments
arenotabletoamendorchangethedocumentsinanyway.
Particularlywheretheprojectsiteisremote,orsubcontractorsare
inremotelocations(andifdocumentsaregeneratedinhardcopy),
thereisariskoffailuretocollateandretainallrelevantdocuments.
Particularriskariseswheretheprojectitsnearitsendpointandthe
partiesareabouttodemobilise.Considerationneedstobegivento
requestingcopiesofkeydocumentsfromsubcontractorstoavoid
theneedtorequestthematalaterstage.
Greatcareneedstobetakeninrelationtoemails,whichencourage
amoreinformalstyleofcommunicationandmaybedifficultto
control.Theriskisthatsuchcommunicationsmayberequiredtobe
disclosedinlaterlitigationorarbitration.Verybroadrulesof
discovery (24)applyinAngloAmericansystemsofCourtlitigation,
requiringtheproductionofallcategoriesofdocumentswhichare
relevanttotheissuesindisputewhicharewithinthecontrolof
eitheroftheparties.Protectionisaffordedinthesesystemsto
legallyprivilegeddocumentsbutthereisnoautomaticprotectionfor
documentsmerelybecausetheyareconfidentialorinternal.
Informalemailexchangesataprojectlevelorfarmoreformal
documentssuchasboardminutesareunlikelytobeprivilegedand
canbekeytotheoutcomeofdisputes.
Civillawsystemshaveafarmorerestrictedapproachtodisclosure,
forexampleinFranceandHollandpartiesarenotgenerallyrequired
todisclosecategoriesofdocumentsotherthanthosetheywishto
presenttosupporttheircase.Thetrendininternationalarbitrationis
towardsamorelimiteddisclosurethancommonlawlitigation(see
thediscussioninChapter11below).
page"96"
[B].TimeLimitsUndertheContract
Contractorsinparticularneedtobeawareoftimeperiodssetoutin

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thecontract.Asnotedabovetheremaybenoticerequirements,
whichoperateasconditionsprecedenttoclaims.Generallyitis
sensibleforthepartiesto:
tracknoticeperiods
tracktheperformanceofobligationswithinanagreedtimelimit
trackpaymentwithinagreedtimelimitsand
trackclaimstimelimits/requirementsfortheprovisionof
particulars.
Thoughtandconsiderationneedstobegiventoeventswhichmay
ultimatelygivecausefordelayoradditionalcosts.Theabove
provisionscanresultinaconstantstreamofcorrespondencefrom
contractorswiththeaimoftryingtobestprotecttheirposition.This
canresultinadditionalworkforthecontractadministratorswithin
boththeemployerandthecontractor.Converselyearlyattention
mayresultinsuccessfulmitigationofcostsordelay.
Itissensibleforthecontractcorrespondencetobewrittenwithan
eyetothepossibilityoffutureformaldisputeresolution.Oral
communicationsorinstructionsshouldbeconfirmedinwriting,for
example.Warninglettersshouldbewrittenwhereanactionor
omissionisproposedbytheotherpartytothecontractwhichmay
beprejudicialorresultinbreachofcontract.Issuestoaddressin
relationtocontractcorrespondenceinclude:
Doesthewriterhaveauthoritytospeakonbehalfofthe
company?
Istheletteraddressedtothecorrectparty/representativeofthe
party?
Hasthelettergonethroughanyinternalreviewprocedures?
Isthelanguageappropriate(businesslike,factual,firm)?
Doestheletteravoidunnecessaryconcessions?
Doestheletterexplicitlypreserverightswhereappropriate?
Isthecorrespondencesupportedwithfactsasopposedto
opinions?
Arethereclearreferencestocontractualprovisionsandpreceding
relevantcorrespondenceordocumentation?
Careshouldbetakentoavoidthewaiverofrights.Ofcourse,itis
notuncommoninlongtermprojectstomakeaccommodationswith
theotherpartyforfunctionalreasons.Careshouldbetaken,
however,toensurethatoneoffconcessionswillnotoperateto
waivecontractualrightsgenerally.Thefirststepistocheckthe
termsofthecontractforprovisionsinrelationtowaiver.Some
contractsspecificallyaddressthisissue,providingthatfailureto
pursuearightononeoccasionshouldnotbedeemedawaiverof
rightsforthefuture.Explicitreservationsofrightsin
correspondenceissensible,however.Itshouldnotbeassumedthat
merelystatingwithoutprejudiceonaletterwillbesufficient.
Thereisthefurtherpointthatundermostsophisticatedlegal
systemstheconductofthepartiesinimplementingtheagreement
canaffecttherightsandobligationsundertheagreementevenif
thereisnotanexpresswrittenvariation.Acquiescenceto
page
"97" conductinbreachofcontractoveranextendedperiodwhere
thereisrelianceonsuchacquiescence,forexample,mayleadtoa
partybeingestoppedfrompursuingtherelevantrightsinthefuture.
Itmaybesensiblefortheinhouselegalteamtodoregularcheck
upsoncontractcorrespondencetoaddresssuchissues.

Clause8.3theYellowBookandRedBookcontainsimilar
provisions.
2
ModelformofGeneralConditionsforContractforusein
connectionwithhomeoroverseascontractsforthesupplyof
electrical,electronicormechanicalplantwitherection.
3
Clause18.3ENAAPowerPlantModelForm1996.
4
Clause16.
5
Clause63.5.
6
UnfairContractTermsAct1977,s.3(2)(a).Thetestof
reasonablenessforthepurposesofUCTAisthatthetermshall
havebeenafairandreasonableonetobeincludedhavingregardto
thecircumstanceswhichwereoroughtreasonablytohavebeen,
knowntoorinthecontemplationofthepartieswhenthecontract
wasmade.
7
Clause8.3forsimilarprovisionsinotherstandardformssee
FIDICRedBook(clause8.3),FIDICYellowBook(clause8.3)and
ENAAProcessPlantModelForm1992(clause18.2).However,
undersomestandardformsthecontractorisobligedtoproducea
revisedprogrammeonlyiftheemployerrequestsonee.g.,ENAA
PowerPlantModelForm1996(clause18.4)andICED&C(clause
14.4).
8
Clause4.21.
9
Inaddition,clause1.12FIDICSilverBookprovidestheemployer
withageneralrighttorequestinformationinordertoverify
contractualcompliance.
10
Forotherexamplesofprovisionsgivingtheemployerorhis
representativesrightsofaccesstotheworks,seetheENAA
ProcessPlantModelForm1992(clause23.8),ENAAPowerPlant

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ModelForm1996(clause23.8),ICED&C(clause37),AIAA201
1997GeneralConditionsoftheContractforConstruction(clause
3.16.1)andEEC(clause28.1).
11
Section111UKConstructionAct1996.
12
NewYorkStateGeneralBusinessLaw756(b).
13
Foradiscussiononpartneringandalliancingintheconstruction
industryincludingareviewofthehistoricaldevelopmentof
partnering,structuresforpartneringandalliancingandtypical
contractualarrangements,seeSallyRoeandJaneJenkins,
PartneringandAlliancinginConstructionProjects(Sweet&Maxwell
2003).
14
Forexample,seeTheNECPartneringOption(ThomasTelford
2001)andPPC2000TheACAStandardFormofContractfor
ProjectPartnering(Amended2003)(Assn.ConsultantArchitects
2003).
15
GettingtheMostoutofBIMAGuideforClients,DavisLangdon,
AECOM.
16
Ibid.,at24.
17
GrowththroughBIMRichardGSaxonCBE(April2013).
18
GovernmentConstructionStrategy,infran.22.
19
ComparativeRolesofMajorStakeholdersfortheImplementation
ofBIMinVariousCountries,DrAndy.D.Wong,Prof.FrancisK.W.
Wong,DrAbidNadeem.
20
SeetheBIMTaskGroupatwww.bimtaskgroup.org(accessed
10Sep.2013).
21
E.g.,theConstructionIndustryCouncilhaspublishedits
BuildingInformationModel(BIM)Protocol(February2013).Someof
thelargerbuildingcontractorsareproducingtheseprotocolsandit
isthoughtthatindividualUKgovernmentdepartmentsarealsolikely
topublishtheirownprotocolsinduecourse.
22
GovernmentConstructionStrategy(May2011)recommendsthat
thosedesigningandconstructingbuildingsshoulddemonstratethat
thebuildingisoperatingattherequiredperformancelevelfora
periodofupto5yearsaftercompletion.
23
Bennett&Jeyes,TrustingtheTeam,supran.4,Ch.3.
24
SeethediscussioninCh.11.

Chapter5:DisputeBoards
5.01.Introduction
InChapter3wediscussedtheuseofdisputeboardsasameansof
disputeresolution,consideringtheiradvantagesanddisadvantages.
Thischapterlooksattypicalproceduresforareferencebeforea
disputeboard,guidingthereaderthroughthevariousstagesand
identifyingtheissuesthatfrequentlyariseintheprocess.Aftera
generaldiscussionofsuchprocedures,thereisabriefcommentary
onthemostcommoninstitutionalruleswithacomparisonofthe
keyfeaturesprovidedinatable.Thechapterthendiscusseshowto
approachareferencebeforeadisputereviewboardtactically,
includingthemannerofpreparationofsubmissionsand
representationatthehearing.Finally,theeffectofa
recommendationordecision,enforcementandchallengeare
considered.

Source
Chapter5:Dispute
BoardsinJaneJenkins
,International
ConstructionArbitration
Law(SecondEdition),
ArbitrationinContext
Series,Volume3
(JaneJenkinsKluwer
LawInternational2013)
pp.99118

5.02.CommencingtheReference
Theprocedureforcommencingareferraltothedisputeboardwill
dependonwhethertheprojecthasastandingdisputeboardinplace
orthedisputeboardmustbeconstitutedonanadhocbasisonce
thedisputehasarisen.
Wherethecontractprovidesforanadhocdisputeboardtobe
constituted,thefirststageintheprocessistogivenoticeof
intentiontotheotherpartytoreferadisputetothedisputeboard,
andthereaftertoappointthedisputeboardmembers.Typicallythe
constructioncontractwillprovidethatthedisputeboardmemberis
tobeagreedbetweentheparties(wherethereisasingledispute
boardmember)orthateachpartyshallnominateonememberwith
thethirdpartybeingappointed(a)inconsultationwiththeparty
nominatedmembersor(b)byaninstitution(1)(wherethereisa
page"99" threememberdisputeboard).Thenoticeofintention
toreferistypicallyabriefdocument(twoorthreepages)setting
out:
thenatureandabriefdescriptionofthedispute
thenamesandaddressesofthepartiesinvolvedandtheir
representatives,ifapplicableand
thenatureofthereliefsought.
Thenoticeshouldcontainsufficientinformationtoenablethe
receivingparty,potentialboardmembersandtheinstitutionwhowill
appointthedisputeboard,ifagreementcannotbereachedas
betweentheparties,toassessthesuitabilityofparticular
individualsforappointmenttothedisputeboard.
Wherethedisputeboardistobeselectedfromastandingpanelof,

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say,fiveexperts,withtwoexpertssittingwithachairmanto
determineaparticulardispute,thenoticeofintentiontorefera
disputefordeterminationshouldprovidesufficientinformationto
enablethechairmanofthedisputeboardpaneltoselectthemost
suitableexpertsfromthestandingpaneltohearthereference.(Of
course,partiesmayhaveagreedthatexpertsshouldbeselectedin
strictrotation,inwhichcasetherewouldbenodiscretionregarding
theselectionofthepanelmembersasandwhenadisputearises).
Wherethemembersofthedisputeboardarefullyconstitutedfrom
theoutset,therulesmayrequirethatthereferralnoticeincludesall
information,includingsupportingdocumentationuponwhichthe
referringpartywishestorelyintheproceedings.Whereadispute
boardistobeconstitutedafterapartyhasissuedanoticeof
intentiontoreferadisputefordetermination,thisinformationmay
berequiredtobedeliveredwithinaspecifiednumberofdays
followingtheconstitutionofthedisputeboard.Alternatively,the
rulesmayrequirethepartiestoexchangewrittensubmissions
simultaneouslyratherthanprovidingforasequentialprocess.
Dependingontheoveralltimeframeforthereferenceitiscommon
toseeaperiodofuptotwentyeightdaysforthesubmissionof
responsestotheotherparty'ssubmissions.
5.03.ThePowersoftheDisputeBoard
Atypicalfeatureofadisputeboardprocessisthatthedispute
boardmembersaregivenfullpowertotaketheinitiativein
ascertainingthefactsandthelaw.Inparticular,thedisputeboard
mayhavetheexpresspowerto:
requestclarificationoradditionalinformationfromeitherorbothof
theparties
makesuchsitevisitsandinspectionsasitconsidersappropriate
convenemeetingsuponreasonablenoticetothepartiesatwhich
bothpartiesshallbeentitledtobepresent
appointitsownadvisorstoadviseonmattersoflegal
interpretationorexpertiseoutsidetheareaofexpertiseofeachof
themembersonwhichthepartiesarenotagreed
page"100"
openup,reviewandreviseanydecision,approval,
recommendationordeterminationmade,noticeorcertificate
givenbytheemployerand/ortheemployer'sengineeror
representativeand
makeuseofthespecialistknowledgeofeachofthemembers.
Savewheretheagreedproceduralrulesspecifyotherwise,the
disputeboardwillberequiredtofollowanymethodologyand
instructionsprescribedbytheparties,whetherintheiragreementor
thetermsofreferenceofaspecificdispute.Accordingly,ifthey
haveagreedthatcertainproceduresaretoapply(e.g.,the
exchangeofdocuments,theholdingofahearing)thedisputeboard
willberequiredtocomplywithsuchprocedures.Inpractice,dispute
boardstendtobesensitivetotakingstepswhichmayresultin
additionalcost,whichwillbemetbytheparties,withouttheprior
consentoftheparties.
5.04.DotheRulesofNaturalJusticeApplytoDispute
ResolutionBoards?
Iftheagreementissilentonproceduralissues,forexample,
whetherahearingshouldbeheld,willrulesofnaturaljustice
(meaningdueprocessoflaw)beimportedintotheprocedure?
Asofwriting,theauthorsarenotawareofanycaselawonthis
issuespecifictodisputeboardproceedings.Inthecontextofexpert
determinations,theEnglishcourtshavesaid:
Thereisnorequirementfortherulesofnaturaljustice
ordueprocesstobefollowedinanexpert
determinationinorderforthatdeterminationtobe
validandbindingbetweentheparties.(2)
Likewise,theEnglishcourtshaverecognisedthatanadjudicator,
decidingdisputeswithinthetwentyeightdaytimetableprovidedfor
intheUKConstructionAct1996(asamended),maybepermitted
certaindeviationsfromtherulesofnaturaljusticethatwouldbe
expectedincourtorarbitralproceedings:
onehastorecognisethattheadjudicatorisworking
underpressureoftimeandcircumstanceswhich
makeitextremelydifficulttocomplywiththerulesof
naturaljusticeinthemannerofacourtoranarbitrator.
Repugnantasitmaybetoone'sapproachtojudicial
decisionmaking,Ithinkthatthesystemcreatedby
theActcanonlyworkinpracticeifsomebreachesof
therulesofnaturaljusticewhichhaveno
demonstrableconsequencearedisregarded.(3)
page"101"
Inordertoavoidsuchsituationsarising,partiesmaywishtoinclude
morespecificdraftinginbespokeproceduresforreferencesbefore
disputeboardstoproducespecificminimumsafeguardswhicha
courtmaybeslowtoimport.Forexample,theymaywishtoprovide
thatthedisputeboardshallconveneameetingattherequestof
eitherpartytogivethepartiestheopportunitytomakeoral

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submissionsbeforethedisputeboardreachesitsdecision,orthat
allcommunicationswithonepartymustbecopiedtotheotherat
thetimeofsending.
5.05.InstitutionalRules
Anumberofinstitutionshaveproducedcontractualprovisions
addressingdisputeboardsforinclusioninconstructioncontracts,
togetherwithproformaagreements(tobeenteredintobetweenthe
disputeboardmembersandcontractingparties),proceduralrules
andcodesofconduct.
Bywayofillustrationselectedexamplesarenowaddressed.(4)A
comparisonispresentedintabularformbelow.
[A].WorldBankDisputeReviewBoards
Theuseofdisputeboards,initiallyontunnellingprojectsand
eventuallyextendingtootherheavycivilengineeringworksand
buildingconstructionprojects,hadbeenwidespreadfordecadesin
theUSdomesticconstructionmarketandwasconsideredhighly
successful.Asaresult,in1994,theWorldBankbeganconsultation
withvariousinterestedparties,includingFIDIC,ontheuseof
disputereviewboardsonWorldBankfundedinternational
constructioncontracts.In1995,theBankintroducedthe
requirementfordisputereviewboardsinarevisededitionofits
StandardBiddingDocumentsProcurementofWorks(SBDW).(5)
ForcontractsvaluedatUSD50mandabove,SBDW(1995
revision)requiredconstitutionofadisputereviewboardcomprising
threemembers.ForcontractsvaluedatlessthanUSD50m,the
partieshadtheoptionofusingeitherathreememberdisputereview
board,asinglepersonactingasadisputesreviewexpert(orDRE)
oranengineerindependentoftheemployer.
SBDW(1995revision)providedforthedisputereviewboardor
disputereviewexperttoissuerecommendations.A
recommendationwasfinalandbindingonlyifneitherpartyhad
givennoticetotheotherofitsintentiontocommencearbitration
withinfourteendaysofreceiptoftherecommendation.Ifnoticeof
arbitrationwasgivenwithinthisfourteendayperiod,thentheparties
werenotboundbythe
page"102" recommendation.Arevised
editionoftheSBDWwaspublishedinMay2000.SBDW(2000
revision)madesignificantchangestothedisputeresolution
mechanismonWorldBankfinancedprojects.Themandatory
requirementforathreememberdisputereviewboardoncontracts
abovetheUSD50mthresholdwasmaintained.However,theoption
ofusinganindependentengineertoresolvedisputesoncontracts
belowthisthresholdwasremoved.
Inaddition,SBDW(2000revision)providedthatthe
recommendationofadisputereviewboardordisputereviewexpert
wasbindingandmustbegiveneffecttounlessoruntilrevisedby
anarbitralaward.Ifneitherpartygavenoticeofitsintentionto
commencearbitrationwithinfourteendaysofreceiptofa
recommendation,itbecamefinalandbinding.
AfurthersignificantreviewoftheSBDWtookplaceinMay2005to
reflectthepublicationoftheMasterProcurementDocumentfor
ProcurementofWorks&User'sGuideapprovedbythemultilateral
developmentbanksandotherinternationalfinancialinstitutions.
Therelevantchangesintroducedinthe2005versionoftheSBDW
were:
thereplacementoftheoldRedBookwiththenewFIDIC
ConditionsofContractforConstructionMDBHarmonisedEdition
2005(thePinkBook),aharmonizedversionoftheRedBook
agreedbetweenFIDICandthemultilateraldevelopmentbanks
thereplacementofthetermsdisputereviewboardanddispute
reviewexpertwithdisputeboard(DB)and
theremovalofthemandatoryrequirementforathreemember
disputereviewboardforcontractsvaluedatUSD50mand
above.
TheSBDWisupdatedeveryfewyears,withthemostrecent
versionoftheSBDWpublishedinMarch2012.Theprovisions
relatingtodisputeboardsremainunchangedfromSBDW(2005
revision).Thedisputeresolutionclause,GeneralConditionsof
DisputeBoardAgreementandtheProcedureRulesforDBsareset
outinsectionVIIIofSBDW(2012revision).
[B].FIDICDisputeAdjudicationBoards
TheearlystandardformspublishedbyFIDICprovidedforthe
engineertoresolvedisputesinthefirstinstanceIntheeventeither
partywasdissatisfiedbytheengineer'sdecision,thedisputecould
thenproceedtoarbitration.However,asdiscussedinChapter2the
roleofanengineer(whowasremuneratedbytheemployer)acting
asimpartialadjudicatorofdisputesbetweentheemployerand
contractorbecameincreasinglyuntenable.Ontheonehand,
contractorsweredistrustfulofengineersremuneratedbythe
employerimpartiallydecidingdisputes.Ontheotherhand,
employersfromlessdevelopedcountriesweresimilarlysuspicious
ofengineerswhowereoftenfrom
page"103" thesamecountry

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(6)

asthecontractor. FIDICthereforedecidedtofollowtheleadofthe
WorldBankandadoptedtheuseofdisputeboards,whichFIDIC
calleddisputeadjudicationboards(DABs).
FIDICfirstintroducedtheconceptofadisputeboardintoits
contractswiththepublicationin1995ofitsconditionsofcontract
fordesignbuildandturnkeyprojects(theOrangeBook).FIDIC
alsoissuedsupplementstotheoldRedBookin1996andtheold
YellowBook(conditionsofcontractforelectricalandmechanical
works,1987edition)in1997,extendingtheuseofdisputeboardsto
thesecontracts.
The1999editionsoftheRedBook,YellowBookandSilverBook
(EPC/TurnkeyProjects)includedinterchangeablevariationsof
disputeboards:theRedBookprovidedforastandingboardtobe
appointedfromtheoutsetoftheworkstheYellowandSilverBooks
providedforadhocdisputeboardstobeconstitutedtwentyeight
daysafterapartygavenoticeofanintentiontoreferadisputeto
thedisputeboard.(7)
FIDICprovidedthatthefindingsofaDAB(termedadecision)are
bindingonthepartiesandaretobeimplementedforthwith,unless
oruntilthedecisionhasbeenrevisedbyanagreementbetweenthe
partiesorsubsequentarbitration.(8)
TheDABprovisionsunderFIDICarepartofthecontract'sdispute
resolutionclauseandareapplicablewheneveraFIDICcontractis
used,(9)unlessthepartieshaveamendedordeletedtheprovisions.
AsetofproceduralrulestogoverntheDABandthegeneral
conditionsofatripartiteagreementbetweentheemployer,
contractorandDABmembersisannexedtothecontracts.
[C].AmericanArbitrationAssociation(AAA)DisputeReview
Boards
TheAAApublisheditsDisputeReviewBoardGuideSpecifications
(DRBGuideSpecifications)on1December2000.TheDRBGuide
Specificationsprovidetherulesandguidelinesfordisputeboards.
TheAAAalsoissuedaThreePartyAgreement(amodelcontract
providingfortherightsanddutiesoftheemployer,contractorand
DRBmembers)andanAAArosterofexperiencedpersonsfrom
whichdisputeboardmemberscanbeselected.TheDRBGuide
Specificationsisastandalonedocument,whichcanbe
incorporatedintoanycontract.However,itisaguideandpartiesare
advisedtomakesureitfitsinwiththerestofthecontract,
especiallytheotherdisputeresolutionprovisions.
AccordingtotheAAA,itsDRBGuideSpecificationsdrawsonthe
latestDRBmodels,includingthoseusedontheBostonCentral
ArteryTunnelProject,thePuertoRicanTranUrbanoProjectandthe
GoldenGateBridgeRetrofitProjectinCalifornia.Whilsttheuseof
DRBhasbeenprevalentintheUSfordecades,themainusers
havegenerallybeenpartiesinvolvedinpublicsectorconstruction.
TheAAAhasdeveloped
page"104" theDRBGuide
Specificationstomakedisputeboardsmoreaccessibletothe
privateconstructionsector.
ApeculiarfeatureoftheDRBGuideSpecificationsistheheavy
involvementoftheAAA.TheAAAbelievesthatalthoughparties
canchoosetoadministertheprocessthemselves,theinvolvement
ofaninstitutionsuchasitselfenhancesthesenseofneutrality.The
AAA'sroleincludesprovidinglistsofpotentialdisputeboard
members,actingasaliaisonbetweendisputeboardandparties,
includingschedulingmeetingsandsitevisits,organisingpaymentof
thedisputeboardmembers'feesanddisbursementsand
communicatingminutesofmeetingsandthedisputeboard's
recommendationtotheparties.
AnotherfeatureoftheDRBGuideSpecifications,whichintending
usersshouldapproachwithcaution,istheprocessofnominating
membersforthedisputeboard.Ithasthepotentialtobecomea
drawnoutprocessifonepartyobjectstothenomineeoftheother.
Apartyisallowedfourteendaystonominateareplacementandthe
otherpartyhasafurtherfourteendaystorejectthereplacementand
isnotrequiredtodisclosethereasonfornonacceptance.This
processwillcontinue,untiltwomutuallyacceptablemembersare
named.(10)
[D].InternationalChamberofCommerce(ICC)DisputeBoards
TheICCpublisheditsdisputeboarddocumentsinSeptember2004.
ThedocumentscompriseasetofDisputeBoardClauses(ICCDB
Clauses),DisputeBoardRules(ICCDBRules)andaModelDispute
BoardMemberAgreement(DBMA).TheobjectiveoftheICC's
documentsistoprovidepartiesintendingtousedisputeboardswith
acomprehensiveandflexibleframework.AccordingtotheChairman
oftheICCTaskForcechargedwithdraftingtherules,(11)themain
factordifferentiatingtheICC'sapproachfromothersisthatthe
ICC'ssystemisintendedtobeadaptableandapplicableto
medium/longtermcontractsinanyindustryanywhereintheworld.
AsnotedinChapter3,partiesintendingtousetheICCdocuments
havethreeoptions.ThefirstistooptforaDisputeReviewBoard
(DRB).ADRBattemptsaconsensualapproachtoresolving
disputesandissuesarecommendation.Arecommendation
becomesfinalandbindingonlyifneitherpartyexpresses

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dissatisfactionwithitortherecommendationisupheldbyarbitration
orbythecourts.ThesecondoptionistheuseofaDispute
AdjudicationBoard(DAB),whichapproachesdisputeresolutionina
lessconsensualmanner.ADABissuesadecisionwhichmustbe
implementedforthwith.Thedecisionbecomesfinalifneitherparty
filesanoticeofdissatisfaction.Ifdissatisfactionisnotified,the
matterwillbefinallydecidedbyarbitrationorthroughthecourts.
ThethirdoptionisahybridofaDRBandDABcalledaCombined
DisputesBoard(CDB).TheCDBwillnormallyissuea
recommendationbutifeitherpartyrequestsadecisionandtheother
doesnotobject,theCDBwillissueadecision.
page"105"
AnotherdistinctfeatureoftheICCrulesisthepowergiventothe
ICCunderArticle21toreviewadecisionbyaDABorCDBbeforeit
iscommunicatedtotheparties.However,thispowerisexercisable
onlyifthepartieshaveexpresslyauthoriseditintherelevant
clause.
Inaddition,partiesareencouragedunderArticle17(3)toseekto
resolvethematteramicablyeventhoughdisputeboardproceedings
areongoing.
page"106"
5.06.ComparisonofrulesandproceduresforDispute
AdjudicationBoards/DisputeReviewBoards
WORLDBANK
Adhoc/Standing Standing:tobe
appointedby
thedatestated
inthecontract.

FIDIC
RedBook:
Standing:tobe
appointedby
datestatedin
Appendixto
Tenderorthe
ContractData,
asapplicable.

ICC
Standingunlessotherwise
agreed.Tobeestablished
attimeofenteringthe
contract.

AAA
Standing:It
couldtakeupto
eightyfour
days (13)from
datecontract
Thepartiesmustspecify enteredinto
whetherthedisputeboard beforetheboard
istobeaDRB,aDABor isinplace.
aCDB.

YellowBook
andSilver
Book:Tobe
appointedwithin
twentyeight
daysofnotice
ofintentionto
referdispute.(12)
Sizeofboard
Timelimits

Procedure
Exchangeof
statements
Righttohearing

Oneorthree
members
Decisiontobe
givenwithin
eightyfour
daysofreceipt
ofthe
referenceof
thedispute,
partiesmay
agreelonger
period.
Twentyeight
daystogive
noticeof
dissatisfaction
withthe
decisionand
intentionto
commence
arbitration
DBmay
conduct
hearingsand
request
exchangeof
statementsor
anyother
additional
informationas
theDBmay
requireforthe
purposeof
makinga
decision.

Oneorthree
members
Decisiontobe
givenwithin
eightyfourdays
ofreceiptofthe
referenceofthe
dispute,parties
mayagree
longerperiod.

Oneorthreemembers

Oneorthree
members
Recommendation/decision Recommendation
tobegivenwithinninety tobegivenwithin
daysofcommencement fourteendaysof
ofproceedings,parties
hearing,(14)
mayagreelongerperiod. partiesmay
agreetoextend
thisperiod.
page"107"

Twentyeight
daystogive
noticeof
dissatisfaction
withthe
decision.

Thirtydaystogivenotice
ofdissatisfactionwiththe
recommendationor
decision.

Fourteendaysto
givenoticeof
acceptanceor
rejectionofthe
recommendation

DABmay
conduct
hearingsand
request
exchangeof
statementsor
anyother
additional
informationas
theDABmay
requireforthe
purposeof
makinga
decision.

Ahearingshallbeheld
withinfifteendaysof
receiptofresponse,
unlessotherwiseagreed
bythepartiesandthe
disputeboard.

Ahearingisto
bescheduled
withinseven
daysofreceiptof
responsetothe
referralrequest
ortheresponse
tocounterclaim,
whicheveris
later.

Unlessotherwiseagreed
orDRB/DAB/CDBorders
otherwise,exchangeof
StatementofCaseand
response.

DABcanadopt DABcanadopt
aninquisitorial aninquisitorial
procedure.
procedure.

Thereareno

Thereisno

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Partiesmustappearin

Partiesareto
exchange
statementsof
case.Partiesare
encouragedto
exchangeany
otherdocuments,
evidenceor
exhibits,
althoughthe
DRBmaylimit
anyexchangeof
information.
page"108"
Partiesareto

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Jurisdiction

express
restrictionson
theuseof
lawyersat
hearingsbut
theDBhas
finalsayon
conductofthe
proceedings
andcanrefuse
audienceto
anypersons
otherthanthe
representatives
oftheparties.

express
mentiononthe
useoflawyers,
buttheDAB
hastherightto
refuse
admissionor
grantaudience
toanyoneother
thantheparties'
representatives.

personorthrough
authorised
representatives,butthey
maybeassistedby
advisors/lawyers.

haveauthorised
representativeat
allhearings.
Participationof
lawyersislimited
unlessotherwise
decidedbythe
DRB.

Resolutionof
disputes
formally
referredtoitby
eitherparty.

Resolutionof
disputes
formally
referredtoitby
eitherparty.

Resolutionofdisputes
formallyreferredtoitby
eitherparty.

Resolutionof
formaldisputes
referredtoitby
eitherparty.

Noprovision.

Noprovision.

Noprovision.(15)

Producea
reportafter
eachvisit.

Producea
reportafter
eachvisit.

Atmeetingsandsite
visitsDBistoreview
performanceofcontract,
provideinformal
assistancewithrespectto
anydisagreementand
produceawritten
summary.

Becomesfinal
ifnonoticeof
dissatisfaction
isgivenwithin
twentyeight
daysofreceipt

Becomesfinal
ifnonoticeof
dissatisfaction
isgivenwithin
twentyeight
daysofreceipt

Adecisionisbindingand
mustbegiveneffectto
unlessanduntilrevised
byarbitration.Ifneither
partyhasgivenanotice
ofdissatisfactionwithin

Resolutionofdisputeson
aninformalbasisprovided DRBmay
Partiesmay
Partiesmay
allpartiesagree.
facilitatethe
agreetoseek agreetoseek
resolutionof
anopinionona anopinionona
problemsand
matteronan
matteronan
claimsbefore
informalbasis informalbasis
theybecome
fromtheDAB fromtheDAB
formallyreferred
oramember
oramember
disputes.
thereof.
thereof.
Joinderof
disputes

YesDRBcan
consolidate
disputesby
notifyingthe
partiesinwriting.
Theonusison
thecontractorto
providetheDRB
withall
documentsin
disputes
involving
subcontractors
andtoensure
subcontractor
attendsand
assistsinthe
proceedings.
page"109"
Monitoring
Atintervalsof TheRedBook: Schedulemeetingsto
Reviewperiodic
ProjectProgress notmorethan atintervalsof keepitinformedaboutthe progressreports
(mandatorysite 140daysbut notmorethan contractandsitevisitif
submittedtoitby
visitsetc.)
notlessthan 140daysbut
relevant.Minimumof
theparties.
70days.
notlessthan70 threesitevisitsper
Sitevisitsat
days.
annumifsitevisitsare
Atsitevisits,
leasteverythree
relevant.
DBisexpected DABtousesite
monthsunless
tobecome
visittobecome
theDRBand
acquainted
acquaintedwith
partiesagree
withprogress progressof
otherwise.
ofworksand worksandany
anyproblems. problems.
Eachvisitto
compriseafield
inspectionofthe
worksandan
informal
roundtable
discussionon
statusofthe
works,disputes
andclaims.
Producereportafterevery Produceminutes
meetingandsitevisit.
ofmeetingtobe
giventoparties
bytheAAA.
page"110"
EffectofDecision Bindingand
Bindingand
Arecommendation
Recommendation
/
mustbe
mustbegiven becomesbindingifa
isnonbinding.
implemented effectto
noticeofdissatisfactionis
Recommendation forthwith
promptlyunless notgivenwithinthirty
unlessand
anduntil
days.Ifnoticeisgiven
untilrevisedby revisedby
thereisnoobligationto
amicable
amicable
complywith
settlementor settlementor
recommendationuntil
anarbitral
anarbitral
disputefinallydetermined.
award.
award.

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ofdecision.

Nexttier

ofdecision.

thirtydaysofreceiptof
thedecision,thenparties
agree(insofarassuch
agreementcanbevalidly
made)tocontinueto
complywiththedecision
andnottocontestit.
Fiftysixdays Fiftysixdays Arbitrationorlitigation.
Noprovision,but
fromdateof
fromdateof
partiesarefree
noticeof
noticeof
atanytime
dissatisfaction dissatisfaction
duringDRB
toattemptan toattemptan
proceedingto
amicable
amicable
referthedispute
settlementof settlementof
totheAAAfor
thedispute.
thedispute.
mediationorany
otherADR
ICCarbitration, ICCarbitration
method.
unless
ifamicable
otherwise
settlement
agreed,if
negotiations
amicable
fail.
settlement
negotiations
fail.

page"112"
[A].DisputeBoardFederation(DBF)
TheDBFpublisheditsAdHocDisputeAdjudicationBoardRulesin
2011.Therulesareastandaloneproceduretobeusedin
independentlyadministereddisputeboardmatters.TheDBFis
uniquefromtheotherinstitutionshighlightedaboveasitistheonly
onewhichpublishesdetailedguidanceforitsdisputeboard
membersandrequireseachmembertosubscribetoitscodeof
ethics.
5.07.FindingtheBestApproach
[A].PreparationofSubmissions
Thekeyproceduralobjectiveforthepartiesindisputeboard
proceedingsshouldbetoclarifythedisputeorissuesas
economicallyandquicklyaspossible.Ratherthanidentificationof
theissuesthroughpleadingsthepartiesare(typically)encouraged
topresenttheirrespectivecasesinanarrativeform.Forexample,
theICCDBRulesprovidethattheStatementofCaseshould
includeaclearandconcisedescriptionofthenatureand
circumstancesoftheDisputeandapresentationofthereferring
party'spositionontheissue(s)indispute,alongwithanysupportfor
itspositionsuchasdocuments,drawings,schedules,and
correspondence.However,intheexperienceoftheauthors,where
lawyersareinvolvedindisputeboards,thislackofpractical
experiencecanresultintheproceedingsbeingrunasmini
arbitrations,withtheexchangeofsubstantialvolumesoflegal
submissions,witnessstatementsandexpertreports.Intheviewof
theauthors,thisapproachisrarelyappropriate.
[B].DisclosureofDocuments
Whilstthedisputeboardmayrequestfurthermaterials,whetherof
itsownmotionoruponthesuggestionoftheotherparty,thereare
(typically)nofixedrequirementsfordisclosureofdocumentary
evidencebeyondtheneed,asamatterofproof,foreachparty,to
submitdocumentsuponwhichitreliesandtorespondtorequests
forfurtherinformationmadebythedisputeboard.Wheretheparties
agree,limitedspecificordersfordisclosuremaybegranted.
Itisnotuncommonforthedisputeboardtodrawadverseinferences
ifapartyhasrefusedtoprovideobviouslyrelevantdocuments
eitherofitsownvolition,oruponthespecificrequestoftheother
partyordisputeboarditself.
[C].Hearings
Underthecommonlyusedrulesreferredtoabovetherewillbe
hearings.Sometimes,asdiscussedabove,therulesexpressabias
towardshearingsbeingscheduledforthenextregularsitevisit.An
exampleisICCDBRulesArticle19.2whichstates:
page"113"
Hearingsshallbeheldduringscheduledmeetingsor
sitevisits,unlessthePartiesandDBotherwiseagree.
Thedisputeboardisgivenfreedominrelationtotheproceduretobe
followedatthehearingstage.Article19.8oftheICCDBRules
suggestsadefaultrunningordernamely:
presentationofthecasebytheparties
identificationbytheDRBofanyissueswhichneedtobeexplored
further
clarificationbythepartiesconcerningtheissuesidentifiedbythe
DRBand

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responsestotheclarificationonlytotheextentthatnewissues
areraisedbytheotherparty.
Inearlydisputeboardhearings,intheauthors'experienceexternal
lawyerstookalowprofileinhearingsbeforethedisputeboard.
Indeed,onoccasionsexternallawyerswereinvitedtoattendas
observersonly.However,ithasincreasinglybecomecommonfor
disputeboardhearingstoinvolveminihearings'includingthecross
examinationoffactualwitnessestestimonyfromexpertwitnesses
andlengthyoralsubmissions.Thisisnotahelpfuldevelopment
saveforthemostsignificantofprojectsorwherethereisa
significantprospectthatthepartieswillaccepttheoutcomeofthe
disputeboardproceedingwithoutfurtherreferencetoarbitration.It
maybethattherearecertainissuesoflegalprinciplewhichare
centraltothedispute,inwhichcaseexternallawyersmayplaya
valuableroleinpresentingtheparty'scaseonthoseissues
alternativelyaninhouselawyerorcontractmanagermaybeused.
Giventheessentialaimoftheprocedureistoachieveamore
streamlinedandinformalprocessthanarbitrationarguablythe
preferredapproachisforthepresentationofthefactstobemadeby
thosewithfirsthandknowledgeoftherelevantissuessuchasthe
siteengineering,employer'srepresentative,contractadministrator
orprogrammer.
Thetribunaltypicallytakesaninquisitorialapproach,asking
questionsofthosepresentingthecasewiththeparties'legal
representativessubmittingwrittendraftquestionstobeposedtothe
witnessesbythedisputeboardinadvance.(16)
Ideallythemembersofthedisputeboardwillhavetherelevant
technicalexpertiseandaccordinglytherewillnotbethesame
necessitytoeducateasmayberequiredinrespectofarbitrators
whoarelawyerswithlimitedexperienceofthetechnicalissuesin
dispute.
5.08.TheDisputeBoardsRecommendationorDecision
Assetoutabove,alloftheinstitutionaldisputeboardrulesrequire
thedisputeboardtoissueitsrecommendationordecisionwithina
setperiod.Arguablythedisputeboardhasnojurisdictionto
determinethedisputeifithasnotissueditsrecommendationor
decisionwithinthisperiod.Oneschoolofthoughtrecommendsthat
therelevantcontractprovidesthatthisperiodcanbeextendedwith
theconsentoftheparties,inordertoallowthedisputeboard
additionaltimetodeterminethereferreddisputeif
page
"114" required.However,giventheincreasingtendencyfordispute
boardprocedurestobecomeminiarbitrations'itmaybebetternot
toprovideanexpressabilitytoextendthedurationinthecontract.
Itisalwaysopentothepartiestoagreetoextendtheperiodallowed
tothedisputeboardifthisisunavoidableorrequestedbythe
disputeboard.Again,dependingontherules,thedisputeboard
decisionmayneedtobeunanimous,oramajoritydecisiononly.
Forexample,theICCDBRulesrequirethreememberdisputeboard
tomakeeveryefforttoreachaunanimousdecision.Wherethis
cannotbeachieved,amajoritydecisionispermissible.Itisuseful
toprovideapowertocorrectanyclericalerrorormistakeinthe
decisionoutsideofthetimelimitfordeliveringthedecision.
Thedecisionmayalsoaddressthequestionofcostsinrelationto
thereference.Generally,eachpartybearsitsowncostsinrelation
toanyreferencebeforeadisputeboard,withthereasonablecosts
andexpensesofthedisputeboardbeingbornebythepartiesin
equalshares.(17)Itisincreasinglycommonforthedisputeboardsto
beaskedtomakeordersinrelationtocosts,allocateitsowncosts
inunequalsharesand/ortoorderthelosingpartytopaysomeorall
ofthewinningparty'scosts.
[A].TheStatusofaDisputeBoardDecision
Thedisputeboarddecisionisnotanarbitralawardcapableof
enforcementundertheNewYorkConvention,nordoesithavethe
statusofacourtjudgment.Instead,thedecisionisbindingonlyas
amatterofcontractbetweentheparties.Accordingly,itseffectwill
begovernedbytherelevantcontract(typicallytheconstruction
contractorseparatedisputeboardagreement).Itmay,forexample,
constituteonlyarecommendationwhichisnotbindingonthe
partiesatall(seetableabove).Moretypicallythedecisionwillbe
bindingunlessanduntilreversedinarbitrationonserviceofanotice
ofdissatisfactionorreferraltoarbitrationbyeitherparty.Itis
generallythecase,however,thattheruleswillprovidethatthe
decisiondoeshavetobecompliedwithinthemeantime.Indeed
thisistheveryessenceofthevalueofdisputeboardproceedings
theyprovideameansofresolvingdisputesinthefirstinstanceto
enabletheprojecttocontinueevenif,followingarbitration,theresult
maybereversedormodifiedinsomeway.
Inpractice,themostlimitingaspectofdisputeboardsisthelackof
aneffectiveenforcementprocedure.Disputeboarddecisions,
althoughbindinginnature,maynotbecompliedwithandenforcing
adecisioninthefaceofnoncomplianceisrarelystraightforward.
(18)
Ifapartybelievesthatadecisioniswronglydecideditwilloften
page"115" ignorethedecision,inthebeliefthatitwillbe
vindicatedwhenthematterisfinallydeterminedbyarbitrationor
litigation.(19)
[B].EnforcingaDisputeBoardDecision

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Theappropriatemethodofenforcingadisputeboarddecisionis
thereforeanordinaryactionforbreachofcontract.Whatisthe
properforumforsuchaclaim?This,ofcourse,willdependagainon
thedraftingofthedisputeresolutionclauses.Ideally,therewillbea
provisionexpresslyprovidingthatadisputeconcerningaparty's
failuretocomplywithabindingdisputeboarddecision,whetherthe
decisionisfinalornot,canbereferreddirectlytotheagreed
procedureforfinaldeterminationofdisputesforenforcement,most
usually(oninternationalprojects)arbitrationbutpossiblylitigationin
thedesignatedcourts.(20)
Howshouldanarbitraltribunalrespondtoarequesttoenforcea
disputeboarddecision?
TheenforcementofFIDICdisputeboarddecisionshasbeenthe
subjectofanumberofarbitralandcourtdecisions.Itappears
relativelyuncontroversialthatanarbitraltribunal,facedwitha
bindingbutnotfinaldisputeboarddecision,hasjurisdictionto
enforcethedecisionbywayofinterimorpartialawardpending
determinationoftheoveralldisputeinafinalaward.(21)
Onwhatgroundsmayarespondenttosuchanactionseektoresist
enforcement?Potentialgroundsinclude.
[1].NoJurisdictionoveranIssue
Ifthedisputeboardpurportstodecidematterswhich,onatrue
constructionofthereferraldocumentation,werenotreferredtoit
thenthedecisionisoutsideitsjurisdictionandwillnotbeenforced.
Theargumentisessentiallythatthedisputeboardhasaskeditself
thewrongquestion.(22)Alternatively,itmaybesaidthatthevery
natureofthedecisionisonewhichthedisputeboardisnot
contractuallypermittedtomake.Forexample,thedisputeboard
mayhaveissuedaprovisionaldecisionwhereitispermittedonlyto
issueafinaldetermination(albeitsubjecttoreversalatthenexttier
ofdisputeresolution).Further,itmayhaveapplieditsown
assessmentofwhatisfairandreasonableinthecircumstancesand
notstrictlyappliedthetermsofthecontract.
page"116" In
short,adisputeboardchargedwithapplyingthecontractisnot
permittedthefreedomtoactasamiablecompositeurtoarriveatits
ownassessmentofwhatitperceivestobeafairresult.Inthe
authors'experiencethismaybearealtemptationforadispute
board,andifthepartiesconsiderthistobeanattractiveoption,
theyshouldconsiderbuildingintheflexibilitytousethedispute
boardinthisway.
[2].LackofFairness
Asdiscussedabove,enforcementofadisputeboard'sdecision
mayberefusediftherehasbeenalackoffairnessinthe
proceduresadopted.Theauthorsarenotawareofanydecided
casesintheUKonthisissue.However,byanalogywithcaselawin
Englandonthestatusofanadjudicator'sdecision,examplesmay
includewhere:
(i) assistanceissoughtfromaprogrammingspecialist,butthe
partiesarenotgivenanopportunitytocommentonthefinal
reportpreparedbyhim(23)
(ii) onepartyisconsulteduponsubmissionsmadebytheother
withoutareciprocalprocess(24)
(iii) thefailuretomakeavailabletoonepartyinformationobtained
fromtheotherpartyandvariousthirdparties(25)and
(iv) useofananalysisdifferenttothatadvancedbytheparties
withoutinformingthepartiesoftheproposedmethodologyand
withoutseekingtheirobservationsonitssuitability.(26)

Forexample,FIDIC,theICCortheDisputeBoardFederation.
BernhardSchulteGmbH&CoKGandothersv.NileHoldingsLtd
[2004]EWHC977(Comm)(CookJ).
3
SeeBalfourBeattyConstructionLimitedv.LambethLondon
BoroughCouncil[2002]BLR288.SeealsoMacobCivilEngineering
Ltdv.MorrisonConstructionLtd[1999]BLR93.InGlencot
DevelopmentandDesignoLtdv.BenBarrett&Son(Contractors)
Ltd[2002]]BLR207.218whereaninevitablecompromiseis
recogniseditisacceptedthattheadjudicatorhastoconductthe
proceedingsinaccordancewiththerulesofnaturaljusticeoras
fairlyasthelimitationsimposedbyParliamentpermit.ButnotePC
HarringtonContractorsLtdv.SystechInternationalLtd[2012]
EWCACiv1371inwhichthecourtdeterminedanadjudicatorwas
notentitledtopaymentofhisfeeswherehisdecisionwasheld
unenforceableduetoaseriousbreachofnaturaljustice.
4
Inadditiontotherulesdiscussedbelow,otherinstitutions(for
example,theInstituteofCivilEngineers,London)publish
procedureswhichmaybeencountered.
5
TheSBDWisthestandardformofcontractthatmustbeusedon
anylargescalecivilworksprojectfinancedwhollyorpartlybythe
WorldBankandisbasedontheFIDICConditionsofcontractfor
WorksofCivilEngineeringConstruction(theoldRedBook).
2

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6

SeeJohnBowcock,WhatFIDIChastoOfferandPlansforthe
Future,availableat,
http://www1.fidic.org/resources/contracts/bowcock97.asp(accessed
on26Jul.2005).
7
SubsequentpublicationsbyFIDIChavealsoincludedprovision
forstandingoradhocdisputeboards.
8
ThedifficultiesinenforcingdecisionsfromDABsareaddressed
attheendofthischapter.
9
Seeclauses20FIDICRed,Silver,YellowandPinkBooksand
2011Subcontractrespectively.
10
Specification1.02.C.5.cDRBGuideSpecifications.
11
PierreM.Genton,inapresentationatanICC/FIDICconference
inParis2930April2004.
12
UnderFIDICSilverandYellowBookspartieshavetheoptionof
maintainingastandingDAB.
13
Orlonger,ifeitherpartyobjectstoanomination.See
Specification1.02.Cwhichgivespartiesineachcase14day
timeframestoaccept/rejectalternativenominationstotheBoard
untilmutuallyacceptablemembersarenamed.
14
Whilsttherulesprovidetimelimitsforrespondingtoreferrals,it
islefttotheDRBtofixthedateofhearing,which,therules
recommend,shouldbearoundthetimeofthenextsitevisitsee
Specification1.04.D.
15
ButnoteArt.15(4),thoughnotanexpressjoinderprovision,
permitstheDBtoadapttherulestoapplytomultipartysituations
wheretherearemorethantwopartiestothecontract.
16
ThisreflectsthedefaultpositionundertheAAAinstitutional
rules.
17
TheFIDICGeneralConditionsofDisputeAdjudication
AgreementandtheAAADisputeResolutionBoardGuide
Specificationsprovidethatthecontractorpaysthedisputeboard
members'invoicesinthefirstinstance,withthecontractortobe
reimbursedbytheEmployerforonehalfoftheamountssopaid.
TheICCModelDisputeBoardMemberAgreementprovidethe
optionofthepartiesbeinginvoiceddirectlyinequalshare,orone
partypayingthedisputeboardmembersinfullandseeking
reimbursementforonehalffromtheotherparty.
18
SeeCRWJointOperationv.PerusahaanGasNegara(Persero)
TBK[2011]SGCA33.
19
SeeNaelBunni,TheGapinSubClause20.7ofthe1999FIDIC
ContractsforMajorWorks,22Intl.Constr.L.Rev.272(2005).
20
Forexample,theFIDIC1999suiteofcontractsprovideforthe
directreferraltoarbitrationofaparty'sfailuretocomplywitha
bindingdisputeboarddecision:Subclause20.7.
21
SeeCRWJointOperationv.PerusahaanGasNegara(Persero)
TBK[2011]SGCA33,supran.18andthevariouscasereports
referredtotherein.Butseecriticismofthiscase:Christopher
Seppala,HowNottoInterprettheFIDICDisputesClause:The
SingaporeCourtofAppealJudgmentinthePerseroCase,29Intl.
Constr.L.Rev.4(2012).
22
See,byanalogy,caselawontheenforcementofanexpert's
decision,forexample,ShellUKLtdv.EnterpriseOilplc[1999]2
Lloyd'sRep456andJonesv.SherwoodComputerServicesplc
[1992]2AllER170.
23
RSL(SouthWest)Ltdv.StansellLtd[2003]EWHC1390.
24
DiscainProjectServicesLtdv.OpecprimeDevelopmentLtd.
[2001]BLR285.
25
WoodsHardwickLtdv.ChilternAirConditioning[2001]BLR23.
26
BalfourBeattyConstructionLimitedv.LambethLondonBorough
Council,supran.3.

Chapter6:FormsofADR
6.01.Introduction
Theobviousquestioniswhy,inaworkonconstructionarbitration,
isthereachapteronmediation,conciliationandotherformsof
ADR.Theansweristhatthisbookisintendedtoprovideaguide
throughtherealworldofconstructionarbitrationandisnotan
abstracttreatiseonthepracticeofarbitrationinavacuum.
Arbitrationisnotanendinitselfbutameanstoanend.In
achievingtheobjective(settlementofadispute)itwilloftenbe
sensibletoconsiderwhetherthatobjectiveisbestservedby
pursuingarbitrationtotheexclusionofallothermodesofdispute
resolution.Ifnot,whetheratwoprongedapproachisamore
sensible,practicalandcostefficientwaytoproceed.Forthat
reason,andbecauseintherealworldthepossibilityofresolving
disputesinamoreconsensualandlessconfrontationalwaywillbe
encountered,thischaptersetsouttoidentifytheformsofADR
whichareavailable,thecircumstancesinwhichtheymightbe
consideredandhowtheyinterfacewiththearbitrationprocessitself.

Source
Chapter6:Formsof
ADRinJaneJenkins,
International
ConstructionArbitration
Law(SecondEdition),
ArbitrationinContext
Series,Volume3
(JaneJenkinsKluwer
LawInternational2013)
pp.119136

Sohow,whendisputesaretoberesolvedbyarbitration,dothe
partiescometoresolvetheirdifferencesbyADR?Tostartwith,itis
nowcommonplaceforjudgestotakeanactiveroleinseekingto
settlecourtcasesbytheprocessofcourtencouragedmediation.In
EnglandandWales,forinstancetheWoolfReportrecommended
increaseduseofADR,andpartiestolitigationarerequiredtostate

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whetherADRhasbeenconsideredaspartofthepretrialreview.(1)
Anunreasonablerefusaltodosomaylaterresultincostpenaltiesif
thelitigationproceeds.
Similarly,thereisaninternationaltrendforvoluntaryandrobustly
encouragedADRcourtannexedandconnectedprogrammesare
increasinglycommon.Partiesinvolvedinlitigationinother
jurisdictionsmayberequired(bytherelevantcourts
page
"119" and/orapplicablecivilprocedurerules)toconsiderattempting
toresolvetheirdisputesthroughADR.Forexample:
inHongKong,partiesarerequiredtoindicateatthepointof
timetabling,whethertheyarewillingtoundertakemediation(and
ifnot,whynot)andanunreasonablefailuretoparticipatein
mediationcouldresultinadverseconsequences(2)
inGermany,partiesaregivenfinancialincentivestoencourage
mediation,includingthewaiverofcourtfees,thesuspensionof
thestatutesoflimitationandenforceabilityofsettlements(3)
intheNetherlands,lawisbeingreviewedwhichprovidesthat
mediationproceedingswillstoptheexpiryoflimitationand
prescriptionperiods,andprovidesaframeworkinrelationto
confidentialityandtheenforcementofsettlements(4)
inGhana,pretrialmediationismandatoryintheCommercial
DivisionoftheGhanaHighCourtandisbeingextendedthrough
theDistrictCourts
inSouthAfrica,theCourtRulesonMediationmakemediationa
compulsorystepforallcivilandcommerciallitigation(5)
inpartsofCanada,partiestoacivildisputemustundertake
mediationwithinacertaintimeaftertheactionhasbeensetdown
fortrial
intheUnitedStates,therulesofcivilprocedureapplyingto
disputesbeforethefederalDistrictCourtsandtheUnitedStates
CourtsofFederalClaimsprovideforconsiderationofADRatpre
trialconferencesasameansofassistingintheresolutionofthe
dispute
inproceedingsbroughtincertaincourtsinAustralia,partiesare
requiredtoconsider(aspartoftheircasemanagement)using
mediationtoattempttoresolvetheirdisputeand
moregenerally,theEUMediationDirective2008aimsto
encourageamicabledisputeresolution,particularlythroughthe
useofmediation.(6)
Arguably,asimilarfocusuponencouragingthepartiestosettlea
disputebyADRshouldbeencouragedbyarbitrators.However,the
lackofanysuchstandardpracticemeansthatifanyformofADRis
tobeattempteditgenerallyhappensbyagreementbetweenthe
partieswithouttheinvolvementofthearbitratorintheprocess.
page"120"
Parties'agreementtoparticipateinADRmaycomeaboutinoneof
twoways.First,asdiscussedinChapter3,thedisputeresolution
provisionsoftheconstructioncontractmayrequirethepartiesto
attemptADRaspartofthedisputeresolutionprocess.Atonetime
itwasconsideredthatsuchclauses,asamatterofEnglishlawand
possiblysomeothercommonlawbasedlegalsystems,were
unenforceableandcouldbesimplyandsafelyignoredbyaparty
whichfeltdisinclinedtoseektoattempttoresolvetheirdisputesin
thisfashion.Now,anydisputeresolutionprovisiongovernedby
Englishlawwhichincludesarequirementtomediate(orattempt
someotherformofADR)mustnowberegardedasbinding,
providedtheprocedurefordoingsoissufficientlyclearlyprescribed
inthecontract.(7)InSingapore,arecentcaseheldthatanexpress
contractualclauserequiringpartiestonegotiateingoodfaithwas
validandenforceable.(8)TheCourtofAppealalsocommentedthat
inprinciple,therewasnodifferencebetweenanagreementto
negotiateingoodfaithandanagreementtosubmitadisputeto
mediation.Therefore,areluctantpartycanalsonowbecompelled
byanapplicationtoeitheranarbitratororacourt,toparticipateina
mediation.Thisdoesnot,ofcourse,implythatthechosenADR
techniquemustresultinaconcludedsettlementoreventhatitmust
bepursuedtothebitterendifitisobviousthatitwillfail.Butatthe
veryleastthestepsagreedbythepartiesforparticipationinthe
ADRproceduremustbeattempted.
WhereADRhastakenholditisnowcommonplaceforbothlitigators
andarbitrationspecialistsaliketoregardmediationandotherADR
techniquesasoneofthetoolsbywhichclients'disputesmaybe
resolved.
Howeveritcomesabout,thetwoquestionswhichneedtobe
addressedatthisstageare(i)whatformofADRshouldbe
attemptedand(ii)whoshouldbetheneutralmediator.Obviouslythe
twoquestionsaretosomeextentinterdependent,withtheanswerto
thesecondquestionlargelydependentontheanswertothefirst.
However,thereisacontinuumofpossibilitiesforformsofADR
theyneednotfallsquarelyintojustoneofthetypicalforms
describedbelow(orindeedanyother).Indeed,allinstancesofADR
arepersonalisedtothenatureofthedisputeandthepartiesto
someextent.Inthisregardwherepartiesaregenuinelyboth
interestedinsettlingthedisputethepartiescanusuallycometo
someagreement(eveniftherelationshiphasinthepastbeen
particularlyacrimonious)astothewayinwhichADRwillbe
approached.

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page"121"
6.02.TypesofADR
ADRsitssomewherebetweentheformsofprincipaltoprincipal
negotiationthattakeplacebothatsiteandprojectmanagement
levelseverydayofeveryweekonconstructionprojectsandthe
moreformalsystemsofdisputeresolutionprocesses,including
expertdetermination,adjudication,DisputeAdjudicationBoards
and,ofcoursearbitrationandlitigationthemselves.Yetevenwithin
thisnarrowpartofthedisputeresolutionspectrum,ADRtechniques
spanaconsiderablegap.Theprincipalcommonfeatureisthe
involvementofanindependentneutralmediatorwhoseobjectiveis
notnecessarilytodeterminetheparties'respectiverightsand
obligations,buttofacilitateaneffectiveresolutionofdisputeswhich
havearisen.
Whilethismayinvolveconsiderationsometimesquitecarefuland
detailedconsiderationofrightsandobligations,asoftenasnot,
thisisinthecontextofencouragingthepartiestoconsiderwhatthe
alternativestoreachingabindingnegotiatedsettlementmightentail.
Inthecontextofthecommonorgardenvarietyconstructioncase,
thiscontemplationofwhatmighttakeplaceiftheydonotreacha
negotiatedsettlementwillalmostinevitablyleadthepartiesto
realisethatitwouldentailconsiderableexpenseanddiversionof
managementtimefromtheirprincipalbusiness(quiteapartfromthe
riskofawardagainstitandconsequentialcostorders).Assuch,
anythingotherthananegotiatedsettlementatasearlyastageasis
possibleisdestructivetotheparties.Forthisreason,iffornoother
reason,earlysettlementshouldbeencouragedinallpossible
circumstances.Theneutralmediator'sjobistofacilitatethis.In
ordertoachievethisdesirableoutcome,theneutralmediator'sskills
canbedeployedinanumberofdifferentways,theprincipalof
whicharediscussedbelow.
Ofcourse,thereisnoobligationonanyofthepartiestoreacha
settlementasaresultofanyformofADRprocedureandtheneutral
mediatorhasnopowerstocompelthepartiestoenterintoan
agreementortoholdthemtoanyparticularagreementthatmayor
maynothavebeenmadeinthecourseoftheADRprocedure.Only
whenaformalagreementhasbeenreachedandrecordedbythe
partiesinwriting(9)isthedisputesettled.Althoughtheagreements
reachedthroughmediationaregenerallymorelikelytobe
implementedvoluntarily,theEUMediationDirectiverequiresallthe
MemberStatestoestablishaprocedurewherebyanagreement
may,attherequestoftheparties,beconfirmedinajudgment,
decisionorauthenticactbyacourtorpublicauthority.Thisis
intendedtoallowmutualrecognitionandenforcementthroughoutthe
EUofagreementsreachedthroughmediation,underthesame
conditionsasthoseestablishedfortherecognitionandenforcement
ofcourtdecisionsincivilandcommercialmatters.
page"122"
[A].MediationandConciliation
AttheleastjudgmentalendofthescaleofADRprocedureslie
mediationandconciliation.Unfortunatelytherearenohard
definitionsofeitherofthesetermsandasaresulttheymayeither
beusedmoreorlessinterchangeably(accordingtosome)orbe
distinguished(sayothers)bythewillingnessofaconciliatorto
adoptamorerightsbased,judgmentalapproachthanamediator.
Forpresentpurposes,norealdistinctionisintendedtobedrawn
betweentheprocessofmediationandconciliation,itbeing
recognisedthatthedegreetowhichtheneutralsconcernedare
willingtotakeamoreinterventionist,judgmentalapproachhas
muchmoretodowiththepersonaltemperamentandoutlookofthe
neutralthanwiththelabelattachingtotheprocess.Forthatreason
thetermsmediatorandmediationareusedwithoutanyintention
therebytodistinguishtheprocessfromconciliation.
Ignoringthesemantics,therefore,theprocessofa
mediation/conciliationisaboutthebringingtogetheroftheparties
withjudicioususebytheneutralmediatorofbothcarrotandstick,
usually,thoughnotinvariably,inanonjudgmentalway.Inother
words,theneutralmediator'sapproachisonewhichcausesthe
partiestothinkforthemselves,promptedbytheneutralmediatoras
andwhennecessary,whichelementsofaproposeddealaretotheir
advantageandwhicharenot.Itisfortheparties,nottheneutral
mediator,toassessandfactorintotheiranalysisofwhetherto
settleandonwhatterms,andthechancesoftheirsuccessand
costs(particularlytheirrecoverablecosts)thatfailuretosettle
wouldinvolve.
Wherethecontractcontainsanexpressrequirementtoparticipate
inamediation,theprocesswillstartaslaiddowninthecontract.
Thismayeithercontainquitedetailedprovisionsastotheconduct
ofthemediationormaybeinashortform,oftenreferringtothe
provisionsofoneoftherecognisedADRcentres.Eitherway,the
firstsignificantstepisthechoiceofthemediator.Atthispoint,itis
importanttorememberwhatitisthatthemediatorisdoingor,
rather,notdoing.Byandlarge,whatthemediatorisnotemployed
todoistodeterminetherespectiverightsandobligationsofthe
parties.Whatthemediatorisattemptingtodoistobringtheparties
tothepointwheretheyrealisethatitisintheirbestintereststo
settle,evenifthatmeansmakingsomecompromisesalongthe

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way.Forthisreason,theselectionofthemediatorisasmuchabout
choosingthepersonwiththerightinterpersonalskillsasitisabout
themediator'sknowledgeofthesubjectmatterofthedispute.Andit
ismuchmoreaboutpickingthemediatorwiththerightinterpersonal
skillsthanfindingthepersonwhowilldeterminewhattheright
answeris.
Theidealmediatorwill,therefore,havetheskilltoidentifywhatitis
thateachpartywantstogetoutofthemediationbywayof
settlementandhowtobringthemtogether,byfocussingonthe
relevantissuesandremovingtheobstaclestosettlementthata
deeprooteddisputeoftencontains.Notleast,themediatormust
recognisethepersonalinvolvementoftheindividualparticipants,
manyofwhoseactionshavecontributedtothedisputeandwhose
bonuses,reputationsorpossiblyevencareersdepend,noton
gettingthemostsensiblecommercialsettlementinallthe
circumstances,butongettingtheanswertowhichtheyhave
committedthemselves,alongwiththeorganisationforwhichthey
work.
page"123"
Takingtheseinterpersonalskillsasagiven,thenextissueisthe
importanceofthemediatorhavingsomefamiliaritywiththesubject
matterofthedisputeorofthebusinesseswithinwhichtheparties
operate.Ofcourse,againinanidealworld,amediatorwouldhave
boththeskillsetandthedetailedknowledge,notjustoftheparties'
businesses,butalsoofthesubjectmatterofthedispute.The
realityisthatthishappensonlyoccasionallyandthatsuchnew
agemediatorscanrarelybefoundoriftheydoexisttheywillnot
havethetimetodevotetothemediation.Giventhattheidealmay
notbeattainable,amediator'sunderstandingofthewaythe
businessoperates,andtheopportunitieswithinthatbusinessarea,
ismoreimportantthanaknowledgeofthespecificsofthedispute.
Puristswillsayamediatorneednothaveanylegalorother
particularbackground.However,onemustrememberthatthemore
complexthedispute(andthemoreatwartheparties),thegreater
thenecessityforthemediatortobecapableoftestingand
challengingeachoftherespectiveparty'sviewsastothelikely
prospectsofsuccessandtheriskoffailure.
Accordingly,thechoiceofmediatorwillnormallybemadeonthe
basisofthemediator'sreputation,knowledgeofthebusinessarea
withinwhichthedisputehasarisen,andavailability.Oncethe
mediatorhasbeenchosen,anydeficiencyinthemediator's
backgroundknowledgecanoftenbemadegoodbytheselectionof
anappropriatepupilmediator.MostADRinstitutionsrequireany
mediatorrecommendedbythemtohaveundergoneboththeoretical
andpracticaltraining,aswellasundergoingaprocessofcontinuing
educationandpractice.Forthisreasonthereis,atleastatthetime
ofwriting,asteadysupplyofwouldbepupilmediatorswillingtoget
handsonexperienceofmediations.Whilenothavinganyformal
roleintheconductofthemediationandnotbeingpaidfortheir
participationeitherasuitablyqualifiedpupilmediatorworkingwith
thechosenmediatorcanoftenaddinvaluableexperiencetothe
process.Sotoocanhavingleadandcomediators,withtheco
mediatorsupplyingindustryorsubjectmatterspecificinput,
thoughobviouslyatadditionalcost.Therewillalmostinvariablybe
timingdifficultiesinorganisingamediationwithadesiredmediator.
Particularlywhereinternationalpartiesareinvolved,itmaybe
difficultforparties'decisionmakerstotravel,andforthemediatorto
beavailableatthesametimeasthepartiesandtheircounsel.This
mustbeborneinmindinadvanceofattemptingtoidentifypotential
windowsforADR.
Anotherfactorthatmaybeconsideredisthelikelyprejudicesofthe
mediator.Timeandtimeagainthequestionisaskedwhetherthe
mediatorisablackletterlawyeroracommercialman,orwhether
themediatorisacontractor's'oranemployer's'man.These
mattersare,inpractice,clearlyofgreatsignificancetotheusersof
themedicationprocessandforthatreasonshouldnotbeignored.
Afterall,theprocessrequiresthepartiestoreachagreement,andit
isinnoone'sinterestifonepartyperceivesthemediatorasbeing
partialtothepositionoftheother.However,whilethereisoften
greatpressureandmuchtemptationtoinfluencetheprocessof
mediation,muchasis(quiteproperly)donewhenselectingan
arbitrator,thebestresultmustbetoselectamediatorwhodoesnot
haveareputationforfavouringthepositionofonepartyortheother.
page"124"
Asforcosts,whilesomemediatorschargeasmuchasthemost
expensivearbitrators,theoverallcostsofamediationmeasured
indaysofworkratherthanweeksormonthsmeansthatthe
questionisofmarginalrelevance.
[B].TheProcessPreparationfortheMediation
Meeting/Hearing
Oncethemediator(s)havebeenchosen,thenextstepwilloftenbe
informalapproachesbythemediatortobothparties,eithertogether
orseparately,inordertoestablishtheprocedureandtoallowthe
mediatoranearlyopportunitytodirecttheprocessinawaywhich
heconsidersmostlikelytoresultinafavourableoutcome.
Unlikearbitration,therearenorestrictionsontheparties(ortheir
advisers)talkingtothemediatorwithouttheotherbeingpresent,
althoughoccasionallysomeadvisersdoattempttostamptheirown

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authorityontheprocessbyseekingtodictatethatvirtuallyall
contactwiththemediatoristobejoint.Fortunately,mostmediators
explainwhythisisnotlikelytobeinthebestinterestsofeither
partyandmostoftentheprocesscontinuesasthemediatorsees
fit.
WhilstinstitutionssuchastheICC,LCIA,AAA,CIETAC,ICSID
andUNCITALhaveestablishedADRrulesinoneformoranother
whichmaybeadoptedbythepartiesintheircontracts,itshouldbe
notedthatthereare,infact,veryfewinviolablerulesrelatingtothe
conductofamediation.Thesinglemostimportantone,whichis
foundinvirtuallyallguidesandrulesofmediation,isthatthe
processistobewithoutprejudicei.e.,nothingsaidordoneinthe
courseofthemediationistobereliedonasevidenceinany
subsequentcourtorarbitrationproceedings.Theotherfundamental
ruleisthatwhatissaidbyonesidetothemediatorinconfidence
mustnotbepassedontotheotherpartywithoutconsent.Howthat
consentisgivenvariesfrommediationtomediation,withthedefault
positiongenerallybeingthateverythingsaidbyonepartyinthe
absenceoftheotheristoberegardedasconfidentialunless
disclosureisexpresslyauthorised.Occasionallythedefaultisthe
reverse,withthemediatorfeelingfreetopassoneverythingsaidto
himunlessitisspecificallyidentifiedasbeingconfidentialandnot
foronwarddisclosure.Eitherwaycanworksatisfactorilybutitis,of
course,essentialtoknowwhichdefaultpositionistoapply.
Oneofthefirstthingsthatthemediatorwilldoistocirculateadraft
mediationagreement.(10)Thiswilldealwiththekeyissuesofthe
usetowhichinformationdisclosedinthemediationmaybeput.It
willalsodealwithconfidentiality,aswellasmoremundanematters
suchasfees,venueforthehearinganditsduration.Themediation
agreementshouldbeinplacepriortocommencementofthe
mediation.
Thedraftmediationagreementandnodoubtthemediatorin
personwillalsomakeitclearthatitisexpectedthatthoseleading
themediationforeachpartywillhavethenecessaryauthorityto
settle.Thisisclearlyanimportantfactor,andonewhichcauses
considerableanxietyinpractice.Ofcourse,inpractice,nobody
representingacorporatebodycomesauthorisedtosettleatany
price,thoughnormallymostdocome
page"125" with
somethingresemblingauthoritytosettlewithinarealisticrange.
However,whereitbecomesapparentregardlessofwhatisbeing
saidthatthoseleadingaparty'sdelegationtothemediationdonot
infacthaveauthority(orcannoteasilyobtainitviamobilesor
Blackberries)theprocessislikelytofounderquitequickly.
Especiallydifficultarecaseswherethirdpartiessuchas
subcontractors,professionaladvisers,insurersorlenderstoSPVs
haveaninterestintheoutcome.Whileadegreeofunderstandingis
normallypresentconcerningthedifficultiesthatthesesituations
present,itisneverthelessincumbentonthepartyhavingtoreport
to,andobtainapprovalfrom,otherinterestedpartiestotakeall
necessarystepstohavethoseotherpartiesengagedintheissues
andtheprocess.Thismightextendtohavingthempresentonan
observerbasistoreducetheinformationlagthatwouldotherwise
occur.
Followingtheintroductoryandadministrativestagesofthe
mediation,itislikelythatthepartieswillbeinvitedtopresent
positionpaperstothemediatorandeachother.Typically,mediators
preferthesetobefairlyshortbuttheparties(andtheiradvisers)
tendtomakethemlongerthantheyneednecessarilybe,oftenalso
attachingmanyfilesofsupportingpapers.Inpart,thisisbecause
thefunctionofthesepositionpaperstendstobeforgotten.Although
themediationprocesswillinvolveareviewofthemattersleadingup
tothedisputeandtheparties'respectiverightsandobligations,the
purposeofthemediationistofindasettlementwhichisasmuch
forwardlookingasitisanhistoricreviewofwhatwentwrong.The
realfunctionofthesepositionpapersisnot,therefore,tosetoutin
greatdetailallthathasgonebefore.Most,ifnotall,ofthiswill
alreadybeknowntothepartiesandbeofonlymarginalrelevanceto
themediator.Therealfunctionsofthepositionpaperare(i)to
educatethemediatorabouttheparties'currentpositionsandthe
possibleavenuesforasuccessfulsettlementand(ii)toeducatethe
parties'decisionmakers(who,likelyasnot,willnotpreviouslyhave
haddirectexposuretotheotherparty'scase)aboutthekeyfactors
heshouldtakeintoaccountinagreeingtoasettlementontheterms
thattheotherpartyconsidersacceptable.
Mattersdealtwithinpositionpapersmaythereforeincludekey
strengthsinaparty'sownpositionorkeyweaknessesintheother
party'sposition(relevantifthematterisnotsettledandhas
subsequentlytobedeterminedbyanarbitrator),butitisjustas
likelytheywillincludesuggestedopportunitiesforeachsideto
improveontheirowncommercialpositioninthepresentproject.
However,unlikeanyformofcourtorevenarbitrationproceedings,
thereisnoreasonwhythemessagesbeingsentshouldbe
restrictedtothematterindisputeoreventheprojectorbusiness
relationshipthatgivesrisetoit.Thereisnoreasonwhytheposition
papersshouldnotidentifyinstanceswherethepartiesmightjointly
takeadvantageoffutureopportunitiesnotreadilyexploitableby
eitherinisolation,orraisepossibleadversecommercial
consequencestooneorbothofthemifsettlementisnotreached.
Inshort,alengthyregurgitationofthecontractualcorrespondence
atthisstageisawastedopportunity.Thefocusshouldbeon
gettingkeyissuesatplayacrosstothedecisionmakeroftheother
party.

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page"126"
[C].TheMeeting/Hearing
Followingtheexchangeofpositionpapers(andpossiblyreply
positionpapers),experiencedmediatorswilloftenaskaseriesof
followupquestions,suggestingareasofthewrittenpresentation
thatmightbedevelopedorclarified.Afterthat,therewillbesome
formofmediationhearing.Again,thereareabsolutelynohardand
fastrulesastohowsuchameetingwillbeconducted.Allthatcan
sensiblybesaidisthatalmostallstartoffwithgeneralintroductions
(mainlyforthemediator'sbenefit,asitwouldbeunusualforthe
partiesnottoknoweachother'srepresentatives)andanopportunity
foreachpartytomakeanoralpresentationtotheotherparty/ies
andthemediator.Again,thisisastageintheprocessthatprovides
greatopportunities,andequallyonewhichisoftenwasted.Whatis
definitelynotrequiredatthisstageisa(further)detailed
regurgitationofthehistoryofthedispute.Whatthefirstpartofthe
hearingofferseachpartyistheopportunitytopresentitsreasons
astowhyasettlementshouldbeagreedandonwhatterms.While
thismayhavebeendonebefore,thisisusuallythefirstopportunity
togivesuchinformationdirectlytothedecisionmakeroftheother
partywithoutanyfilteringorspinaddedbythedecisionmaker's
subordinatesandadvisers.Thisisimportant,becauseitmaywell
bethatthosesubordinatesandadvisershaveavestedinterestina
particularoutcome,eitherbecausetheywerepartoftheproblemor
becausetheyhavebecomeidentifiedwithaparticularviewonthe
position,fromwhichitisnowdifficulttoresile.
Fromthispointgoingforwardinamediationitbecomesincreasingly
difficulttopredictwhichprocedurewillbeadopted.Moreoftenthan
not,themediatorwillsuggestthatthepartiesbreakoutinto
separateroomssothatthemediatorcanexplorespecificissues
witheachpartytoimproveitsknowledgeoftheissuesandthe
likelyareaofsettlement.Atthesametime,themediatorwilloften
taketheopportunitytomakesurethateachpartyistakinga
realisticviewonthestrengthofitspositionandtheconsequences
ofnotreachingasettlement.Normallythemediatorwillavoidtaking
apositionontheunderlyingdisputebutwillcausethepartiesto
undergoaprocessofrealitytestingbywhichtheyaremadetoface
uptothekeypointsintheirandtheotherparty'scasesandthe
financialandotherconsequencesofnotsettling.Aspartofthis,the
mediatormayrequireeachpartytoproducesummariesfortheir
internaluse.Inaddition,specificmatters(commercial,technicalor
legal)maybeidentifiedforfurtherdiscussionsinsmallgroups
betweentheparties.Thishasthebenefitofallowingthemediatorto
isolateandsidelinepotentialstakeholdersintheprocesswhomight
representanobstacletosuccess.
Whatevertheprocess,therewillcomeastagewhenthemediator
feelscomfortableenoughtoattempttosketchoutasettlementthat
thepartieshave,inessence,boughtinto.Notunusuallythereisstill
agap(gulf,moreoften)betweenthepartiesatthisstagewhich
needsfurtherwork,involvingmorerealitytestingandmore
discussionabouttheimpactthatresolvingthedisputeina
traditionalmannerwillhaveontheparties'businesses.
Atsomelaterstage,oneoftwothingswillhappen.First,itmay
becomeapparentthatnofurtherprogresscanbeachievedinthe
timeallottedforthehearing,withtheresultthatthereisnopurpose
incontinuing.Ifthathashappenedasaresultoftheneed
page
"127" toobtainahigherlevelofauthorityorthirdpartyconsent,the
mediatorwillencouragethepartiestoobtainthatauthority/consent
immediatelybut,failingthat,toseektomaintaintheprogressofthe
mediationeitherbyagreeingadateforanadjournedhearingor
fixingadateandtimeforaconferenceorvideoconferencecallto
takemattersforward.
Theotherthingthathappensmoreoftenthanmightbeexpectedis
thatasettlementagreementisreached.Inthisevent,thechallenge
forthemediatorandthepartiesistodocumentthesettlement
agreementinanacceptableform,ideallybeforethepartiesleave
thehearing.Inreality,itisonlyrelativelysimpledisputeswherethe
settlementcanbefullydocumentedwiththeresourcesavailableto
thepartiesatthehearing,eveniflawyersarepresentforboth
parties.Experienceshows,however,thatawrittenrecordevenif
onlyaheadsofagreementofthesettlementshouldbesignedby
thepartiesbeforetheyleavethemediationhearing,thereby
reducingthechancesoftheagreementbeingreviewedperhapsby
othersnotpresentatthemediationandthedealevaporating
beforebeingconsummated.
[D].Minitrial/ExecutiveTribunal
Themediationprocessdescribedaboveinvolves,inanycomplex
case,eachpartybeingsupportedbyalargenumberofpeople
requiredtoprovidethenecessaryfactual,legal,technicaland
financialsupporttothedecisionmaker.Amediationinvolving
twentyormorepeopleis,asaresult,notuncommon.Nevertheless,
havingthisnumberofpeopleinvolvedisunwieldyandmakesthe
mediator'sjobmoredifficultasitisbynomeansalwayseasyto
separatethedecisionmakersfromtherhetoricandtheinterestsof
otherstakeholdersandtogetthedecisionmakerstofocusonwhat
isinthebestinterestsofthepartiestheyrepresent.Oneparticularly
effectivewaythiscanbedoneisbytheADRtechniqueknownas
minitrial.Inessence,thisisanamalgamofaconventionalhearing

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andamediationasdescribedabove.Theessentialdifference
betweenaminitrialandamediationisthatthedecisionmakerof
eachpartyisisolatedfromitsteamandplacedwithitsopposite
numberandtheneutral.
Again,whiletherearenohardandfastrulesonhowminitrialsare
tobeconducted,thestagesuptotheoralhearingarelikelytobe
similartothoseinatypicalmediation.Inotherwords,therewillbe
selectionofaneutral,agreementofthegroundrules(without
prejudicenatureofdocuments,confidentialityofproceedingsetc.)
andpreparationandexchangeofpositionpapers.Thedifference
comesaboutatthehearingitself.Atthispoint,insteadofthere
beingahearingofthesortpreviouslydescribed,thedecision
makersandtheneutralformapaneltowhicheachparty's
representativesmakepresentations.Attheconclusionofthe
presentations,includingafteranyreplysubmissionsandquestions
fromthepanel,thepanelretireswithoutthepresenceofanyofthe
party'sotherrepresentatives.Whatthentakesplaceisamini
mediationbetweentheparties'decisionmakers,moderatedand
guidedbytheneutral.
Thereareanumberofadvantagestothis.Forastart,thefactthat
thedecisionmakerwillbeisolatedfromitssupportstaffmeansthat
itwillbemuchbetterbriefed
page"128" thanifitknewithad
immediateandunfetteredaccesstoitsadvisersandothersinits
organisation.Thisenhanceddegreeofpreparationenforcedupon
thedecisionmakerincreasesthechancesofthesuccessofthe
process.Thesameeffectcanoftenbefoundinmediationsthat
takeplaceawayfrombothparties'homebases.Evenwith
increasinglysophisticatedcommunications,theextradegreeof
preparationattendantingoingoffsiteproducesanincreased
chanceofasettlement.Thesecondadvantageisthattheneutral
getssoleaccesstothedecisionmakersandcandirecttheirfocus
ontowhatisintheirorganisation'sbestinterests,generallyspeeding
uptheprocessbywhichmediatedsettlementstendtobereached.
Despitetheseadvantages,thefactisthatminitrialsarefarless
commoninEurope(atleast)thanmediations,althoughtheCentre
forEffectiveDisputeResolutioninEnglandandtheNetherlands
ArbitrationInstitutebothcaterfortheprocess.(11)
[E].EarlyNeutralEvaluation
AsdiscussedinChapter3,afurthertechniquewhichisby
definitionanevaluativeprocessistheprocessofEarlyNeutral
Evaluation(ENE).Unliketheprocessesofmediation,conciliationor
minitrial,thetechniquesetsouttoobtainanonbindingdecision
fromanindependentthirdpartywhoisanexpertintherelevant
field.Thereis,therefore,noneedfortheneutraltohavethe
requisiteinterpersonalskillsorabilitytoassistpartiesinreaching
anacceptablesettlement.ThisADRtechniqueisallaboutand
onlyaboutreachinganonbindingdecisiononthemeritsofthe
disputesoastoassistthepartiesinreachingasettlementoutside
oftheconfinesoftheprocessitself.
Sincethisis,ineffect,atrialrunoftheparties'cases,thereisno
realneedforanyofthesafeguardsrequiredby
mediation/conciliationorminitrialtopreventmaterialusedinthe
ENEfrombeingreliedoninanysubsequentproceedings.Thatsaid,
itisconventionalforthepartiestoagreethattheirsubmissionsand
theresultsoftheprocessshallnotbereliedoninsubsequent
proceedings.
Sincetheprocessisnonbinding,thetimescalesfortheproduction
ofadecisionbythemediatorcanbekeptshort,sothattheprocess
canruninthesamesortoftimescalesasanadjudicationordispute
adjudicationboardforasmallproject.Ofcourse,thekeydifference
betweentheresultofanENEandthatofanadjudicationordispute
adjudicationboardisthatthedecisionisnotbinding,even
temporarily.Thismeansthatalthoughthedecisionisexpectedto
beindicativeofadecisionultimatelyobtainedinanarbitration,there
isnoneedforthecasetobeworkeduptoquitethesamedegreeas
wouldbeneededifthedecisionwerebinding,evenifbindingonly
unlessanduntiloverturnedinarbitration.Forthisreason,itisnot
unusualforENEprocedurestobedeterminedonpaperonly,orwith
veryshortoralsubmissions.Itwouldberareforwitnessestobe
calledorfortheevidenceorcredibilityoffactualorexpertwitnesses
tobetakenintoaccount.Forthesereasons,therearemanycases
wherethereisnorealvaluetobeobtainedbyanENE.The
procedureismostsuitableforquestionsofinterpretationof
documentsornarrowtechnicaldisputeswherethe
page
"129" factsarenotmuchindispute.Whereaneutral'sdecisionin
anENEdoesdependonfactswhichareincontentionthevalueof
thedecisionwillbemuchreduced,sinceeachsidewillthenaimoff
fromthedecisionobtainedthroughtheENEbyitsanticipated
chancesofsuccessonthedisputedfacts.
6.03.WhichADRTechniqueShouldbeUsed?
Asreaderswillhaveappreciatedfromthedescriptionofthe
proceduressetoutabove,themostcommonlyusedformofADRis
mediation/conciliation.OfthetwoothertypesofADRwhichhave
beenidentified,ENEisclearlyunsuitableformanyconstruction
disputessincethesecasestendtobefactanddocumentintensive.
However,despitethis,ENEmaybesuitableiftherearekey
elementsoflargerdisputeswhicharesuitablefortheprocedure.

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Inparticular,agoodnumberofdisputesinconstructionprojects
involvetheapplicabilityornonapplicabilityofclauseslimitingor
excludingliability.Ofcourse,inmanycasestheseissuesare
resolvedbytreatingthemasapreliminaryissueinanarbitration,
butthisisoftenresistedonthebasisthatonepartyfeelsthatthe
wholeofthecaseneedstobedeployedinordertoputtheclausein
itscorrectcommercialcontext.Inaddition,evenapreliminaryissue
whichisbindingonthepartiesandwhichmaybedeterminativeof
theoutcomeoftheclaimmayinvolveconsiderableexpense.
Perhapsbecauseofthesefactors,anumberofsuchissuesarenot
resolvedinthissensibleandrelativelyeconomicalfashion,butare
lefttobedeterminedbythetribunalinthecourseofageneral
decisiononthemerits.Wherethishappens,hugeamountsoftime
andmoneycanbewastedonprovingthesubstantivemeritsofthe
casewhenwhatisreallyinissueisonly,forinstance,whetherthe
claimsareeffectivelyunlimitedorrestrictedtoasmallpercentage
oftheclaim.Oncetheanswertothatthresholdquestionisknown,a
suitablesettlementcanbeswiftlynegotiated,almostregardlessof
theargumentsonthemerits.ENEmaybeasuitablevehiclefor
gettingthepartiestoapositionwheretheyaresufficientlyconfident
oftheanswertosuchquestionstoknowwhatfigurethe
negotiationsshouldbearound.
LeavingasidethepossibleuseofENEinthecircumstances
describedabove,thebulkofconstructionclaimswillgenerallybe
suitableformediationorconciliation.Typicalconstructioncases
involveconsiderabledisputesoverthefactsandlargequantitiesof
paper,bothfactorstendingtowardsanADRtechniquewhich
focusesonharnessingtheparties'knowledgeoftheircasesrather
thanrequiringthecasetobedistilledintoaformthatcanbe
presentedtoatribunalandthenruledupon.Inaddition,in
significantpartsoftheindustry(particularlyintheprocessand
powersectors,aswellasinmanypublicsectors),thereisapattern
ofrepeatbusiness,whichlendsitselftoconstructivesolutionsto
problemsonparticularprojects.
Whetherornotminitrialfindsanincreasedroleforitselfisamatter
ofsomedebate.Quiteobviously,theprocesslendsitselfto
organisationswithastrongcentralmanagementwhereadecision
makercanmakeandisaccustomedtomakingdecisions
withoutfirstobtainingaconsensuswithinalargepartofthe
organisation.Perhapsbecauseofthisitmaybedifficulttosee
muchscopeforminitrialinthepublic
page"130" sectororin
cultureswhereitisimportanttoobtainconsensusbeforedecision
aremade.
Further,asidentifiedabove,anyformofADRcanbetailoredor
combinedwithotherformstosuitpartiesandthenatureofthe
dispute.TheauthorsareawareofsuccessfulADRprocesses
involvingafirststageofnonbindingneutralevaluation,inwhichthe
evaluatordoesnotissueadecisionbutidentifiestoeachparty(in
thepresenceofbothparties)thelikelyobstaclesandweaknesses
totheircase.Asubsequentcommercialnegotiation/mediation
betweenthepartiesthemselveswasthenconductedagainsta
backgroundofcommonknowledgeandunderstandingoftheparties'
respectiverisksasevaluatedbyaneutralindividual.
Ithastoberecognised,however,thatnoteverycaseissuitablefor
ADR.Therearecaseswhichcanclearlyonlybedeterminedbya
bindingdecisionmadebyajudgeorarbitrator.Typical(thoughless
likelytobeheardbyanarbitrator)arecaseswherefraudorother
significantmalpracticeisalleged.Casesfallingwithinthisclassare
verydifficulttosettleonavoluntarybasisbecauseofthestigma
whichsooftenattachestothepersonororganisationagainstwhich
theallegationsaremade.Evenwherethecostsoffightingthecase
andprovinginnocencemakeacommercialsettlementeminently
sensible,inpracticecasessuchastheseproveremarkablydifficult
tosettle.Alsofallingwithinthisgeneralcategoryareclaimsagainst
organisationswhereeitheradecisiontocompromiseaclaimmay
beperceivedasbeingsoftor,worse,involvingsomeformof
benefitforthepersonwithintheorganisationmakingthedecisionto
settle.Inthesecases,itiseasierfortheorganisationandthe
individualswhocompriseittopressthemattertoadecisionofan
arbitratororjudgeevenifthedecisionisadversethantoreacha
sensiblecommercialcompromisebeforethattime.
6.04.ADRsInterfacewithArbitration
Therearetwoprincipalissuesarisingoutoftheinterfacebetween
ADRandarbitration.Thefirstiswhenisitappropriatetoengagein
anADRprocedurewhenthematteristobereferredtoarbitration.
Thesecondisinwhatcircumstances,ifatall,isitappropriatefor
thearbitratortoengageinaformofADRandtheconsequencesof
thearbitratorcontinuinginofficeifhedoes.
[A].ADRandArbitration:AQuestionofTiming
Asalreadydescribed,anyformofADRprocessleadingtoa
consensualresult(includingENE,toanextent)requiresthatthe
partiestotheprocessarefullyawareofthefactssurroundingthe
disputeandtheirchancesofsucceedinginresolvingitintheir
favourifthematterisreferredtoarbitration.Itisforthisreasonthat
itmakesnosenseforapartycommittedtomediationtotryto
bouncetheotherpartyintoasettlementbyrefrainingfrom
revealingpartofitscasebeforethemediation.Trialbyambushmay
workinanenvironmentwhereitispermittedandwherethereisno

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opportunitytotaketimeouttoanswerthepoint.Butinthe
overwhelmingmajorityofcases,suchlastminutedisclosureinan
ADRproceduremerelyrenderstheprospectofreachingany
page"131" agreedsettlementremote.Notonlywillthe
bouncedpartywanttimetoreconsidertheimpactofthenew
informationonitsownanalysisofthesituation,butitwillalsowant
theopportunitytoeducatethepartyresponsibleformakingthelate
revelationwhyitisnotthesmokinggunthatitwasportrayedtobe.
Accordingly,mediationcannotsensiblytakeplacebeforetheclaim,
itsbasis,itssizeandpotentialimpacthavebeenexplainedbythe
claimantandthennotbeforetherespondenthashadanopportunity
toanalyseitwiththebenefitofitsownadvisersandonthebasisof
thefactsasitsownrecordsandwitnessesunderstandthemtobe.
Inpracticalterms,inaconstructioncontractthisprobablymeans
thatwhereanengineer,architectorcontractadministratoris
chargedwithforminganinitialviewonthevalidityofclaims,
mediationisunlikelytobesuccessfulbeforethisprocesshasbeen
completed.However,withthebenefitofthisinformationandthe
respondent'sresponsetotheclaim,bothpartiesshouldbein
possessionofsufficientinformationtoallowtheirrespective
organisationstoparticipateinanADRprocedureandtomakean
informeddecisionaboutthecircumstancesofthedispute.In
addition,itishopedthatthewiderissuesrelevanttothebenefitsto
bothpartiesofsettlingratherthanfightingthemattertothebitter
endwouldbereadilyavailableatthistime.
Wherethereisnosuchprocedure,ortheprocedurehasnotbeen
followedbutthepartiesneverthelessdecidetoproceedwithanADR
procedureregardless,itisprobablyfruitlesstoattempttogo
straighttoADRwithoutsomeformofformalclaimbeing
considered.Whilethepositionpapersexchangedinmediationsor
minitrialscouldbeusedforthispurpose,theirrealfunctionisnotto
arguethemeritsofthesubstantivedisputebuttoprepareforthe
mediation.Inthesecircumstancesitwouldmakesenseeitherfor
thestandardcontractprocedurestobefollowed(ifthereareany)or
forananalogousorshadowproceduretobeadopted,perhapsona
truncatedtimetable.
Sofarthequestionoftiminghasbeenapproachedonthebasisthat
thedecisiontotryADRiseitherwrittenintothecontractasoneof
theearlystepsinthedisputeresolutionprocess,orthattheparties
havesimplydecided(assometimeshappens)thatthepotential
savingsofADRareworthgoingforeventhoughthecontractdoes
notrequirethemto.However,intheabsenceofguidanceinthe
contractandanypositivedesiretoresolvedisputesinacost
efficientandeffectivemanner,itmaybethatthefirsttimethatADR
isconsideredisafterarbitrationproceedingshavebeen
contemplated,orevenstarted.Atthispoint,itislikelythatthere
wouldbeampleinformationavailabletobothpartiestoenablethem
toevaluateboththeirownandtheotherparty'scasecertainly
sufficienttoallowthemtoreachaninformeddecisiontosettle.The
questionisthennotwhetherthepartiesareabletoenterintoan
effectiveADRprocedurebutwhetheritisintheirintereststodoso
atthattime.
IfthequestionofattemptingADRhasnotbeenaddresseduptothis
point,itislikelythataconsiderableamountofinvestmentwill
alreadyhavebeenmadebyoneorbothpartiesandtheopportunity
tosaveaconsiderableproportionofthecostsofaconventional
arbitrationwillhavebeenmissed.Fromthisbelatedstartingpoint
therelativemeritsofproceedingwithADRsoonerratherthanlater
needtobeconsidered.Inessence,thisisatradeoffbetweenthe
additionalinformationthatthearbitrationprocesswillproducefor
eachpartyagainstthecostsofachievingadditionalcertainty
page"132" abouteachparty'sowncaseanditsknowledgeof
theother's.Thereis,unfortunately,noclearanswertothisquestion.
Infact,onlytwoclearconclusionscanbedrawn.Thefirstisthat
thesoonerADRisattempted,thegreaterthechancesbecomeofa
loweroverallspendonthedisputeresolutionprocess.Whatthis
doesnot,however,revealiswhether,fromeachparty'sindividual
perspective,itwillachieveabetteroverallsettlement(costs
included)byparticipatinginanADRprocessatanearlystage,
ratherthanwaitingformoreinformationtobecomeavailable.For
instance,theavailabilityofawidescaledisclosureprocessmay
offersignificantactualorperceivedopportunitiestooneorother
party,whichwouldsuggestleavinganattemptatADRuntilafterthe
disclosureprocessiscomplete.Alternatively,itmaybethatitis
importanttoseewhetheraparticularpersonwillbecalledasa
witnessfortheothersideand,ifso,whathehastosay.Thecase
mayrevolvearoundatechnicalissue,themeritsofwhichwillnot
becomeclearuntiltheexchangeofexperts'reports.Theexistence
ofanyofthesefactorswouldsuggestthatcommencementofan
ADRprocedureshouldbedelayed.
Thesecondconclusionisthattherewillcomeapointbeforethe
costsofthehearingitselfareincurredwhenthepartieswillknow
asmuchabouttheirownandtheotherparty'scaseastheywillever
know.Theconsequenceofthisisthatinalmosteverycasethereis
awindowofopportunityforthepartiestoachievebothcertaintyof
outcomeandareductioninthecostsofresolvingtheirdisputeby
attemptingADR.Whileinsomewaysthiswindowisfartoolatein
theprocesstobeideal,achievingbothoftheseobjectivescertainly
makestheexerciseworthattempting.
[B].ArbitratorsasMediators:MedArb

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Theoneargumentagainstattemptingmediationatthislatestageis
thatifitisunsuccessful,furthermoneyandeffortwillhavebeen
wastedinbringingathirdpartyuptospeedonthecase.This
inevitablyleadsonetoquestionwhetheroneormoreofthe
arbitratorscouldnotsensiblyfulfilthefunctionofamediator,
therebyeliminatingor(attheworst)significantlyreducingthe
possibilityofADRaddingto(ratherthanreducing)thecostsof
resolvingthedispute.Theobviousadvantagesincludethefactthat
thearbitrator(s)havealreadybeenbroughtuptospeedorwillhave
tobebroughtuptospeedonthecase,sotheadditionalcostof
educatinghiminthecontextofthemediationiseithernonexistent
oronewhichwillbeincurredanyway.Itisalsoprobablethatthe
arbitrator(s)havebeenselectedfortheirsuitabilitytodeterminethe
dispute,withtheprobableresultthattheyhaverelevantbackground
knowledgeoftheparties'businessesand/orofthesubjectmatterof
thedispute.
Whilsttheargumentsinfavourofthearbitrator(s)actingas
mediator(s)aresuperficiallyattractive,thefollowingtwomatters
needtobetakenintoaccount.
First,thatthearbitratorshaveinallprobabilitybeenselectedfor
theirabilitiesasarbitratorsandnotasmediators.Whileitis
becomingincreasinglycommonforarbitratorstotrainasmediators
(aswellasadjudicators,expertsandmembersofalltypesof
disputeboards),thisdoesnotnecessarilymeanthattheyareas
goodatthejobofmediatorsastheyareatthejobtheyarebest
knownfor.Indeed,thereisaninherent
page"133" conflictwhen
switchingfromcarryingoutarightsbasedanalysis(judge/arbitrator)
tocontributingtoaninterestsbasedsolution(mediator).Some,but
bynomeansall,judges/arbitratorssuccessfullyaccomplishthe
transition.Itthereforecomesasnorealsurprisetofindthatsomeof
thebestmediatorsintheworldactsolelyasmediatorswhether
thisisexplainedbythewaytheyapproachmattersortheamountof
practicetheygetisimmaterial.
Second,mediationinvolvesaprocessofexchangeofinformation
betweenthepartiesandthemediatorthatisentirelycontrarytothe
rulesofnaturaljusticefoundinarbitration(whicheffectivelyprohibit
onepartymakingprivatedisclosuretothearbitrator).Asaresult,
eitherthearbitrationorthemediationwillbecompromised.Ifthe
arbitrator/mediatordoesacceptprivateinformationfromparties
withoutdisclosingittotheothertherewillbearealriskthatthat
materialmay,consciouslyorunconsciously,informthatarbitrator's
decision,leadingtoreasonablegroundsforconcernandchallenge
ofanyarbitralaward,bothinthecourtsoftheplaceofthe
arbitrationandinthecourtsoftheplaceofenforcement.If,
however,thearbitrator/mediatoreitherrefusestoacceptreceiptof
privateinformationoracceptsitonlyontermsthatitmaybeused
inreachingitsdecisioninthearbitrationand/ordisclosedtothe
otherparty,thentheprocessofmediationwillbecompromised.No
rightthinkingpartyinthesecircumstanceswouldthenvoluntarily
discloseanythingtothemediatorwhichwouldhavetheremotest
possibilityofimpactingadverselyonitscaseifthemediationfailed.
Forthesereasons,thepossibilityofarbitratorsactingasmediators
andthencontinuingtoactasarbitrators(MedArb)hasbeenand
remainsthesubjectofconsiderablecontroversy.Medarbisa
relativelyfamiliarpracticeincivillawjurisdictions,whereboth
judgesandarbitratorsareusedtotakingontheroleofmediatorto
encouragesettlementbetweenthepartiesduringtheproceedings.
Incontrast,thepracticeisviewedwithgreatsuspicionincommon
lawjurisdictions,ashighlightedbythedecisionintheHongKong
CourtofAppealintheGaoHaiyancase.(12)InAsia,includingChina,
medarbiscommonlyseen.AlthoughpartiesinAsianjurisdictions
willoftenstillcommencearbitrationorlitigationproceedingsatthe
startofadisputetocommunicateastrongindicationoftheirintent
toseetheclaimthrough,theyarealsooftenamenableto
engagementinmediation,giventhatnegotiatedsettlementis
positivelyviewedinAsiancommercialculture.Often,settlement,
andinparticularmediation,isstronglyencouragedbyarbitral
tribunalsandcourtsinAsianandothercivillawjurisdictionswhilst
proceedingsareongoing.
Forexample,apositiveattitudetowardsmedarbisreflectedin
Japan'sArbitrationLawof2003andtheJCAAArbitrationRules,
whichallowanarbitratortoattempt
page"134" tosettlethe
disputesubjecttotheproceedingsoverwhichheispresiding,
(13)
subjecttotheparties'consent. Likewise,themediatorina
disputemaygoontoactasarbitratorinanysubsequentarbitral
proceedingsarisingfromthesamedispute,andanymediation
settlementmaybeincorporatedintoanarbitralaward.(14)In
Germany,theGermanjudgeisunderalegaldutytocarryouta
conciliationhearingbeforetheactualhearingcancommence.(15)
AsinEnglandandtheUnitedStates,thepositiontakeninmost
internationalarbitrationrules(suchastheICCrules (16))isthatin
ordertomaintaintheneutralityandfairnessoftheproceedings,any
mediationprocessshouldbekeptcompletelyseparatefromany
arbitration.Assuch,itiscrucialthatlittleadditional(andno
confidential)informationisgivenbyeitherpartytothe
arbitrator/mediatorwhilstheiswearinghismediatorhat.
[C].ModelMediationClause
ThesuccessfuldraftingofamodelADRclausedependsgreatlyon
thewillingnessofthepartiessubjecttoitsprovisionstocooperate.

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WhileanADRprovisionmaynotbeabletoforcethepartiestoenter
negotiationswithopenminds,itcanprovideastructureandprocess
withinwhichthepartiescanfindamutuallyacceptablesolution.
Theclausemustprovideaclear,satisfactoryframeworkwithin
whicheitherpartymayinvoketheADRprocessandcontainan
effectivemechanismforreferringthedisputetoarbitration(orsome
otherformalmeansofdisputeresolution)ifsettlementcannotbe
reachedwithinaprescribedamountoftime.Ifthepartiesintendthat
mediationshouldfunctionasaconditionprecedenttoarbitration(or
someotherformalproceedings),thenmultitieredorescalatingADR
clausesshouldclearlyandunequivocallysetoutindetailthenature
ofanyADRstepstobeundertakenbeforecommencing
proceedingsor,asnotedearlierinthischapter,thereisariskthat
theclausewillbeheldtobelegallyunenforceable.(17)

LordWoolfMR,AccesstoJustice:FinalReporttotheLord
ChancellorontheciviljusticesysteminEnglandandWales(HMSO
1996).
2
InHongKongaMediationOrdinancehasalsobeenenacted,
providingaregulatoryframeworkfortheconductofmediation.It
primarilydealswithrightsandobligationsofparticipantsin
mediationespeciallyinrelationtoconfidentialityandthenon
admissibilityofmediationevidenceincourtandotherdeterminative
tribunals.
3
GermanMediationAct,whichcameintoforceinJuly2012.
4
Bill32555.
5
Inaddition,theKingRichardIIIReportoncorporategovernance
placesafiduciarydutyonmanagementtoconsidertheuseofADR,
inparticular,mediationbeforedecidingtolitigate.
6
TheDirectiveappliestocrossborderdisputesinciviland
commercialmatters,withtheexceptionofrevenue,customsor
administrativemattersortheliabilityoftheStateforactsor
omissionsintheexerciseofstateauthority.TheDirectivetherefore
providesthatMemberStatesshouldauthorisethecourtstosuggest
mediationtothelitigants,without,however,compellingthemtouse
it.TheDirectivedoesnotapplyinDenmark.
7
Cable&Wirelessplcv.IBMUnitedKingdomLtd[2002]EWHC
2059heldthatwherenegotiationormediationproceduresare
sufficientlyclearlyprescribedinacontract,thecourtwillenforce
them.Itwasheldthatthecourtsshouldnotbeabletoaccentuate
uncertainty(andthereforeunenforceability)inthefieldofdispute
resolutionreferences:contractualreferencestoADRwhichdidnot
includeprovisionforanidentifiableprocedurewouldnotnecessarily
failtobeenforceablebyreasonofuncertainty.Thisisdistinguished
bySulamricaCIANacionaldeSegurosSAandothersv.Enesa
EngenhariaSAandothers[2012]EWCACiv638andWah(Aka
AlanTang)andanotherv.GrantThorntonInternationalLtdand
others[2012]EWHC.Bothcasesheldthatbecausetheprocessfor
ADRwasnotproperlydefinedandtheparties'commitmenttothe
processequivocallyexpressed,thentherequirementtosubmitto
ADRasapreconditiontoarbitrationwasnotenforceable.
8
HSBCInstitutionalTrustServices(Singapore)Ltd(trusteeof
StarhillGlobalRealEstateInvestmentTrust)v.Toshin
DevelopmentSingaporePteLtd[2012]SGCA48.
9
Writingisnot,perhaps,strictlynecessarybutisrequiredbythe
principalstandardrulesformediation.
10
Foranexample,seetheCEDRModelMediationAgreement
(13thed.,2012),availableat:
http://www.cedr.com/about_us/modeldocs/?id=20(accessed10
Sep.2013).
11
See http://www.cedr.co.ukand http://www.nai
nl.org/english/(accessed10Sep.2013).
12
InGaoHaiyanandanotherv.KeeneyeHoldingsLtdandanother
CACV79/2011theHongKongCourtofAppealheldthatanarbitral
awardwasenforceablefollowingaclaimthatthearbitral
proceedingsinamedarbprocessweretaintedwithbias'fromthe
precedingmediationproceedings.Indecidingwhetherthemediation
processgivesrisetoapparentbias,theCourtofAppealplaced
considerableimportanceoncontextandhowmediationisnormally
conductedintheforumofmediation,includingculturaldifferences
betweenChinaandHongKongwhichmayhelptoexplain
differencesinthewayinwhichmediationisconductedinthetwo
jurisdictions.
13
SeeArt.38(4)oftheArbitrationLaw(LawNo.138of2003),and
Rule47oftheJCAACommercialArbitrationRules.
14
JCAAInternationalCommercialMediationRules,Rules8and
11.
15
Section278oftheGermanCodeofCivilProcedure.
16
SeeArt.7,(3)and(4)oftheICCADRRules:
http://www.iccwbo.org/productsandservices/arbitrationand
adr/adr/adrrulesandguidetoadrrules/#article_7(accessed10
Sep.2013).
17
InWah(AkaAlanTang)andanotherv.GrantThornton
InternationalLtdandothers[2012]EWHC3198(Ch)theChancery
Divisionheldthatthetermsoftheagreementlackedsufficient
definitionandcertaintyinrespectofthetermsoftheprocessand
thepartiesrespectiveobligationstoconstituteenforceable
conditionsprecedenttothecommencementofarbitration
proceedings.

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Chapter7:Commencementofan
Arbitration
7.01.Introduction
Thischapteroutlinesoneofthemainbenefitsofarbitration:the
abilitytotailortheproceduretotheneedsoftheparties.Theparties
areabletoshapetheprocessinvariousrespects,themost
importantbeingtheirrighttoappointthemembersofthetribunal.
Thefactthatthepartiescanchoosearbitratorswhoarespecialised
inparticulartechnicalareasandselecttheseatofthearbitration
andthelanguagetobeadoptedallowsauniqueflexibility,which
meanstheprocessisparticularlyappropriateforinternationaland
complextechnicaldisputes.
Thedecisionastowhetherarbitrationisthemostappropriateforum
inwhichtoresolveadisputeisusuallytakenlongbeforeany
problemarisesbetweentheparties.Thearbitrationagreementthat
thepartiesdraftatthetimeofenteringintocontractualrelations
will,toagreatextent,dictatetheprocess.(1)Thepartiesmust
thereforethinkverycarefullyattheearlystage,whenthearbitration
clauseisbeingagreed,aboutissuessuchasthetypesofdisputes
whichmayarise,theappropriateseatandlanguageofany
arbitrationand,wherethereispotentialforamultipartydispute,
whichpartiesarelikelytohavesimilarinterests.Itisoftenadifficult
challengetoanticipatethewayinwhichfuturedisputesmayarise,
howeverthischapterwilltrytoandaddresssomeofthe
considerationsoneshouldbearinmindwhendraftinganarbitration
clauseinordertoensuretheproperproceduresareinplace,should
itultimatelybenecessaryforthepartiestoarbitrate.

Source
Chapter7:
Commencementofan
ArbitrationinJane
Jenkins,International
ConstructionArbitration
Law(SecondEdition),
ArbitrationinContext
Series,Volume3
(JaneJenkinsKluwer
LawInternational2013)
pp.137154

Asdiscussedinthepreviouschapter,thereareseveralarbitral
institutionsthatwillprovideguidanceandstructuretotheprocess,
shouldthepartiesoptforaninstitutionalarbitration.However,the
partiesshouldbeawarethatthereisanadditionalcost,inthatfees
arepayabletothoseinstitutionsandthatproceduralrules
page
"137" suchasthoseoftheICCandLCIAexcludetherightto
appealforanerroroflaw.Thealternativeisanadhocarbitration,
whichprovidesmoreflexibilityandpartycontrol,butcarrieswithit
certaindisadvantages.Forexample,anadhocarbitrationmaytake
moretime,asthepartieshavetocooperateandagreethe
procedureandtherearenoinstitutionaldeadlinesdrivingthe
process.Itmayalsobenecessarytohaverecoursetonational
courtsformatterssuchastheappointmentofarbitratorsindefault
ofagreementfurtherslowingtheprocess.Thereis,however,a
middleroad,wherebythepartieselecttoadopttheframeworkofa
particularinstitution,butreservetherighttoderogatefromitsrules
byagreement.
Partiesfromdifferentcountriesmayfavourdifferentmodels,often
dependingonwhethertheyarefromcivilorcommonlaw
jurisdictions.(2)Ininternationaldisputes,theproceduralexpectations
ofpartiesfromdifferentlegaltraditionscanleadtodifficulties,
althoughasarbitrationbecomesmorecommontheseproblemsare
diminishing.Nevertheless,itisvitalthatbeforeselectinga
particularstructure,thepartiesconsidertheprosandconsofthe
differentrulesofthevariousarbitralinstitutionsandassessthe
flexibilityeachprovides.
7.02.SelectionoftheTribunal
Theprinciplebehindtheparties'righttoappointthearbitralpanelis
thattheyshouldbefreetohavethedisputeresolvedbyjudgesof
theirownchoice.(3)Thequalityofanarbitraltribunalisthemost
importantfactorinensuringthattheprocessiseffectiveandhas
theconfidenceoftheparties.Theprocessworksbestwherethe
partiesareabletoweighupallthecircumstancesofaparticular
disputebeforemakingadecisionastotheskillsthatarerequiredof
theparticulartribunal.Thereis,accordingly,atacticaldecisionto
bemadeatthetimeofdrawingupthearbitrationagreement,with
regardtohowmuchdetailthepartieswanttoincludeaboutthe
compositionofthetribunal.(4)Wherethearbitrationclauseisdrafted
beforethedisputearisesandincludesrestrictionsastothespecific
experienceanarbitratormustpossessorhisnationalityisspecified
insomedetail,thechoiceofavailablearbitratorsmaybe
significantlylimited.Forthisreasonitisgenerallysafertoprovidea
broadsetofcriteriaandallowtheparties(orfailingthemthe
relevantinstitution),tomaketheselectionbasedonthisguidance.
Itisalsogenerallypreferableforthepartiestobeinvolvedinthe
selectionprocessevenifagreementbetweenthemisreachedless
oftenthanwouldbeliked.Beinginvolvedinchoosingtheir
arbitratorsgivesthepartiesasensethattheircaseisbeingproperly
heardandmaylaterassistthemtoaccepttheaward.
Ensuringequaltreatmentofthepartiesintheorganisationof
proceedings,andinparticulartheselectionandappointmentof
arbitrators,canbeverydifficultina
page"138" multiparty
dispute.Thissituationmayoccurwherethereisasinglecontract
betweenseveralparties(e.g.,ajointventure)orwherethereisa

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webofinterrelatedcontracts.Failuretoensurethatalltheparties
haveequalinputmayprovidegroundsforresistingenforcementof
theaward.
Thepartiesshouldtaketimecarefullytoconsidertheiroptionswhen
carryingouttheselectionprocess.Itisanopportunitytoensure
thatthepaneliscomposedofthepeoplewiththerequisiteskilland
knowledgetoservetheneedsofthepartiesandtoreachthecorrect
decision.Thismaybeparticularlyimportantwherethepanelwillbe
requiredtodecidecomplextechnicaldisputes,suchasoftenarise
outofconstructioncontracts.Thepartiesmust,however,bearin
mindanystatutory,institutionalorcontractualtimelimitsand
ensurethatintakingtheirtimeinconsideringtheappointment,they
donotfailtomeetanydeadline.Caremustalsobetakentoconfirm
theavailabilityofthecandidatesasmanyofthewellknownand
respectedinternationalarbitratorsareveryheavilycommittedwhich
cancausesignificantproblemsforfixinghearingdatesandthe
promptrenderingofawards.
[A].NumberofArbitrators
Thisissueisusuallydecidedatthetimeofdraftingthearbitration
clause.Thereisobviousmeritinhavinganoddnumberof
arbitratorsitismostcommontohaveeitherthreearbitratorsora
solearbitrator.Asolearbitratorwillbecheaperandmaydeliverhis
decisionmorequickly,asheneednotconsultordiscusstheissue
withothers.Coordinatingmeetingsandhearingsforthree
arbitratorswillalsobemoredifficultandmayresultindelays.Itis
notunusualthereforeforpartiestoprovideforasolearbitratorwhen
draftingtheirarbitrationagreementifitisanticipatedthatdisputes
willbeofrelativelylowvalue.Conversely,withathreemember
tribunalthereislesschanceofanunusualresultoramistaken
approachbeingadoptedtowardsthecase.However,themain
disadvantageofproceedingwithasolearbitratoristhatifthe
partiescannotagreeonwhotoappoint,thedecisionwillfalltoan
appointingauthorityandbetakenoutoftheparties'hands.Where
thearbitrationagreementprovidesforthreearbitrators,theusual
practiceisthatthepartieseachappointanarbitratorandthethirdis
selectedbythetwopartyappointedarbitratorsorthearbitral
institution.Forthereasonsoutlinedabove,itisrecommendedthat
thepartiesretaincontrolovertheselectionprocessbycarefully
draftingtheprocedurefortheappointmentofarbitratorsinthe
arbitrationclauseoradoptinginstitutionalrules.
Aswithmanystagesofthecommencementprocess,muchwill
dependonwhetherthepartieshaveelectedaninstitutional
arbitrationoranadhocarbitration.Thedifferentinstitutionshave
theirownpreferences.TheLCIA(5)andICC(6)Rulesprovidethat
unlessthepartiesagreeotherwise,therewillbeasolearbitrator.
HoweverboththeLCIAandtheICCRulesmakeanexception
wherethedisputeissuchthatinthecircumstances,itwarrantsthe
appointmentofthreearbitrators.Bycontrast,the
page
"139" UNCITRALArbitrationRules (7)andtheUNCITRALModel
Law(8)expressapreferenceforthreearbitratorsunless,withinthirty
days,thepartieshaveagreedotherwise.InChina,CIETAC(9)isthe
mostpopularcommissionforinternationalarbitrationsanditsRules
requirethatthetribunalismadeupofthreearbitratorsunlessthe
partiesagreeotherwise.(10)Theprosandconsofthedifferent
optionsmustbeconsidered.
[B].ConsiderationsWhenSelectingaTribunal
Theabilitytoselectanarbitratorisoneoftheuniquefeaturesof
arbitrationandisonewhichthepartiesshouldusetotheirbest
advantage.Thereareawiderangeofpotentiallyrelevantqualities
andskillsthatthepartiesshouldconsiderwhentailoringthe
selectiontotheirneeds.Theserangefrompracticalissues,suchas
languageandexperience,totheappropriatenessofappointinga
personwithparticularpubliclyheldviewsorawellknownapproach
toanissuerelevanttothedispute.Thedecisionmayalsohingeon
thenumberofarbitratorsmakingupthetribunal.Ultimately,the
moreexperiencedthepanel,themoreefficienttheprocesswillbe,
therebysavingtimeandmoneyfortheparties.
Asarbitrationbecomesincreasinglypopularininternational
disputes,thelanguageofthearbitratorsbecomesincreasingly
importanttotheparties.Thelanguagesofthepartiesmaydiffer,
documentsinthecasemaybeinavarietyoflanguages(although
ofcoursethesecanbetranslated,albeitatacost),witnessesmay
speakdifferentlanguagesandtheseatofthearbitrationmaynotbe
inthenativecountryofoneormoreoftheparties.Havingamulti
lingualarbitratororanarbitratorwhospeaksaparty'sownlanguage
maybeasourceofreassuranceandcomforttotheparties.Under
theICCRules,ifthepartiescannotagreethelanguage,itwillbe
determinedbythetribunalwithdueregardbeinggiventoall
relevantcircumstancesincludingthelanguageofthecontract.(11)
UndertheLCIARules,thelanguageisbasedonthatofthe
arbitrationagreement,butthefinaldecisionisdeterminedbythe
tribunalbasedontheLCIArecommendation,theparties'comments
andanyotherrelevantmatters.(12)UndertheUNCITRALArbitration
Rules,thelanguageisagaindeterminedbythetribunal.(13)Itisalso
usualforsolearbitratorsorchairpersonstobeofanationalityother
thanthenationalitiesoftheparties.
page"140"

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Atleastoneofthearbitratorsonapanelshouldgenerallybean
experiencedlawyer,particularlywherethearbitrationinvolves
issuesoflawandtherearefewarbitrationsthatdonot.The
principalreasonforthisisthatinmostinternationalcommercial
arbitrationsthepartiesneedtobeabletoentrusttheprocessto
someonewhoiscapableofprogressingitjustlyandeffectively.
Second,onamoresubstantivelevel,internationalcommercial
arbitrationsfrequentlyinvolvedifficultquestionsoflaw.Itis
thereforesensibleforatleastthechairmanofathreemantribunal
tobealawyer,sothathecandealwithsuchlegalissuesasand
whentheyarise.Thereisthenthequestionwhethertoappointa
lawyertrainedandexperiencedinacommonlaworcivillaw
system.Thiswillberelevanttobothsubstantiveandprocedural
issuesgivenanarbitratorwhoisfamiliarwith,forexample,cross
examinationintheEnglishcourtsislikelytobemorecomfortable
withordersforcrossexaminationofwitness(albeitonalimited
basis)thanthecivillawpractitioner.Thefusionofcommonandcivil
lawproceduresininternationalarbitrationdoesmitigateagainsta
polarisedapproachandrulessuchastheIBArulesontheTakingof
EvidenceinInternationalArbitrationproposeausefulmiddleground.
Theseissuesarediscussedfurtherinthenextchapter.
Inmanyjurisdictions,includingtheUK,itisbothacceptableand
desirableforsomeofthearbitratorsonapaneltobenonlawyersin
areassuchasengineeringandconstruction.Itisclearly
advantageousinacomplextechnicaldisputeforthearbitratorsto
haveexpertiseintherelevantsector,althoughifthepartiesintend
touseexpertstheymightnotdeemitanessentialrequirement.The
partiesmayagreethatthearbitratorshouldbeapersonengagedin
aparticulartrade.Thepartiesmayevenagreethattheappointment
shouldbemadebyatradeassociation.Ifanarbitratorissuitably
qualified,hewillbeabletoliaisecompetentlywiththeexperts(if
theyarealsorequired)andhelpguidethetribunalininterpretingthe
experts'opinionsandattachingweighttotheirfindings.The
CharteredInstituteofArbitratorsrunscoursesandexaminationsfor
thosewhowishtoqualifyasarbitrators.Manyarbitralinstitutions
reservetherightnottoconfirmtheappointmentofapersonthey
considerunsuitable.(14)
Arbitratorsmayalsobeselectedbecauseoftheirparticular,
publiclyheld,viewsinrelationtofundamentalissuesbetweenthe
parties,forwhichreasonthepartynominatingthemfeelsthatthey
willappreciatetheparty'scasemorereadily.Thisisoneareawhere
therighttoselectarbitrators,oneofthekeyadvantagesof
arbitrationoverdomesticcourts,needstobeexercisedwithsome
care.Whileitisquiteacceptabletonominateanarbitratorwhose
broadviewsperhapsonlegaltheoriesortherolesofpartiesto
constructioncontractsalignwiththoseneededtowinthecase,
caremustbetakennottooverstepthemark.Viewsheldnotjust
generallybutontheparticularsubjectmatterofthedisputein
questionarelikelytoformthebasisforachallengeforlackof
neutrality.Itisforthesereasonsthatitisbecomingincreasingly
commonforthepartiestointerviewarbitratorsbeforenominating
them.Thisisnotjusttoassesswhetherthearbitratorshavethe
appropriatequalificationsorpersonalitytraits,butalsototesttheir
viewsonrelevantissues.Clearly,anysuchconversationcanbe
page"141" conductedinonlythemostgeneralterms,sinceit
wouldbeinappropriateandagroundforsubsequentchallengeof
theawardforonepartytohaveaprivateconversationwithan
arbitratoraboutthemeritsofthecaseheisappointedtodetermine.
[C].MethodsofAppointment
Themethodofappointmentisusuallyagreedinthearbitration
clause.Therearetwomainwaysinwhichthearbitraltribunalmay
beappointed.Theprocessmaybeconductedbythepartiesorby
thearbitralinstitution.Theprocedurallawoftheseatmayalso
influencetheprocess.
Whereaninstitutionisnotinvolved,themostcommonmethodis
thatthepartiesseektoagreeontheidentityofasolearbitratoror,
wherethereisapanelofthree,thateachpartyeachappointsone
arbitratorandthetwopartyappointedarbitratorsthenagreeonthe
chairperson.(15)Theappointmentofthethirdmemberofthetribunal
bythetwopartyappointedmembersisusuallythemost
satisfactorymethodtotheparties,astheywillhavefaithintheir
appointedarbitrators'judgmentinelectingthechairperson.However,
itisimportanttoconsiderwhatistohappenintheeventofany
failuretoagreeontheidentityofanarbitrator,orwhereoneparty
simplyfailstoparticipateinanywayintheappointmentprocess.
Whilstinmostjurisdictionsitwillbepossibletoapplytothelocal
courtstoappointanarbitratorinsuchcircumstances,thiscanbea
slowanduncertainprocess.(16)Forthatreason,wherethe
appointmentofarbitratorsisinthehandsoftheparties(asinanad
hocarbitration)itisgoodpracticetohaveanexperiencedbodyto
actasanappointingauthorityi.e.,onewhoseprincipalfunctionis
tomakeappointmentsofarbitratorsindefault.
Whereaninstitutionisinvolved,theprocesstendstobeunderits
control.Whilethepartiesmaynominatearbitratorsforappointment,
theactualappointmentisreservedtotheinstitutionitself.Thus
undertheICCRules (17)andtheLCIARules (18)(wheretheparties
haveexpresslyagreedtobeinvolvedintheselection),theparties
havetherighttoselectonearbitratorofathreemembertribunal
each,howeverthisissubjecttoinstitutionalconfirmationandthe
ICCorLCIAwillappointthechairperson.Inaddition,asdescribed
above,whereanypartyfailstoagreeortoparticipateinthe

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nomination/appointmentprocessasrequired,theinstitutionwillfill
thegapbyactingastheappointingauthority.Inanadhoc
arbitrationundertheUNCITRALArbitrationRules,ifthepartiesdo
notappointthearbitrators,theSecretaryGeneralofthePermanent
CourtofArbitrationatTheHaguemay,attherequestofeither
party,designateanappointingauthority.(19)Thistwostepprocessis
cumbersome,butatleastavoidstheneedtoapplytoacourtto
appointthearbitrators.
page"142"
TheCIETACRulesapplyalistprocedureforappointmentofthe
chairman,wherebyeachsidenominatesonetofivecandidatesand
providestheirnamestoCIETAC(ifthepartieshavenotagreedon
thechairmanorchoosenottoentrustnominationtotheChairmanof
CIETAC).(20)Whereonecandidateappearsincommononbothlists,
suchcandidatewillbeappointedasthechairmanofthetribunal.If
morethanonenameisproposedbybothsides,CIETACdecides
themostsuitableappointment.Wherethepartiesdonotnominate
thesamepersonorpersons,CIETACwillappointanindividualwho
hasnotbeennominatedbyeitherside.
Theuseofsuchlistsmaybeaneffectiveandhappycompromise.
(21)
Itprovidestheopportunityforinstitutionstoconsultwiththe
partiesontheappointmentofthearbitrators.Thepartiesmaybe
providedwithalistofnamesandgivenanopportunitytoveto
anyonetheydonotthinksuitableorexpressapreferencefor
others.Alternatively,thepartiesmaydrawuptheirownlistsand
exchangethemsimultaneously.Thismethodhelpstopreventthe
deadlockwhichoftenoccurswheneachpartyautomaticallyrejects
theother'snominations.
TheUNCITRALArbitrationRulesemployasystemwhichisahybrid
ofthepartyappointmentandlistsystems.(22)TheICDRand
NetherlandsArbitrationInstitutealsoemploythismethod.The
appointingauthoritysendsoutthesamelisttoeachparty,withat
leastthreenamesonit.Eachpartygradesthenamesonthelistto
showitspreferenceandthetribunalappointsthearbitratorsbased
ontheparties'input.Thismethodensuresthatthepartiesretainthe
elementofchoice,buthelpsprotectthearbitrators'independence.
Thepartiesarealsomorelikelytobecontentwithallthree
membersofthetribunalifthismethodisemployed.Inthe
Netherlands,researchshowsthatthepreferencesexpressedbythe
partiesarethesamein80%ofcases.(23)Theuseofalistalso
helpswithadaptingtheprocessofselectiontomultipartydisputes.
[D].DutiesofArbitrators
Onceappointed,thetribunalhasadutytoactfairlytobothparties,
evenifthepartiesappointedtheirownarbitratorstothepanel.(24)
Arbitratorsmustmeettherequiredstandardsoffairness,equality,
independenceandimpartiality.(25)Thishasbeendescribedasa
nonwaivablemandatoryprinciple.(26)Thepresumptionisthatthe
page"143" arbitratorsshouldbeindependentandimpartialeven
iftheywereappointedbyoneofthepartiesasarepresentativeof
thatparty'sviews.(27)Becauseofthismany(thoughnotall)
institutionsrequirethat,unlessthepartiesagreeotherwise,the
nominatedarbitratorsmustsignastatementofindependence
disclosinganypreviousrelationshipwiththepartiesorthesubject
matterofthedispute.(28)Oneexamplewherenoformalstatementof
independenceisrequiredcanbefoundintheAAARules,however,
thereisacleardutytodiscloseanycircumstanceslikelytogive
risetojustifiabledoubtsastothearbitrator'sindependenceand
impartiality.(29)TheICCRulesrequirearbitratorstoactwith
independenceandimpartiality,andthatarbitratorsdisclosetothe
partiesanymatterwhichmightberegardedasimpactingtheir
independenceorimpartiality.(30)TheUNCITRALArbitrationRules
(wherethereisnoinstitution)providethatanyarbitratormaybe
challengedifcircumstancesexistthatgiverisetojustifiabledoubts
astothearbitrator'simpartialityorindependence.(31)TheCIETAC
Rulesimposeapositiveobligationonallarbitratorstotreatthe
partiesequally,fairlyandindependently.(32)Arbitratorsarealso
requiredtodeclaretoCIETACanymatterswhichmightraise
reasonabledoubtsastotheirindependenceandimpartiality,
whethersuchmattersarisebeforeorduringthearbitralproceedings.
(33)

Certaininstitutionalrulesalsohavesomelimitationonasole
arbitratororchairman'snationalityspecifyingitshould(savecertain
circumstances)bedifferenttothatoftheparties,toensure
neutrality.(34)Arbitrationclausesthatattempttoplacelimitations
upon,forexample,thenationalityofanarbitratorwererecently
challengedinEngland(onthebasisthatarbitratorswere
employees'forthepurposesofEnglishlegislationagainst
discriminationofemployees.However,theSupremeCourthas
rejectedsuchanobjectiontotheselimitationsonarbitrator
appointments,clarifyingthatarbitratorsareinsteadindependent
providersofserviceswhoarenotinarelationshipofsubordination
withthepersonwhoreceivestheservices'.(35)
Theinstitutionalarbitralrulesprovidearangeoftestsastothe
abilitytochallengeanarbitralappointment.TheICCRulesreferto
challengeforanallegedlackofimpartialityorindependenceor
otherwise.Forpurelyadhocarbitrations,nationallawscontainthe
relevanttests.TheUNCITRALModelLawisrepresentativeofsuch

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rulesrequiringtheretobejustifiabledoubts'astothearbitrator's
impartialityorindependence.Thearbitralinstitutionsdonotdefine
themeaningofindependentandimpartialinsteadtheyare
definedonacasebycasebasis.
page"144"
Inthelastfewyearstherehasbeenadistincttrendawayfrom
viewingindependenceandimpartialityseparatelyandtowards
viewingthesetwoelementsastheoppositesideofthesamecoin.
(36)
Thetraditionalview(37)isthatindependencecanbejudged
objectivelyasithasnothingtodowiththearbitrator'sstateofmind.
Itrelatestohisrelationshiptotheparties.Impartiality,however,
relatestobiasandcanonlybeassessedsubjectively.
Thepartiesshouldtrytoanticipateanyproblemsinordertotryto
ensurethattheirselectiondoesnotcauseanyunnecessarydelay
totheproceedings.Previouscontactbetweenthepartiesandthe
arbitratorshouldbeconsideredforexample,ifanarbitratorhasany
employmenthistorywithaparty (38)orhasanyfinancialinterestin
theoutcomeofthearbitration,(39)thereisaclearargumentthat
thereisapossibilityofprejudice.Inonecase,asuccessful
challengewasmadetotheSCCBoardwhenthesonofoneofthe
arbitratorsjoinedthelawfirmactingforoneoftheparties.(40)Evena
patternofrepeatedappointment(ofaparticulararbitrator)byoneof
thepartiescouldraiseconcern.However,inpractice,succeeding
withsuchachallengeisdifficult.Inconsideringwhetherthereis
groundforchallenge,theconsiderationwillbewhetherafairminded
andinformedobserverwouldconcludethattherewasareal
possibilitythatthetribunalwasnotimpartial.(41)Similarviewson
thispointhavebeenexpressedinboththeUKandtheUS.(42)
Asthisisacomplicatedandcontroversialarea,theIBApublished
GuidelinesontheConflictsofInterestinInternationalArbitration
(theGuidelines)inJuly2004tohelppartiesandarbitrators
determinewhatinformationshouldbedisclosed.TheIBAbelieves
thatthedutytobeindependentandimpartialshouldnotbea
hindrancetointernationalarbitration.TheGuidelinesareaimedat
clarifyingthescopeofthedutysothattherearefewerchallenges
to,andwithdrawalsof,arbitrators.TheIBAprovidesspecific
examplesofpotentialconflictsanddeterminestheappropriate
actionbasedonatrafficlightssystem:theyhaveproduced:(i)
NonwaivableRed,(ii)WaivableRed,(iii)Orange,and(iv)Green
lists.TheNonwaivableRedscenariosareregardedbytheIBAas
givingrisetojustifiabledoubtsastothearbitrator'sindependence
andimpartiality,anddisclosureofthesituationcannotcurethe
conflict.TheGuidelines'examplesoftheNonwaivableRed
categoryincludewherethearbitratorisadirectororlegaladvisorof
oneofthepartiesorhasasignificantfinancialinterestinthe
outcomeofthearbitration.WaivableRedsituationsarewherethe
conflictisserious,
page"145" butifthepartiesexpresslyagree
tothearbitrator'sappointment,theconflictcanbewaived(e.g.,
whereaclosefamilymemberofthearbitratorisamanagerofone
ofthepartiesorhasafinancialinterestintheoutcome).The
Guidelines'Orangelistcoverssituationswhereoneoftheparties
hasjustifiabledoubtsaboutaconflictsuchasanarbitrator's
historicalinvolvementwithoneoftheparties,butifnotimely
objectionismade,thearbitratormayconducttheproceedings.The
Greenlistcoverssituationswhere,objectively,thereisnoconflict.
Thismaybewherethearbitratorhaspreviouslypublishedageneral
opinionconcerningarelevantissueorownsaninsignificantnumber
ofsharesinoneoftheparties,whichispubliclylisted.(43)
Eitherpartycanchallengethepreliminarydecisionsmadeatthe
timeofcommencement.Inaninstitutionalarbitration,thechallenge
isusuallyaddressedtotheinstitution,howeverachallengemaybe
madethroughthecourtsofthecountryinwhichthearbitrationisto
takeplaceifthenationallawallowsit.Challengesshouldbemade
assoonasisreasonablypractical.Achallengetoanarbitratorcan
beusedtochallengeanaward.However,itisfrequentlytoolateto
raiseanobjectionbythetimetheawardisgranted,unlessgrounds
arediscoveredlateintheday.Iftheobjectionisnotraisedatthe
timethegroundsforobjectionbecameapparent,thegroundsfor
challengewillbedeemedtohavebeenwaived.
7.03.TheParties:Joinder/Consolidation
Thearbitrationmodelisbestsuitedtobilateraldisputes.Thereason
forthisisthatthearbitralprocessisbasedentirelyonthe
agreementofthepartiesinthearbitrationclauseoftherelevant
contract,generallybeforeanydisputehasarisen.Itisaconsensual
process.
Unfortunately,constructiondisputesofteninvolvemultiparty
relationships,wherebyvariouscontractorsandsubcontractorsare
tiedintooneprojecttogether.Inthosecircumstancesitisvery
difficulttodrafttheperfectarbitrationclausebecauseonecannot
predictthedifferentsetsoffactsthatmaygiverisetodisputes
betweentheparties.Thisisfurthercomplicatedwherethereisan
internationalelement.Inaddition,becauseofthedifferenttimesat
whichthevariousagreementsareconcluded(andthediffering
negotiatingstrengthsofthepartiestothoseagreements)theparties
mayeachhaveconsentedtoarbitratebutunderdifferent
procedures.Forexample,theemployerandthecontractormay
haveagreedtoarbitrateundertheICCRulesinSwitzerland,
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mayhaveagreedtoarbitrateundertheLCIARulesinLondon.The
twosetsofagreementsmayalsomakedifferentprovisionsfor
languageorthenumberofarbitrators.Intheabsenceofany
agreementbetweentheparties,thereisnoscopetoconsolidatethe
twosetsofarbitrations.
page"146"
[A].JoinderorConsolidationbyConsentoftheParties
Wheredisputesariseinrelationtothesameproject,involving
multipleparties,itmaymakesensetojoinadditionalpartiesor
consolidatemultipleproceedings(atleastinrelationtodisputeswith
commonelements).However,thisisnotgenerallyprovidedforin
standardformarbitrationclauses,andisonlyrarelyachievedin
practice.Itcan,infact,beverydifficulttoachieveaworkable
consolidationarrangement.Partiestoanarbitrationclauseshould
givethoughtatthetimetheyenterintothefirstcontracttoincluding
consolidationprovisionsiftheyarenotaddressedintheinstitutional
rulesadoptedbytheparties.
Thereissomescopeinprincipleincertaininstitutionalrulesfor
joinderofadditionalpartiesandconsolidationofproceedings.The
ICCRuleswereamendedin2012topermitjoinderofanadditional
partywherethisisnotifiedtotheSecretariatbeforeappointmentof
arbitrators.However,joinderissubjecttotheCourtdeterminingthat
anarbitrationagreementexistsbetweenallinvolvedpartiesorthat
arbitrationagreementsinthedifferentapplicablecontractsare
compatible.(44)Similarly,theICCRulesallowforconsolidationof
multiplearbitrationsinanyofthreecircumstances(i)theparties
agreetoconsolidation(ii)allclaimsaremadeunderthesame
arbitrationagreementor(iii)whereclaimsaremadeundermultiple
arbitrationagreements,thearbitrationsarebetweenthesame
parties,thedisputesinthearbitrationsariseinconnectionwiththe
samelegalrelationship,andtheCourtfindsthearbitration
agreementstobecompatible.(45)
Therefore,evenwhereajoinder/consolidationarrangementis
includedintheinstitutionalrules,(46)thetwosetsofpartiesmay
haveagreedtoincompatibleprovisions,forexampleregardingthe
seatorlanguageofthearbitration,whichcouldhavetheeffectof
hinderingorpreventingconsolidation.
Wherethereisnopowerintherelevantrulestoconsolidatecases
andwhereitisobviousthatconsolidationofcasesarisingbetween
differentpartiestodifferentagreementsislikelytobebeneficial,the
partiesmaytrytomakeexpressprovisionforconsolidationof
proceedingsintwoways.(47)First,theymayenterintowhatmight
becalledpushorpullarbitrationagreements,sothatAentersinto
anagreementwithBandBwithC,D,Eandsoon,witheach
agreementcontaininganexpressconsenttohavedisputesarising
underthatagreementconsolidatedwiththosearisingunderother
agreements(i.e.,pushedintoajoinedproceeding).Asimportantly,
suchanagreementmustalsoallowdisputesunderother
agreementstobeheardtogetherwithdisputesundertheagreement
inquestion(i.e.,pulledintoajoinedproceeding).Allrelated
contractsshould,ofcourse,containarbitrationclauseswiththe
sameseat,language,governinglawetc.Doneproperly,judicious
useoftheabilitytopushdisputesintootherarbitrationsortopull
otherdisputesintothearbitrationofthedisputeunderthe
page
"147" agreementinquestionwillalloweffectiveconsolidation.The
advantageofthistechniqueisthattheconsentofallthepartiesis
notrequiredsimultaneouslyafterthedisputehasarisenbutis
providedforinthecontractualarrangements.
Thesecondpossibilityisthatallthepartiesinvolvedintheproject
enterintoaseparateandstandaloneumbrellaagreement,which
allowsforallrelateddisputestobeheardtogetheror,forsimilar
disputestobeconsolidated.Insuchanarrangement,theparties
mayreservetherighttodecidewhichproceedingsarerelated,or
mayreferthatdecisiontothetribunal.However,itisinevitablethat
disputeswillnotalwaysariseatthesametime,sotheparties
shouldconsidergivingthetribunaladiscretionnottoconsolidate,
sothatifonesetofproceedingsisquiteadvancedwhentheother
arises,timeandmoneyisnotlostinunnecessaryconsolidation.
Althoughanumbrellaagreementrequiresaseparatesetof
negotiations(whichmaynotbeeasytocomplete),theadvantageis
thatitallowsajoinder/consolidationregimetobeappliedto
agreementswhichhavealreadybeennegotiatedwithoutthe
conclusionoffounderprovisionsandalsopermits(sinceitprovides
forastandalonearbitrationprocedure)differencesintheindividual
arbitrationprovisionsineachoftheunderlyingrelatedagreements
tobeovercome.
[B].ConsolidationbyCourtOrder
Insomejurisdictions,(48)joinderandconsolidationcanbeorderedby
thecourts,withouttheconsentofthepartieswhenitisnecessary
orconvenient,howeverthisisstillconsideredexceptional.Court
orderedconsolidationorjoindercontradictstheprinciplethat
arbitrationprocedureisinaccordancewiththeagreementofthe
parties'(49)andprivate.
[C].AdvantagesandDisadvantagesofJoinderand
Consolidation

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Themainadvantageofjoinderorconsolidationisthatitcan,at
leastwhenthecostsofallthepartiesareaggregated,becheaper
forthepartiesandmaketheprocessquickerandmoreefficient.
Thecostofsettingupasecondoreventhirdtribunalwillbesaved
eveniftheonearbitrationactuallyconductedwillberathermore
complex.Italsohelpstoreducetheriskofinconsistentawardsand
thereforeincreasestheparties'confidenceintheprocessby
deliveringamorecertainoutcome,particularlyforthepartysuchas
themaincontractorwhoisthemeatinthesandwich,havingto
delivertotheemployerwhat,inpractice,itssubcontractorswillbe
providing.
Allisnot,however,rosyevenwheretimeandefforthasbeenput
intoagreeingaregimewhichpermitsjoinderandconsolidation.For
instance,oneofthedisadvantagesofjoinderorconsolidation
provisionsisthatunlesstheyareinvokedatthestartoftheinitial
disputethen,ifanotherpartyissoughttobejoinedatalaterstage
intheproceedingsandthedisputesconsolidated,thatjoinedparty
orpartieswillnothave
page"148" hadanequalinputintothe
compositionofthetribunal.Thisisonereasonwhyjoinderand
consolidationclausesoftenprovidefortheappointmentofall
tribunalmembersbyanindependentbody,therebyeliminatingany
disparityininfluencebetweentheoriginalandjoiningparties.(50)
However,eventhemostartfuldraftingcannotovercomethe
principalproblemofthelatejoinderofparties,whichistheimpact
onthetimetableofthearbitrationintowhichtheyhavebeenjoined
(questionsoffairnessdictatethatsomedelaywillhavetobe
tolerated,toallowthejoiningpartiestocatchup).Norcanitreally
overcometheproblemofthewastedcostsofthejoiningpartiesif
theyhavealreadybeenseekingtoresolvetheirdisputesinsome
otherforum.Theonlypracticalansweristolimittheoperationof
joinder/consolidationclausestospecificwindowsaroundthestartof
thefirstrelevantdisputes,leavingtheprovisionsinoperativeifnot
invokedmoreorlesscontemporaneouslywiththecommencement
ofthefirstarbitration.
[D].NoJoinder:AlternativeSolutions
Inmanycasesitissimplynotpossibletoobtaineffectivejoinderat
thecontractdraftingstage.Inmanycases,anemployer,for
instance,willsaythatitwantssinglepointresponsibilityfordelivery
ofitsprojectbyitsmainorgeneralcontractorandthereforehasno
interestinbecominginvolvedindisputeswithsubcontractors.Or,
perhaps,theemployerisinapositiontodictatedisputeresolution
provisionswhichareunattractivetoboththemaincontractorandits
subcontractors,withtheresultthatitislessunattractivetohave
separatedisputeresolutionmechanismsthanitistohaveall
disputesresolvedinanunfamiliarforum.
Inthesecasesthereareanumberofdraftingsolutionswhichcan
beadoptedtoallowdisputeswithcommonthemestoberesolvedin
oneforum.Onetechniquetoprotectthemaincontractoristheuse
ofpaywhenpaidprovisionswhichpreventthemaincontractorfrom
becomingexposedtoitssubcontractorsuntilinreceiptoffunds
fromtheemployer.Theseclausesare,however,becomingless
attractivesincenotonlydotheyeliminatetheriskofdiffering
decisionsonthesameissue(i.e.,ispaymentdue?)buttheyalso
passdowntothesubcontractorsthecreditriskthatthemain
contractorhastakenontheemployer.Thislastpointisgenerally
regardedasunfairandhasled,incertaincountries,forpaywhen
paidclausestobeeitherwhollyorpartiallyoutlawed.(51)Inaddition,
unlessthemaincontractorhaspassedthewholeoftheriskdownto
asubcontractorinanidentifiableway,(52)paywhenpaidclausescan
page"149" alsohavetheeffectthatthesinsoftheemployerare
visitedwithoutgoodreasononitssubcontractors.
Forallthesereasonsthetrendinmajorprojectsistomoveaway
fromsimplepaywhenpaidclausestoprovideprotectiontothemain
contractorand(tosomeextent)thesubcontractorsbyascheme
whichprovidesthatthesubcontractorsareentitledtoreceive
whateverthemaincontractorisentitledtoreceiveandonlywhatit
isentitledtoreceivewhetheritactuallyreceivesitornot.The
corollarytothisisthatthesubcontractorsarenormallygivenarole
inthepursuitanddefenceofclaimsbetweenthemaincontractor
andtheemployer.Thismayormaynotbevisibleinthecourseofa
maincontractarbitration,wheretheeffectivepartywillgenerallybe
hiddenbehindlayersofadvisersandrepresentatives.Insome
cases,however,themaincontractexpresslyrecognisesthe
possibleroleofsubcontractorsinmaincontractarbitrations,though
aspartofthemaincontractor'srepresentationandnot(asinfull
joinder)asaseparateparty.
Bythesetechniquestherisksassociatedwithlackofjoindercanbe
largelyovercome.Whereasubcontractor'srightsandobligations
areeffectivelydefinedbyreferencetotheestablishmentofthemain
contractor'srightsandobligationsasagainsttheemployer,by
applyingtheresultsofamaincontractarbitrationdownthechainas
amatterofcontract,overallriskcanbeminimised.Whiledisputes
maystillbebroughtatthesubcontractlevelindeeditisnighon
impossibletostopclaimsbeingbroughtiftheparties'respective
entitlementsunderthesubcontractaredefinedbyreferencetothe
equivalententitlementsunderthemaincontract,asubcontract
disputewillclearlybefruitlessunlessanduntilthosemaincontract
rightshavebeendetermined.This,andthepossibilityofanadverse
costsorderforbringingfrivolousclaims,operatesasapowerful
disincentivetothebringingofsuchclaimsbeforeproperly

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establishedatthemaincontractlevel.
7.04.TheRequestforArbitration
TheRequestforArbitration(Request)(53)isthefirststeptowards
arbitration.TheRequestisservedontherespondentbythe
claimant,(54)andhasthreekeyfunctions.First,itisameansof
givingnoticeandcallingthearbitrationintoexistence.Failureto
complywiththerulesforgivingnoticemayrendertheaward
unenforceable.Second,itestablishesthebasisofthedisputeand
willinformthearbitraltribunaloftheissuestobedecided.Third,it
isimportantintryingtopromotesettlementinthecase.Ifthe
claimantpresentsastrongcaseinitsRequest,therespondentmay
bemorewillingtosettle.
Differentjurisdictionshavedifferentapproachestothemannerand
extentinwhichthisfirstwrittendocumentshouldshapetheconduct
ofthearbitration.Therequirementsofnationallawsmustbe
checkedastoanyrequirementstheyimposewithregardtotheform
orcontentoftherequestornoticecommencingarbitration.
page"150"
However,nationalrulesonthissubjectwilloftenbesubjecttothe
parties'agreementandtherefore,therequirementsoftherelevant
arbitralinstitution.Ifthepartieshaveadoptedtherulesofoneofthe
variousarbitralinstitutions,thoseruleswilldictatewhatshouldbe
includedintheRequest,unless(andtotheextentpermittedunder
therulesconcerned)thepartieshaveagreedotherwise.The
requirementsoftheICCandLCIAaresimilartothoseofamodern
Englishparticularsofclaim.Thefullnamesandadescriptionofthe
partiesandtheirfulladdressesmustbesetout.Themainbodyof
theRequestshouldcontainadescriptionofthenatureand
circumstancesofthedisputeandthereliefsought.TheICCRules
alsorequireinformationastothebasisoftheclaimandamountsof
anyquantifiedclaims,togetherwithanestimateofanyother
claims.(55)Referenceshouldbemadetotherelevantagreementsin
disputeandthearbitrationclausethatisinvoked(theseare
normallyattached).TheRequestshouldalsocontainastatementof
anymattersonwhichthepartieshavealreadyagreed,suchas
placeofarbitration,language,thenumberofarbitrators,
qualificationsofthosearbitratorsoreventheiridentities.If
agreementhasnotbeenreachedontheseissues,theclaimant
shouldsetoutitsproposalsintheRequest.TheRequestmustbe
filedwiththeappropriatebody.FortheICC,theappropriatebodyis
theICCSecretariatandfortheLCIAitistheLCIARegistrar.The
Requestmustalsobesenttotheotherpartyorparties.The
claimantshouldcheckwiththeinstitutionastowhetherthereisa
feetobepaidonfilingtherequest.Inanadhocarbitration,ifthe
partieshavenotmadereferencetotherulesofanyarbitral
institution,itmayfalltothelawofthecountryoftheseatof
arbitrationtodeterminethecontentoftheRequestandthemanner
inwhichitistobeservedontherespondent.
Thedifferencesbetweentherequirementsofthedifferentarbitral
institutionsreflecttoalargeextentthedifferentjurisdictional
approaches.Inparticulartheydifferintermsofthefactualdetail
requiredandtheinclusionoflegalargumentintheRequest.The
LCIARuleseffectivelyrequireserviceofanEnglishstyleparticulars
ofclaim,settingoutinsufficientdetailthefactsandanylawon
whichthepartyrelies.(56)AnexampleoutlineforaRequestfor
ArbitrationundertheLCIARulesappearsatAnnex6.Incontrast,
theAAARulesreflecttheUSapproachandrequireonlyabare
indicationofthefacts.(57)
ReceiptoftheRequestmarksthecommencementofthearbitration.
Theclaimantmustensurethattherespondentreceivesthe
Request,andshouldrequestthatreceiptisacknowledged.Of
course,onemustalsokeepinmind,giventhisisthe
commencementofproceedings,thattheydowhatisnecessary
undertheapplicablelaw/rulestostopthetimelimitrunningforany
claim(whetherthattimelimitissetoutinthecontractorotherwise)
andsetparametersforjurisdictionofthetribunalinrespectofthe
issuesreferredfordetermination.Inaddition,inICCcases,the
RequestwillformthebasisoftheTermsofReference.
Accordingly,partiesshouldbecarefultosetoutallclaimsearlyon,
totryandavoidlatersignificantdeparturefromthoseTermsor
page"151" therefore,alaterpotentialchallengetothe
arbitrator'sjurisdictionovertherelevantdisputes.
Theformofanylaterpleadings,submissionsormemorials(asthe
terminologywilldifferdependingonthetribunalandtheinstitutional
rules)isdeterminedbytheframeworksetoutbytherelevantrules
incombinationwiththeparties'agreement.Thisisdealtwithfurther
inChapter8.
7.05.SelectionofthePartiesRepresentatives
Aswithcourtlitigation,lawyersorotherprofessionaladvocatesmay
beusedtopresenttheparties'casestothearbitraltribunal.
Althoughthereisoftennoparticularrequirementthatthepartiesbe
representedorthattheparties'representativesarelawyersor
lawyersqualifiedintheplaceofthearbitration,(58)thisisoftenthe
case.
[A].AppointingCounsel

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Eachpartywillnormallyappointcounsel(i.e.,alawyerorlawyers)
toruntheircase.Thequalitiesthatthepartiesshouldlookforin
theirlegalteamarenotcoveredhere.Thissectionaddressesonly
thequestionofwhethertheassistanceoflocallawyersisrequired.
Thisisoftenanimportantconsiderationininternationalarbitrations.
TaketheexampleofanICCarbitrationwithitsseatinParis,where
thedocumentsonwhichthedisputecentresaregovernedby
Germanlaw.Frenchlawyersmayberequiredtoadviseoncertain
local,mandatory,procedurallawswhichthepartiescannotcontract
outof.Thatdoesnotmean,however,thatthearbitrationneeds
actuallytobeconductedbyFrenchlawyers,andthereisnothingin
eitherFrenchlawortheICCRulesthatrequiresthis.Indeed,the
arbitrationmightmostlogicallybeconductedbyGermanlawyers,
thoughiftheprojectdocumentswereinanotherlanguagesuchas
Russian,eventhisapparentlysensiblesolutionmightnotbethe
mostappropriate.
Whilethelocallawsoftheplaceofarbitrationmayberelevantto
theconductofthearbitrationincludingrightsofaudiencetomake
submissionsthepartiesmay(andprobablyshould)requirelocal
lawadvicetoidentifyanypitfallspeculiartotheconductof
arbitrationinthatcountry.Thepresentationofthecaseisseparate
from,andnotdependenton,thelawoftheplaceofthearbitration.
Inalmosteverycase,factorssuchasfamiliaritywiththe
substantivelawoftheagreement,theproject,thebusinesssector,
thelanguageofthearbitration,thearbitrationprocessoreventhe
arbitratorsthemselvesismorelikelytoberelevantinchoosingthe
mosteffectiverepresentationthanfamiliaritywiththelawofthe
seat.
page"152"
[B].Insurers
Anotherissuethatshouldbeconsideredisinvolvementofinsurers.
Attheleasttheyshouldbenotifiedofthecommencementofan
arbitrationwhichimpactsinanywayontheirpotentialexposureto
meetlossesunderinsurancepolicies.Wherecoverisdenied,itis
stillimportanttokeepinsurersinformedsoastoavoidanargument
latershouldaclaimbepursuedagainstthemthattheirsubrogation
orotherrightswereinsomewayprejudicedbythemannerof
conductingtheclaims.
7.06.Conclusion
Therearemanyimportantdecisionstobemadebythepartieswhen
commencinganarbitration.Theyshouldbefullyawareofthe
impactofthesechoicesontheprocess.Inparticular,timeandcare
shouldbetakenoverselectionofthetribunal.Theparties'abilityto
inputtheirviewsandnominatemembersofthepanelisuniqueto
arbitration.Thepartiesneedtohaveconfidenceinthearbitrators'
abilitytoconducttheproceedingsandtheywillusuallyfinditeasier
toacceptanawardiftheyknowthattheyappointedtheright
arbitrator.
ThelevelofdetailtoincludeinanyRequestisanotherkeytactical
decision.Thepartiesmaynotwanttorevealtheirhandatsuchan
earlystage,especiallyiftheyanticipatenewfactscomingtolightin
thefuture,howeversettingoutastrongcaseintheRequestmay
leadtoearlysettlement.
Whethertoconsenttojoinderorconsolidationisanotherimportant
practicaldecision.Eachcasemustbeconsideredonitsown
merits.Consolidationmaysavecostsinsomesituationsbutcreate
delaysinothers.
Alltheseissuesshouldbediscussedwiththeparties'lawyersas
soonasthedisputearises.Infact,thepartiesshouldthinkabout
thematthetimeofdraftingthearbitrationclause.Iftheclause
makesprovisionfortherelevantprocedures,theprocessshould
thenrunmoresmoothlyifandwhenitisnecessarytocommence
anarbitration.Moreimportantly,theparties,ratherthanthearbitral
institutionsorthenationalcourts,willbeincontrol.

Theprocesswilldependonwhether(andifsowhich)institutional
ruleshavebeenadoptedandthenationalarbitrallegislationofthe
arbitralseat.
2
Inverygeneraltermsthecommonlawadversarialapproach(as
inEngland)ismorepartydriven.Thecivillawapproach(asin
continentalEurope)ismoretribunaldriven.
3
ConventionforthePacificSettlementofInternationalDisputes
(HagueI)1907,commonlyreferredtoastheHagueConvention
1907.
4
Anexampleofthisiswhereclauseshavespecifiedthatthe
tribunalmustbecomposedofcommercialmen.Thecourtshave
heldthatthisreferstopracticalcommercialexperiencePando
CompaniaNavieraSAv.FilmoSAS[1975]2AllER515.
5
Article5.4.
6
Article12(1),(2).
7
Article7.

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8

Article10.
9
CIETACreviseditsruleseffective1May2012.Asatthedateof
writing,CIETAChasmadeanannouncementterminating
authorisationofitsShanghaiandSouthChinabranchestoaccept
andadministerarbitrations.Thesebrancheshaddeclared
themselvesindependentinstitutionswiththeirownarbitralpanels,
andrefusedtoaccepttherevised2012CIETACRules.Forthe
purposesofthisbook,areferencetotheCIETACRulesisa
referencetoCIETACArbitrationRulesrevisedandadoptedbythe
ChinaCouncilforthePromotionofInternationalTrade/China
ChamberofInternationalCommerceon3Feb.2012,effectiveasof
1May2012.
10
Article23(2).
11
Article20.
12
Article17.
13
Article19.
14
E.g.,Art.7.1LCIARules.
15
E.g.,Art.7UNCITRALArbitrationRules.
16
Article13oftheICCRulesnowempowerstheICCCourtto
appointarbitratorsdirectlywhereitdeemsitnecessarytodoso
(suchasintheeventofdelaybytherelevantNationalCommitteein
providingnames).
17
Articles12and13.
18
Articles5and7.
19
Article6UNCITRALArbitrationRules.
20
CIETACpermitpartiestonominateanyperson,subjectto
confirmationbyCIETAC.
21
CNewmark&RHill,TheAppointmentofArbitratorsin
InternationalArbitration,7Intl.Arb.L.Rev.7380(2004).
22
Article8.
23
Newmark&Hill,AppointmentofArbitrators,74supran.21.
24
Thetribunaleffectivelyentersintoamandatewithbothparties
whichenablesittobindthepartiestothetermsofanyaward.
25
Articles11(1)and22(4)ICCRules,Art.17(1)UNCITRAL
ArbitrationRules,Art.14(1)LCIARules,Art.7(1)AAARules,and
GeneralStandard1IBAGuidelinesonConflictsofInterestin
InternationalArbitration2004.
26
Garnett,Richardetal.,APracticalGuidetoInternational
CommercialArbitration67(2ded.,OceanaPublicationsInc2000).
ThedutiesofarbitratorsaredifferenthoweverfromthoseofaJudge
incivilproceedingsasthearbitratordoesnothaveadutytothe
state.Incontrastinsomejurisdictions,suchasNewYorkState,
partialityispositivelyencouraged.
27
Article11(1)ICCRulesandArt.5.2LCIARules.
28
Article11(2)ICCRulesandArt.5.3LCIARules.
29
Article7(1)AAARules.
30
Article11.
31
Article11.
32
Articles22and33.
33
Article29(1).
34
Article6(7)oftheUNCITRALRulesstatestheappointing
authorityshalltakeintoaccounttheadvisabilityofappointingan
arbitratorofanationalityotherthanthenationalitiesoftheparties.
TheICCRulesstatethatasolearbitratororchairmanshallbeofa
nationalityotherthanthoseoftheparties.Thelatterissubjectto
suitablecircumstancesotherwiseandprovidedthatneitherofthe
partiesobjects.TheAAARulesonlyprovidethatthechairmanmay
beofadifferentnationalitytothepartiesitisnotarequirement.
35
Jivrajv.Hashwani[2011]UKSC40.
36
NigelBlackaby&ConstantinePartasides,RedfernandHunter
onInternationalArbitration454(5thed.,OxfordU.Press2009).
37
Ibid.,at477.
38
Forexampleifheisanofficerofanassociatecompanyor
managingcompany:EdinburghMagistratesv.Lownie[1903]5F(Ct
ofSess)711.
39
Forexample,ifhehasasubstantialshareholding:Sellarv.
HighlandRailwayCompany[1919]SC(HL)19.
40
NiklasLindstrom,ChallengetoArbitratorsDecisionsbythe
SCCBoardduring20082010,
http://www.sccinstitute.com/filearchive/4/40158/Challenges%20to%20Arbitrators%20
%20Decisions%20by%20the%20SCC%20Board%20during%202008.pdf
(accessed10Sep.2013).
41
ASMShippingLtdofIndiav.TTMILtdofEngland[2005]EWHC
2238(Comm.)(Q.B.).
42
MoreliteConstr.Corp.v.N.Y.C.Dist.CouncilCarpenters'
BenefitFunds,748F.2d79(2dCir.1984).SeealsoGarnett,
Richardetal.,APracticalGuidetoInternationalCommercial
Arbitration67(2ded.,OceanaPublicationsInc2000),58.
43
ForamoredetaileddiscussionseeRedfern&Hunteron
InternationalArbitration(2009)s.4.724.90.
44
Unlessallpartiesagreethatthepartymaybejoineddespitean
(ormorethanone)arbitratorhavingalreadybeenappointed(Art
7(1)).
45
Article10ICCRules.
46
Article22.1(h)LCIARules.
47
EnglishArbitrationAct1996,s.48,allowsforconsolidationonly
ifthereisexpressagreement.
48
Forexample,Netherlands,HongKongandCalifornia.
49
ArticleV.1(d)NewYorkConvention.
50
InparttoaddressthedecisioninSiemensv.BKMIandDutco,
CourdeCassation7Jan.1992,discussedfurtherinCh.8.

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51

SomewhatunusuallyintheUKHousingGrantsConstructionand
RegenerationAct1996,paywhenpaidclausesareineffectivein
respectofconstructioncontractsinEngland,WalesandScotland
unlesstheultimatepayerisinsolvent,protectingthesubcontractor
againstlatepaymentbutnot,ultimately,againsttheinsolvencyof
theemployer.Prohibitionsonpaywhenpaidclausesarealso
applicableinAustralia.
52
AshappensattheconcessionairelevelinPFIandlimited
recoursefinancingswherealloftheconcessionaire'sobligationsare
normallycleanlypasseddowntoafewseparatecontractors.
53
ItiscalledanoticeintheUNCITRALArbitrationRules.
54
TheICCtakesresponsibilityforservingtheRequestandactsas
anintermediarybetweentheparties(Art.4(5)ICCRules),however
theotherinstitutionsdonot(e.g.,Art.1.1(g)LCIARules).
55
Article4(3).
56
Article1.
57
Article2(3)(e).
58
Occasionallyacountry'sprofessionalconductlawsforthelegal
professionreservetheconductofarbitrationstolawyersadmittedin
thecountrywhichistheseatofthearbitration,thoughthetrendis
toremovesuchbarsonthepracticeofinternationalarbitration.

Chapter8:ControloftheArbitration
8.01.Introduction
Thischapterconsidersthearbitraltribunal'spowersanddutiesto
controltheproceedings,withreferencetoinstitutionaland
internationalrulesofarbitrationandthearbitrationlawsofselected
jurisdictions.Asastartingpoint,thesourceofthetribunal'spowers
anddutiesisexamined,aswellastheprincipleofpartyautonomy
andtheextenttowhichthisunderliesorrestrictsthetribunal's
abilitytoconducttheproceedings.Adiscussionofthetribunal's
proceduralpowersinrespectofeachofthekeystagesofthe
proceedingsfollows,startingwiththepreliminarystepsfollowingthe
tribunal'sappointment,allthewaythroughtoposthearingmatters.
Finally,thetribunal'scasemanagementduties,encompassingthe
needtoensureproceduralfairnessandthedutytoact
expeditiouslyareconsideredinthelightofarbitralrulesandcase
lawinordertoassesswhat,inpractice,isrequiredfromthe
tribunal.

Source
Chapter8:Controlof
theArbitrationinJane
Jenkins,International
ConstructionArbitration
Law(SecondEdition),
ArbitrationinContext
Series,Volume3
(JaneJenkinsKluwer
LawInternational2013)
pp.155178

8.02.PowersoftheArbitralTribunaltoControlthe
Proceedings
[A].SourceoftheArbitralTribunalsPowers
Thepowersofanarbitraltribunalarethoseconferreduponitbythe
partiesthemselveswithinthelimitsallowedbytheapplicablelaw,
togetherwithanyadditionalpowersthatmaybeconferredby
operationoflaw.(1)
Accordingly,thepowersofthetribunaloriginateprimarilyfromthe
parties,directlyorindirectly:directly,wherethepartiesspecifyin
thearbitrationagreement,arbitrators'termsofappointmentor
anotherwrittenagreementthepowerswhichtheywishthe
arbitratorstoexerciseindirectly,wherethepartiesstipulatethatthe
page"155" arbitrationistobeconductedaccordingtorulesof
arbitration,whetherinstitutionaloradhoc,whichconferexpress
powers(generalandspecific)uponthetribunal.Forexample,the
UNCITRALArbitrationRulesgiveanarbitraltribunalgeneralpowers
toconductanarbitrationinsuchmannerasitconsiders
appropriate(Article17(1)),whilealsogivingitspecificpower,such
asthepowers,absentanyagreementoftheparties,todetermine
theplaceofthearbitration(Article18(1))ortheapplicablelaw
(Article35(1)).
However,asstatedabove,theapplicablelaw,constitutedbythe
lawgoverningthearbitrationagreementandthelawoftheplaceof
thearbitration(totheextentthatthesearedistinct),willalsohavea
roletoplayindeterminingthetribunal'spowers.Itmayoperateso
astosupplementsuchpowers:forexample,theEnglishArbitration
Act(2)confersgeneralandspecificproceduralpowersonthearbitral
tribunal,subjecttoanyagreementtothecontrarybytheparties.(3)
Thus,anarbitraltribunalsittinginEnglandmay(unlesstheparties
otherwiseagree)appointexpertsorotheradvisers,orderaclaimant
toprovidesecurityforcosts,givedirectionsfortheinspection,
preservationetc.ofanypropertywhichisthesubjectofthe
proceedings,administeroathstowitnessesandgivedirectionstoa
partyforthepreservationofanyevidenceinthatparty'scustodyor
control.(4)
Theapplicablelawmayalsooperatetorestrictthepowersofthe
arbitraltribunal.Forinstance,inalmostanycivillawcountry,the
arbitraltribunalwillnotbeentitledtoadministeroaths.Accordingto
academiccommentary,thereasonforthisisthelimitedscopeof
thearbitrationagreement,whichdoesnotextendtothirdparties
suchaswitnesses.(5)Incommonlawcountries,however,arbitration

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lawsquiteoftenincludeprovisionsthatallowthetribunalto
administeroathsortoordertheproductionofdocumentsbythird
parties.
Inpractice,therefore,inordertodeterminethescopeandnatureof
atribunal'spowers,regardshouldbehad,inthefollowingorder,to
foursources:
(a) thearbitrationagreement
(b) anyarbitralrulestowhichthepartieshavesubjectedthe
arbitration
(c) thelawgoverningthearbitrationagreementand
(d) (totheextentthatthisisdistinctfrom(c))thelawoftheplace
orseatofthearbitration(thelexarbitri).
Thelawgoverningthearbitrationagreement((c)above)maybe
expresslychosenbytheparties,thoughinfactrarelyis.Inthe
absenceofsuchexpresschoice,inmanycasesapresumptionthat
thelawgoverningthearbitrationagreementisthesameas
page
"156" thatgoverningtheunderlyingcontractandthesubstanceof
(6)
theagreementhasbeenapplied. However,thisisnotaninvariable
ruleandthepresumptionhasbeendisregardedinsomecases,in
favourofthelawoftheplaceofarbitration.(7)
8.03.GeneralPrinciples
[A].PartyAutonomy
Sincethearbitrationagreementbetweenthepartiesisthebasisof
thetribunal'sjurisdiction,theguidingprincipleisthatthepartiesare
freetodictatetheproceduretobefollowedinanarbitration,within
certainlimitsandsubjecttotherequirementtoobservebasic
standardsofproceduralfairness,asdiscussedbelow.Rulesof
arbitrationandnationalarbitrationlawsstronglyaffirmtheprinciple
ofpartyautonomy.Forexample,boththeUNCITRALModelLaw
andtheICCRulesstatethat,subjecttotherelevantinstitutional
rules,thepartiesarefreetoagreeontheproceduretobefollowed
bythearbitraltribunalinconductingtheproceedings.Itisonly
failingsuchdeterminationbythepartiesthatthetribunalmayitself
determinerulesofprocedure.(8)
TheLCIARulesalsopromotetheparties'freedomtodeterminethe
conductoftheproceedings,statingthatthepartiesmayagreeon
theconductoftheirarbitralproceedingsandtheyareencouragedto
doso(Article14.1).Again,undertheLCIARules,thetribunal's
discretiontodeterminetherulesunderwhichitshoulddischargeits
dutiesissubjecttoanyagreementbythepartiestothecontrary
(Article14.2).TheEnglishArbitrationAct1996alsostatesthatthe
tribunal'sabilitytodecideallproceduralandevidentialmattersis
subjecttotherightofthepartiestoagreeanymatter(section
34(1)).ArbitrationlegislationinbothSwitzerland(9)andGermany (10)
providesthatthepartiesmaydeterminethearbitralprocedure
themselvesorbyreferencetoarbitrationrules,and,again,itisonly
failingsuchdeterminationthatthe
page"157" tribunalmay
decidehowtheproceedingsshouldbeconducted.(11)Finally,it
shouldbenotedthatfailuretorespecttheprincipleofparty
autonomycanbeabartorecognitionandenforcement:under
ArticleV(1)(d)oftheNewYorkConvention,onegroundfor
challengingtherecognitionandenforcementofanawardiswhere
thearbitralprocedurewasnotinaccordancewiththeagreementof
theparties'.
However,somearbitralrulesenvisageatransferofcontrolofthe
proceedingsfromthepartiestothetribunalearlyon.Boththe
UNCITRALArbitrationRulesandtheAAARules,inalmostidentical
provisions,statethatthetribunalmayconductthearbitrationin
suchmannerasitconsidersappropriate,subjecttotherelevant
rulesandminimumrequirementsofproceduralfairness(discussed
furtherbelow).(12)Thisissupportedbyparagraph4ofthe
UNCITRALNotesonOrganizingArbitralProceedings (13)which
statesthat:
Lawsgoverningthearbitralprocedureandarbitration
rulesthatpartiesmayagreeupontypicallyallowthe
arbitraltribunalbroaddiscretionandflexibilityinthe
conductofarbitralproceedings
aswellasbyparagraph7oftheNoteswhichstatesthatprocedural
decisionsbythearbitraltribunalmaybetakenwithorwithout
previousconsultationswiththeparties,dependingonwhetherthe
tribunalconsiderssuchconsultationsnecessaryorwhether:
hearingtheviewsofthepartieswouldbebeneficialfor
increasingthepredictabilityoftheproceedingsor
improvingtheproceduralatmosphere.
Inthiscontextitshould,ofcourse,benotedthat(unlikesetsof
arbitrationrules),theUNCITRALNotesonOrganizingArbitral
Proceedingsaregenerallynotsomethingthatwouldbechosenby
agreementofthepartiesorbindinguponthem.Rather,astheNotes
explain,theyaredesignedtoassistarbitrationpractitionersby
listingandbrieflydescribingquestionsonwhichappropriatelytimed
decisionsonorganizingarbitralproceedingsmaybeuseful(note1).
Itisclearthatreferenceto,ortheuseof,theNotescannotimply
anymodificationofthearbitrationrulesthatthepartiesmayhave

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agreedupon(note3).
[B].RestrictionsonPartyAutonomy
Theabilityofthepartiestodeterminetheconductofthe
proceedingsisnotcompletelyunfettered,evenunderthosearbitral
rulesthatgothefurthestinespousingtheprincipleofparty
autonomy.Typesofrestrictionsontheparties'freedominclude:
page"158"
dueprocess'principles(inparticulartheindependenceand
impartialityofthearbitraltribunal,equaltreatmentandtheparties'
righttobeheard)(14)
publicpolicy/mandatoryrulesoftheforum
institutionalrulesand
theprinciplethatarbitralproceedingscannothaveanimpacton
thirdparties.
Theserestrictionsareexaminedinturnbelow.
Dueprocessprinciplessuchastheonesoutlinedaboveare
fundamentalrequirementsofarbitralprocedure.Theyareintended
toprotecttheparties,butalsooperatetolimittheparties'freedom
todeterminehowthearbitralproceedingsshouldbeconducted:the
partiescannot,forinstance,agreethattheproceedingsbe
conductedinawaythattreatsonepartydifferentlyfromtheother.
AprominentexampleoftheimpactofthisprincipleistheDutco
case,(15)inwhicharbitrationproceedingswerecommencedbya
claimantagainsttwootherparties,theclaimsagainsteachofthe
partiesbeingdifferent.Inaccordancewiththeagreementto
arbitrate,theclaimantappointeditsownpartynominatedarbitrator
whilstthetworespondentswererequired,underprotest,jointlyto
appointasecondpartynominatedarbitrator,asthearbitration
agreementprovidedforarbitrationbyatribunalcomposedoftwo
partynominatedarbitratorsandachairman.Thetribunal'spartial
awardaffirmingthatithadbeenvalidlyconstitutedwassetasideby
theFrenchCourdeCassation,whichstatedthat:
theprincipleoftheequalityofthepartiesinthe
appointmentofarbitratorsisamatterofpublicpolicy
(ordrepublic)whichcanbewaivedonlyafteradispute
hasarisen.
Thesebasicstandardsofproceduralfairnessarereflectedinthe
abovementionedrulesofarbitrationandnationallaws,whichall
statethatthetribunalmustboth(1)actfairlyandimpartiallyor
otherwisetreatthepartieswithequalityand(2)ensurethateach
partyhasareasonableopportunitytopresentitscaseorisgiven
therighttobeheard.(16)Theyarealsopartofinternationalpublic
policy,asembodiedintheEuropeanConventionofHumanRights.
Article6(1)ofthatconventionstates:
Inthedeterminationofhiscivilrightsandobligations
orofanycriminalchargeagainsthim,everyoneis
entitledtoafairandpublichearingwithinareasonable
timebyanindependentandimpartialtribunal
establishedbylaw.
Althoughanagreementtoarbitratedisputesmayconstituteawaiver
bythepartiesofsomeoftheirArticle6(1)rights(e.g.,rightsof
accesstocourt,publichearingand
page"159" public
judgment),itdoesnotnecessarilywaivealloftherightsguaranteed
byArticle6(1).(17)
Asaresult,failuretoobservethesestandardswillbeagroundfor
challengingtherecognitionandenforcementoftheaward.A
challengetoenforcementofanawardmaybemadeunderArticle
V(1)(b)oftheNewYorkConventionaccordingtowhichrecognition
andenforcementoftheawardmayberefusedifthereisproofthat:
thepartyagainstwhomtheawardisinvokedwasnot
givenpropernoticeoftheappointmentofthearbitrator
orthearbitrationproceedingsorwasotherwiseunable
topresenthiscase.
RefusalmayalsooccurunderArticleV(1)(d)(noncomplianceofthe
arbitralauthorityorarbitralprocedurewiththeagreementofthe
partiesorthelawoftheseatofthearbitration)orArticleV(2)(b)
(publicpolicy).
Thepartiescannotdeterminethattheproceedingsbeconductedin
amannerthatiscontrarytothemandatoryrulesorpublicpolicyof
theforumstate.Theseencompasstheprinciplesofprocedural
fairnessdiscussedabove.Moregenerally,however,anyagreement
bythepartiestoperformanactthatiscontrarytotheforumstate's
mandatoryrulesorpublicpolicy,oranactthatisnotcapableof
beingperformedunderthelawoftheforumstate(orthelaw
governingthearbitrationagreement)wouldbeunenforceableinthat
country.Further,suchanagreementcouldopenanyresulting
arbitralawardtochallengeunderArticleVoftheNewYork
Convention,specificallyunderArticleV(1)(a),whichprovidesfora
defencetoenforcementwherethearbitrationagreementisnotvalid
underitsgoverninglaworthelawofthecountrywheretheaward
wasmadeand,dependingonwhererecognitionandenforcement
aresought,underArticleV(2),whichprovidesforchallengewhere

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recognitionandenforcementoftheawardwouldbecontrarytothe
publicpolicyoftheforumwheretheyaresought.(18)
Thearbitralruleschosenbythepartiesmayalsorestricttheparties'
freedomtodeterminetheconductoftheirproceedings,asillustrated
bytheUNCITRALModelLawandtheICCRules,whichbothstate
thattheparties'abilitytodeterminetherulesofprocedureissubject
totheprovisionsoftherelevantrules.(19)However,rulesof
arbitrationgenerallycontainfewmandatoryprovisionsoverand
abovethebasicrequirementsofproceduralfairness.(20)
page"160"
Finally,inlightoftheprinciplethatanarbitrationagreementcannot
bindthirdparties,theparties'latitudetodictatetheconductofthe
arbitralproceedingsdoesnotgenerallyextendtorequesting
proceduralmeasureswhichmightaffectthirdparties,suchas
compellingthirdpartiestoproducedocuments.
Althoughpartyautonomyistheguidingprincipleunderlyingarbitral
proceedings,inpractice,fromthemomentthatthearbitraltribunal
isappointed,thereisagradualtransferofcontrolfromthepartiesto
thearbitraltribunal.Onceadisputehasbeenreferredtoarbitration,
thepartiesmaybeunabletoagreeanyaspectsoftheprocedureon
whichtheyhavenotagreedinadvance.
Accordingly,whatfollowsisadiscussionofthearbitraltribunal's
powertocontroltheproceedingsateachofthekeystagesofan
internationalarbitration,asreflectedinrulesofarbitrationand
nationallaws.
[C].PreliminarySteps
Preliminarystepstakenbythepartiesandthearbitraltribunalatthe
outsetoftheproceedingswillincludesomeorallofthefollowing:
(a) Apreliminarymeetingtodiscusstheorganisationofthe
proceedings(i.e.,essentiallyacasemanagementconference
ormeetingduringwhichthetimetableandprocedural
arrangementswillbediscussedandtheframeworkforthe
arbitrationgoingforwarddeterminedoragreed).Inthecaseof
anICCarbitrationtheTribunalisrequiredtodrawuptheTerms
ofReferenceforthearbitrationandtosubmitthistotheICC
Courtforapproval.SeefurtherChapter11belowandsample
outlineTermsofReferenceatAnnex7.
(b) Adeterminationofanypreliminaryissues,suchasjurisdiction,
thelaw(s)applicabletothesubstanceofthedisputeandthe
arbitralproceedingsandwhetheranyoftheissuesinthe
proceedings(e.g.,quantum)shouldbeheardseparately(see
Chapter11).
(c) Theappropriatenessofexpeditedremedies,suchasthepre
arbitralrefereeprocedureandfasttrackarbitrations.
Asageneralrule,neitherinstitutionalrulesofarbitrationnornational
lawsgrantthearbitraltribunalanyspecificpowersinrespectof
thesepreliminarysteps.However,asdiscussedlaterinthis
chapter,thetribunalhasadutytoconducttheproceedings
diligentlyandexpeditiously,andsuchpreliminarystepswillbea
keymeansofresolvingproceduralissues.
page"161"
[D].WrittenSubmissions
FollowingthesubmissionofanyRequestorNoticeofarbitration
(whichisdealtwithaboveinChapter7)andanyAnswer,further
writtensubmissionsareinvariablyexchanged.Theseprovide
greaterdetailofeachparties'respectiveclaimsanddefences,along
withtheevidenceuponwhicheachpartyrelies.
Oneofthemanypurposesofwrittensubmissionsistogivethe
arbitraltribunalenoughinformationtoenableittomanagethe
conductoftheproceedingsinanefficientandeffectivemanner.
Thisisreflectedbyanumberofarbitralrules,whicheachsetout
theframeworkofrequirementsforwrittensubmissions.Different
rulesanticipatedifferentstructuresfortheexchangeofwritten
submissions.Theseprovisionsusuallycoversomeorallofthe
following:thecontentsofthewrittensubmissions,including
counterclaimsandsetofftheperiodsforfilingsubmissionsand
thepossibilityofamendingorsupplementingsubmissions.Often,
therelevantrulesarenotsoprescriptiveastoidentifyexactlywhat
mustbefiledinwhatform.Muchwilldependupondiscussion
betweenthepartiesandtribunalatthecasemanagementstage.In
practice,dependingonthedetailofrequirementsoftherelevant
rulesorlaws,andindeedthenatureofthedisputeandagreementof
theparties,theformofsubmissionscanvaryquitesignificantly.
Often,submissionsinthememorialstylewillbeagreedupon,of
whichtheremaybeoneormorerounds(thesetypesof
submissionswilltypicallyincludeevidencealongwithlegal
submission,suchaswitnessstatementandexpertreportsand
otherexhibits).Otherarbitrationsmayemployasequenceoffilings
ofpleadingsandevidencewhichmorecloselyapproximatesan
EnglishorAmericanstyleofcourtlitigation(i.e.,pleadingsfollowed
bywitnessstatementsfollowedbyexpertreports).
Forexample,Article15oftheLCIARulesprovidesforservice,

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withinthirtydaysofnotificationoftheformationofthearbitral
tribunalandthenatthirtydayintervals,ofwrittensubmissionsand
replysubmissions.Thesesubmissionsmustsetoutinsufficient
detailthefactsandanycontentionsoflawonwhichtheyrely
and/orwhichtheyadmitordeny(andthegroundsforadmittingor
denyingsuchfactsorlegalcontentions),and,inthecaseofthe
StatementofCase,thereliefclaimedagainstallotherpartiestothe
extentthatsuchmattershavenotbeensetoutintheRequestfor
Arbitration.(21)TheTribunalmayalso,beforeahearing,requirea
partytogivenoticeofthesubjectmatterofawitness'testimony,its
contentanditsrelevancetotheissuesinthearbitration.(22)
TheICCRulesrequireacasemanagementconferencefollowing
submissionoftheRequestandAnswer,duringwhichtheprocedural
timetablegoverningtherestoftheproceedingswillbeset.(23)The
tribunalistoestablishthefactsofthecasebyallappropriate
means'(24)andwillholdahearing(ifanypartyrequestsoneorofits
ownmotion)afterstudyingthewrittensubmissions'andall
documentsreliedupon.
page"162" Accordingly,theICCRules
havegreatscopeforsubmissionstobetailoredbasedonthe
parties'agreementandwhatisappropriateforthecaseinhand.
Howeverthisalsohighlightsthatconsiderationneedstobegivento
theappropriateformandtimingofsubmissionataveryearlystage.
UndertheUNCITRALRules,apartycantreatitsNoticeof
ArbitrationastheStatementofCaseifitsowishes,aslongasthe
Noticecontainsastatementoftherelevantfacts,pointsinissue,
relieforremedysought,andlegalgroundssupportingtheclaim(as
wellascontactdetailsoftheparties).(25)Thetribunalmayotherwise
requirethepartiesatanytimeduringtheproceedingstoproduce
documents,exhibitsorotherevidenceasitseesfit.(26)
Nationalarbitrationlawsarelessprescriptiveastotheform,content
andprocessof,exchangingwrittensubmissions.Forinstancethe
SwissPILAiscompletelysilentontheissueofwritten
submissions,whilsttheEnglishArbitrationAct1996merelystates
that,subjecttoanycontraryagreementbytheparties,thearbitral
tribunalmaydecidewhetheranyandifsowhatformofwritten
statementsofclaimanddefencearetobeused,whentheseshould
besuppliedandtheextenttowhichsuchstatementscanbelater
amended.(27)Thatsaid,itmust,ofcourse,berememberedthat
suchlawsaregenerallyintendedsolelytoprovidethebare
essentialsnecessarytoallowanarbitrationtobeconductedandare
notinthemselvesintended(inthenormalrunofthings)tooperate
withoutinputfromthepartieswhetherbybespokedraftingorthe
adoptionofpublishedsetsofrules.
Invirtuallyeverycasethetribunalretainssomemodicumofcontrol
overwrittensubmissions,evenwheretherulesofarbitrationare
detailed.Forexample,theLCIARulesstatethattheRules'
provisionsonwrittensubmissionsaresubjecttoanycontrary
determinationbythepartiesorthearbitraltribunal.(28)Underboththe
UNCITRALArbitrationRulesandtheUNCITRALModelLaw,the
periodforfilingwrittensubmissionsistobedeterminedbythe
arbitraltribunal.(29)
Suchpowersconferontribunalstheabilitytofurtherrefinethe
parties'casestoassistinpropercasemanagement.
[E].Evidence
Thearbitraltribunal'sroleintheprocessofthetakingofevidence
mayvarytoacertaindegreeaccordingtotheplaceofthe
arbitrationandthelegalbackgroundofthearbitrators.Arbitrators
fromacommonlawbackgroundtendtoactmorelikerefereesor
umpiresmonitoringproceduralfairness,whereascivillawarbitrators
tendtofavour
page"163" moreactivecasemanagement.(30)
Commonlawsystemstendtoobligelitigants,particularlyin
disclosure,topresentallevidencerelevanttotheissuesindispute
includingthatwhichmaybeadversetotheirowninterests.Civillaw
systemsrequirethepartiestoidentifyandproducetheevidence
thattheywishtorelyupon,withoutnecessarilyproducingwhatmay
beadversetotheircase.Further,thereareofcoursedifferences
betweencommonlawapproaches(e.g.,intheUS,privilege
generallyisappliedmorerestrictivelythanintheUK).Commonlaw
systemsrelymoreheavilyuponoraltestimony(particularlythat
testedbycrossexamination)andcivillawuponcontemporaneous
documents.
Thehandlingofevidenceandfactfindingareconvergingin
internationalarbitrationasaresultoftheuseofthe2010IBARules
ontheTakingofEvidenceinInternationalCommercialArbitration
(theIBARules)(31)discussedbelow.Differencesinthemethodsof
takingevidencepersistdependingonthebackgroundofthe
arbitrators,forexampleinrelationtodocumentproduction.(32)The
choiceofarbitratormaythereforehaveafundamentaleffectonthe
styleoftheproceedings.
However,experiencedinternationalarbitrators,whethertheycome
fromacivillaworacommonlawbackground,donotusuallyallow
themselvestobelimitedbyexistingrulesofevidence,whichmight
bepurelytechnicaland/orpreventthemfromestablishingthefacts
necessaryfordeterminingtheissuesbetweensomeparties.In
internationalcommercialdisputes,thestrictandformalrulesof
evidence,whichwereoriginallydevisedtoprotectjuries,arenot
appropriate.Onthecontrary,modernarbitrationrulesprovidethat

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thetribunalmayconductthefactfindinginanywayitdeems
appropriate,(33)whichincludestheapplicationorrejectionofrulesof
evidence.
Asageneralprinciple,ithasbeenstatedthatthemethodsof
presentingevidencetoanarbitraltribunalondisputedissuesoffact
derivefromasynthesisofpartyautonomy,discretionofthearbitral
tribunalandcourtcontrolatthestageofenforcement.(34)The
tensionbetweenthefirsttwoprinciples,partyautonomyandthe
discretionofthearbitraltribunal,isillustratedindifferentways,by
thevarioussetsofinstitutionalrules:
TheICCRulesgivethetribunalawidediscretiontodeciderules
ofevidence,statingthatitshallproceedwithinasshortatimeas
possibletoestablishthefactsofthecasebyallappropriate
means'.(35)TheICCRulesgoontoprovide
page
"164" specificinstancesofthetribunal'sautonomy,interaliain
(36)
relationtohearingtheparties
andwitnessesorexperts (37)and
takingmeasurestoprotecttradesecretsandconfidentiality,(38)
althoughonelimitationisthatthetribunalcannotdecidethecase
solelyondocumentsifoneofthepartieswishestobeheard.(39)
TheLCIARulescontainverydetailedprovisionsconcerning
evidence,conferringsimilarlywidepowersonthetribunal,
subject,inmostinstances,togivingthepartiesareasonable
opportunitytostatetheirviews'.(40)UndertheLCIARules,the
tribunalmay(1)conductsuchenquiriesasarenecessaryand
expedienttoascertaintherelevantfacts(2)orderanypartyto
makeanyproperty,siteorthingunderitscontrolandrelatingto
thesubjectmatterofthearbitrationavailableforinspection(3)
orderanypartytoproduceanyrelevantdocumentsorclassesof
documentsforinspectionand(4)decidewhetherornottoapply
strictrulesofevidenceastoadmissibility,relevanceorweightof
anyfactualorexpertmaterial.(41)Specificallyinrelationto
witnesses,thetribunalhasadiscretiontoallow,refuseorlimit
theappearanceofwitnesses(whethertheyarefactualorexpert
witnesses),(42)tocontrolquestioningbytheparties/putitsown
questionstothewitnesses (43)andtodictatetheform/mannerof
exchangeofwitnesstestimony.(44)
BoththeUNCITRALArbitrationRulesandtheAAARulesprovide
thatthetribunalmayrequireeitherpartytodeliverasummaryof
thedocumentsandotherevidencewhichthatpartyintendsto
presentinsupportofthefactsinissuesetoutinitsclaim,
counterclaimordefence.Furthermore,atanytimeduringthe
arbitralproceedings,thetribunalmayrequirethepartiesto
producedocuments,exhibitsorotherevidence.(45)Concerning
witnesses,thetribunalisfreetodeterminethemannerinwhich
thesearetobeexamined.(46)Finally,thetribunalshalldetermine
theadmissibility,relevance,materialityandweightofthe
evidenceoffered.(47)
page"165"
TheUNCITRALModelLaw,however(asperhapsmightbe
expectedofaninstrumentintendedtoprovidetheframework
withinarbitrationsareconducted,ratherthanasetofarbitration
rulesperse),ismorebriefontheissueofevidence,andclearly
affirmsthepreeminenceoftheparties'autonomy.Itstatesthat,
subjecttotheprovisionsoftheUNCITRALModelLawandany
contraryagreementbytheparties,thearbitraltribunalmay
conductthearbitrationinsuchmannerasitconsiders
appropriate,whichpowerincludesdeterminingtheadmissibility,
relevance,materialityandweightofanyevidence.(48)The
UNCITRALModelLawalsoprovidesthatthetribunalmaymeet
atanyplacewhichitconsidersappropriateforthepurposes,inter
alia,ofhearingwitnessesorexpertsorfortheinspectionsof
goods,otherpropertyordocuments.(49)
TheCIETACRulesprovidethatthearbitraltribunalmay
undertakeinvestigationsandcollectevidenceonitsowninitiative
asitconsidersnecessary.(50)Thearbitraltribunalmayconsult
expertsorappointappraisersforclarificationonspecificissuesof
thecaseandrequestthepartiestodeliverorproducetothe
expertorappraiseranyrelevantmaterials,documents,property,
orgoodsforchecking,inspectionorappraisalbytheexpertor
appraiser.(51)
TheDIACRulesprovidethatthetribunalmaydecideontherules
ofevidencetobeapplied,relevanceorweightofanymaterial
tenderedbyapartyonanymatteroffactorexpertopinion.The
tribunalmayalsoonitsownmotion,orderapartytoproduce
documentsorotherevidenceasthetribunalconsidersnecessary
orappropriate.(52)
Nationalrulesalsoaffirmtheprincipleofpartyautonomy.The
GermanZPOcontainsalmostidenticalprovisionstothoseofthe
UNCITRALModelLawinthisrespect.(53)UndertheEnglish
ArbitrationAct,thetribunal'srighttodecideevidentialmatters
(including,whetheranydocumentsorclassesofdocumentsshould
beproducedbytheparties,whethertoapplystrictrulesofevidence
astoadmissibilityetc.andwhetherthereshouldbeoralorwritten
evidence)issubjecttotherightofthepartiestoagreeanymatter.
(54)
However,Swisslawstatesthatthearbitraltribunalshallitself
conductthetakingofevidence.(55)
Finally,theeffectoftheIBARulesneedstobetakenintoaccount.
UnliketheUNCITRALNotesonOrganizingArbitralProceedings,the
IBARulesaredesignedtobeusedinconjunctionwith,andadopted
togetherwith,institutionaloradhocorotherrulesorprocedures

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governinginternationalarbitrations'(seeForewordtoIBARules).In
practice,partiesfrequentlyagreetotheapplicationoftheIBA
Rules,eitheroftheirownvolitionoratthepromptingofthetribunal.
Whereadopted,theIBARulesbalance
page"166" party
autonomyandthetribunal'sdiscretionbyreferringtoparty
autonomyasunderlyingthearbitraltribunal'spowers,whilstgiving
thetribunalwidediscretioninrelationtoanumberofspecific
evidentialissues.(56)Forexample,ifapartyasksthetribunaltotake
stepstoobtaindocumentsfromathirdparty,thetribunalmayuse
itsdiscretiontodeterminewhetherthedocumentsarerelevantand
materialand,ifso,itshouldtakethenecessarystepstoobtain
them.(57)Atanytimebeforethearbitrationisconcluded,thetribunal
mayalsorequestapartytoproduceanydocumentsthatitbelieves
toberelevantandmaterialtothecase.(58)Further,thetribunalmay
ordereitherpartytoensure,orseektoensure,theappearancefor
testimonyofanyperson.(59)
Inpractice,thethreemainareasinwhichatribunalininternational
arbitrationislikelytoexertcontrolare:
Documentproduction:inthemajorityofcases,thetribunalwill
seektolimitdocumentproductionasfaraspossible,inorderto
focusonthosedocumentsorcategoriesofdocumentslikelyto
berelevantandnecessary.
Witnesses:thetribunalwillalso,asfaraspracticable,attemptto
shortentheoralstageoftheproceedings,forexample,by
refusingtohearoralwitnessevidenceoratleastrestrictingthe
numberoforalwitnessesandanycrossexamination.(60)
Theadmissibility,weightandrelevanceoftheevidencetendered:
asstatedabove,anexperiencedarbitraltribunalwillrarely
excludeevidenceongroundsofinadmissibilityhowever,itmay
useitsdiscretiontoattributemoreorlessweighttoevidence
(e.g.,itmayattributelessweighttouncorroboratedwitness
testimonythantodocumentaryevidence).
[F].Experts
Thepartiesmaysubmittheirownexpertevidencetothearbitral
tribunal,however,thetribunalusuallyhasthepowertoappointits
ownexpert,ifthetribunalconsidersitnecessaryandappropriate.
Thispowermaybeexpresslysetoutinthearbitrationagreementor
incorporatedintotheagreementbyreferencetoinstitutionalor
internationalrulesofarbitration.Alternativelysuchpowermaybe
impliedunderthelawgoverningthearbitrationagreement.(61)
page"167"
Thetribunalmayrequirethepartiestoprovideitsexpertwithany
relevantinformationortoproduceforinspectionanyrelevant
documents,goodsorotherpropertythatmayberequiredbythe
expert.(62)
Generally,thepartieshavesomecontroloverthetribunal'sexpert.
Somerulesofarbitrationprovidethatthearbitraltribunalshould
involvethepartiesintheprocessofappointinganysuchexpertand
indefiningthescopeoftheexpert'sretainer.BoththeICCRules
andtheIBARules,forexample,statethatthetribunalmayappoint
expertsanddefinetheirtermsofreferenceafterhavingconsulted
theparties'.(63)Further,thepartiesmayhavetherighttomake
objectionstothetribunaliftheyhavedoubtsastothe
independenceofitsexpert.(64)Finally,thepartiesmustalsobe
giventheopportunitytoquestionanytribunalappointedexpertata
hearingandtopresenttheirownexpertwitnessestotestifyonthe
relevantissues(seeChapters12and13).(65)
[G].InterimMeasures
Inmostcases,anarbitraltribunalwillhavethepowertoissue
interimmeasures,usuallyforthepurposesoftakingorpreserving
evidence,(66)preservingthestatusquoandprovidingsecurityfor
costs,pursuanttonationallawsoftheseat,ortheparties
agreement(orboth).(67)However,somejurisdictionsexpressly
reservethepowertoissueanyprovisionalorinterimrelieffor
nationalcourtsonly(suchasisthecaseinItalyandChina).Of
course,aswithanyremedyorrelief,thetribunalhasnopowerover
anypartywhoisnotpartytothearbitration.
Whiletheparties'righttoapplytotherelevantlocalcourtsfor
interimmeasuresispreservedbynationallawsorinstitutionalrules
ofarbitration,(68)onceatribunalhasbeenestablishedthepartiesare
oftenrequiredfirsttoseekrelieffromthearbitraltribunal,oratleast
toaskitspermissionbeforeseekinginterimremediesinthelocal
courts.Forexample:
Unlessthecaseisoneofurgency,theEnglishArbitrationAct
1996providesthatthecourtmaymakeinterimordersonlyifa
party'sapplicationhasbeenmadewiththepermissionofthe
tribunalortheagreementoftheotherparties(inallcases,the
courtmayactonlyifortotheextentthatthearbitral
page
"168" tribunal/institutiondoesnothavetherelevantpoweroris
(69)
unabletoacteffectively).
UnderGermanlaw,forthepurposesoftakingevidenceorin
respectoftheperformanceofotherjudicialactswhichthe
tribunalisnotempoweredtocarryout,courtassistancemaybe

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requested,butonlybythearbitraltribunalorapartywiththe
approvalofthearbitraltribunal.(70)
Althoughinstitutionalrulesofarbitrationaregenerallynotasclear
asnationallawsonthisissue,theLCIARulesstatethataparty's
righttoapplytolocalcourtsforinterimorconservatorymeasures
shallonlybeexercisedinexceptionalcaseoncethetribunalhas
beenformed.(71)TheICCRulesprovidethatpartiesmayseek
provisionalmeasuresfromanationalcourteitherbeforethefileis
transmittedtothearbitraltribunal,orinappropriate
circumstances'orthereafter.(72)
Consequently,thepartiesshouldturntothetribunalastheirfirst
portofcallbeforepursuingremediesinthelocalcourts,although
theyshouldbearinmindthatthetribunal'sabilitytoissueinterim
measureswillbesubjecttolimitations,asdiscussedinChapter11.
Clearly,atribunalcannotissueinterimreliefbeforethetribunalis
constituted.TheICC,SIACandtheSCCRulesprovideforan
emergencyarbitrator(subjecttothepartiesagreeingtooptoutof
this).(73)
Thereissomedifficultysurroundingtheenforcementofinterim
measuresgrantedbyatribunalgiventheyarebydefinitionnot
formsoffinalawards(whetherpartialorotherwise)ontheissuesto
bedetermined.TheNewYorkConventioncontainsnothing
regardingenforceabilityofsuchmeasuresinthecontextof
internationalarbitration.Howeversomejurisdictionshaveenacted
legislationspecificallyregardingenforcementofsuchmeasures.(74)
Withoutlegislation,itwilldependupontheapproachofthecourtsin
theparticularcountryofattemptedenforcementAlthoughthebetter
viewisperhapsthatsuchprovisionalmeasuresareenforceable,
localadvice(inthejurisdictioninwhichthemeasurewouldneedto
beenforced)shouldbetaken.SeefurtherChapter11below.
[H].Hearings
Mostrulesofarbitrationgivethetribunaltherighttodetermine
whetherornotoralhearingsshouldbeheld,whilstpreservingthe
rightofthepartiestorequesttobeheard
page"169" orallyif
theysowish,unlesstheyhavepreviouslyagreedotherwise.(75)
Furthermore,therulesusuallystatethatitisforthetribunalto
determinethetimeandplaceofsuchhearings,(76)whetherthisisat
therequestofthepartiesoronitsowninitiative.
Bythestageoforalhearings,controlwillusuallyhaveshiftedfully
fromthepartiestothetribunal.ThisisreflectedbytheICCRules,
whichstatethatthearbitraltribunalshallbeinfullchargeofthe
hearings'(Article26(3)).Inpractice,inaninternationalarbitration,
thetribunaltendstotakeanactiverole,moretypicalofthecivillaw
traditionthanofthecommonlawone,atleastforthepurposesof
establishingthefacts.(77)Forinstance,thetribunalmaygive
specificguidancetothepartiesconcerningthepresentationand
contentoftheirevidence,(78)aswellasputtingquestionsdirectlyto
thewitnesses.Astarkerillustrationofthetribunal'sempowermentis
thetechniqueofwitnessconferencing(seeaboveandChapter12),
whichconsistsofthesimultaneousjointhearingofallfact
witnesses,expertwitnesses,andotherexpertsinvolvedinthe
arbitration,(79)althoughitshouldbenotedthatthispracticeisnot
yetwidelyusedintheinternationalarbitrationcommunity.Finally,in
theeventthatonepartyrefusestoappearatthehearing,the
tribunalmayproceedwiththehearingandissueitsaward.(80)
[I].PostHearingMatters
Oncethehearingisover,thearbitraltribunalwilldeclarethe
proceedingsclosed.Thereafter,thepartiesmaynotmakeany
furthersubmissionsorproduceanynewevidence,unlessrequested
orauthorisedtodosobythetribunal.(81)Itisbecomingincreasingly
commonfortribunalstoexercisetheirdiscretiontoallowtheparties
tosubmitposthearingbriefs,whichmaybeusedtoallowpartiesto
addressanynewmaterialorsubmissionsmadebytheotherparty
oransweranyquestionsposedbythetribunalduringthehearingto
whichtheydidnothavethetimetorespond,orproduce
page
"170" newevidencearisingwhichcametolightafterthehearing
(82)
(butbeforethetribunalhasissueditsaward).
Inadditiontothesegeneralareaswhereatribunalwillexercise
controlintheconductofthearbitrationproceedings,itisbecoming
increasinglycommonfortribunalsinmajorconstructionarbitrations
toseektoincreasetheefficiencyoftheproceedingsbyrequiring
thepartiestoproduceschedulesoftheirpositiononmatters,both
procedural(forinstanceontheparties'respectivepositionsonthe
productionofdocumentsbyreferencetocriteriacontainedinthe
IBARules)andsubstantive(forinstancebytheuseofScott
Schedules,asdiscussedinChapter9).Bothfactualandexpert
witnessevidenceisalsobeingtestedininnovativeways,for
instancebytheuseofmeetings(orconclaves)ofexpertsand
witnessconferencingorhottubbingofbothfactualandexpert
witnessesatthehearing,wherewitnessesandexpertsgiving
evidenceonthesametopicsareheardtogetherbeforethetribunal
andtheirevidenceistestedbyquestionsaskednotonlybythe
partiesbutalsobytheiroppositenumbersandthetribunal(see
Chapters12and13formoreinformationonwitnessesandexperts
ininternationalarbitration).

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8.04.TheImportanceofEffectiveCaseManagement
Inexercisingitsvariouspowersateachstageofthearbitral
proceedings,thearbitraltribunalmustrespectthefollowing
fundamentalprinciples:theparties'dueprocessrights(asoutlined
above)inparticular,theprincipleofequaltreatmentandtheparties'
righttobeheardandtheneedtoactefficientlyandfairly,avoiding
unnecessarydelayorexpense.(83)
[A].ProceduralFairness
Asdiscussedinthefirstpartofthischapter,theparties'due
processrights(principally,therighttoanimpartialandindependent
tribunal,theprincipleofequaltreatmentandtherighttobeheard)
arefundamentalrequirementsofthearbitralprocedure,restricting
boththeparties'andthearbitraltribunal'sfreedomtodeterminehow
proceedingsenforcementofshouldbeconducted.Iftheparties'due
processrightsarenotrespectedinthecourseoftheproceedings,
anyensuingawardcouldbeopentorefusalofenforcementofan
awardunderArticleV.1(b)oftheNewYorkConvention(and/or
challengeoftheawardpursuanttolawsoftheseatwhichalso
reflecttherequirementfordueprocess).How,inpractice,doesthis
impactonthearbitraltribunal'sconductofthearbitralproceedings?
Theprincipleofequaltreatmentwill,inmostcases,requirethe
tribunaltotreatthepartieswithplainequality,forinstance,giving
eachpartythesameopportunitytoparticipateandexpressits
viewsontheevidence.However,itisworthnotingthat
page
"171" somerulesofarbitrationonlyimposeadutyonthetribunalto
(84)
actfairly. Accordingtoonecommentator,inmostcasesthiswill
meantreatingthepartieswithequality,butinsomecircumstances
itmaymeanthatthetribunalhastotreatthepartiesonlessthan
equalterms,topreservesubstantiveequality.(85)
Somekeyexamplesrelatetotheextenttowhichthetribunalmust
adheretoandgivedueconsiderationtheargumentspleadedbythe
parties.(86)
Forexample,aslongasitispermittedtodosopursuanttolocal
lawoftheseatofthearbitrationatribunalmayawardreliefofa
differentnaturefromthatrequestedbytheclaimant,providedthe
awardisultimatelywithinthelimitsoftheclaimand(therefore)
withintheparties'reasonablecontemplation.Oneexampleofthisis
theSwisscaseofBankSaintPetersburgPLCv.ATAInsaat
SanayiveTicaretLtd,(87)concerninganarbitralawardinwhichthe
tribunalhadgranteddamagesratherthanspecificperformanceas
requestedbytheclaimant.(88)TheSwissFederalTribunalstated
thattherewasnobreachoftheprincipleneeatiudexultrapetita
partium(orthejudgemustnotawardmorethanwhatisclaimedby
theparties)whenthetribunaladjudicatesinlawandwithinthe
limitsoftheclaim,andyetdoesnotbaseitslegalconsiderations,
ordoessoonlypartially,onthelegalargumentssetforthbythe
parties'.TheCourt,added,however,thatthepartieswouldhavethe
righttobeheardagainincircumstanceswherethetribunalwished
tobaseitsawardonlegalargumentswhichthepartieshadnot
presentedandtherelevancyofwhichtheycouldnothave
reasonablyanticipated.
Anotherexampleofthetribunal'sfreedominthisregardisthatitis
notnecessarilyboundtorelyexclusivelyupontheauthorities
suppliedbytheparties.Forinstance,inoneEnglishcase
concerninganapplicationtosetasideanarbitralawardonthe
groundsthattheawardcontainedreferencestoseveralauthorities
notreferredtobyeitherthepartiesorthearbitratorinthecourseof
theproceedings,itwasheldthattheapplicanthadfailedtopointto
anyinjusticecausedbythearbitrator'sfailuretocitetheauthorities
earlierintheproceedings.(89)Itis,however,undoubtedlythecase
thatgoodpracticewouldsuggestthatanarbitratorwishingtorelyon
additionalauthoritiesinanawardwouldbewelladvisedtoletthe
partiesknowofthisintentionatanappropriatelyearlystageandto
permitsubmissionsonthem.Attheveryleast,thiswouldavoidthe
possibilityevenifitwereultimatelyunsuccessfulofachallenge
onthebasisthatnopriormentionoftheauthoritieshadbeenmade.
page"172"
However,theauthorsareawareofcircumstancesinwhich
departurebythetribunalfromthemattersstrictlypleadedbythe
partiesmightbeheldtohaveinfringedtheirrighttobeheard.For
example:
Wherethetribunalfailstogivethepartiestheopportunityto
addressitinrelationtoanimportantpointnotadvancedbyeither
party,butwhichplaysakeyroleinitsdetermination.InOAO
NorthernShippingCov.RemolcadoresdeMarinSL(the
Remmar),(90)thetribunalfoundagainsttheclaimantonthebasis
thattherehadbeennomisrepresentationbythedefendantinthe
courseofasaleofaship.However,atthehearingthecasewas
presentedtothetribunalonthebasisthatmisrepresentationwas
notinissue,anditdidnotformthesubjectofargumentatthe
hearing.Thetribunalhadaccordinglyfoundagainsttheclaimant
onapointneitherraisednorseriouslydisputedbythedefendant,
andonwhichtheclaimanthadnotbeengivenanopportunityto
addressthetribunal.Thetribunaldidnotinvitesubmissionson
thepointandthehearingwasaveryshortone,(asthiswasa

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smallclaim),soitwasessentialthatpartiesmadesubmissions
onkeypointsinissueonly.Theawardwassuccessfully
challenged.Inanothercase,thetribunaldeterminedthatthe
respondenthadnotbeeninbreachofitscontractualobligations.
However,liabilitywasnotinissueandthedisputerelatedto
quantumonly.Theclaimant'sapplicationtosetasidetheaward
wasgrantedbythecourt,whichstatedthatthearbitratorshadnot
giventhepartiessufficientnoticethattheyweregoingtoreopen
theissueofliability,whichhadbeenveryfirmlyclosedbywayof
pleading.(91)
Wherethetribunalusesparticularitemsofevidence/failsto
considerotherevidencewithoutallowingthepartiestoaddress
this.InanotherEnglishcase,alandlordclaimedthattheaward
determiningthelevelofrentshouldbesetasideforserious
irregularitybecausethearbitratorhaddeterminedtherentonthe
assumptionthattheupperfloorsoftherelevantpremiseswould
remainvacantandthatarentfreeperiodwouldberequiredinlieu
ofcontributiontothecostofworks.Thetribunalhadalsochosen
toignoreasubstantialpremiuminacomparabletransactionon
theassumptionthatthiswasattributabletofixturesandfittings.
Thecourtsetasidetheaward,statingthatthearbitratorshould
nothavemadesuchassumptionswithoutaffordingtheparties
theopportunitytocommentonthem.(92)
Wherethetribunalfailstogivethepartiestheopportunityto
addressitinrelationtoissuesaffectingitsdeterminationofan
importantpoint(e.g.,costs)whicharenotadvancedbyeither
party.InanEnglishconstructioncase,forexample,anarbitrator
initiallyissuedaninterimawardinfavouroftheclaimants,but
thenmadeafinalawardinfavouroftheclaimantsonsome
issuesandinfavouroftherespondentcontractorsonother
issues.Inthefinal
page"173" awardthearbitratorawarded
costsinfavouroftherespondents,relyingontwomatterswhich
hadnotbeenraisedbyeitherparty.Thecourtstated,interalia,
thatthearbitrator'spowertoawardcostswassubjecttothe
generaldutytoactfairlyandimpartiallybetweenthepartiesunder
section33(1)oftheEnglishArbitrationAct1996andthata
tribunaldoesnotactfairlyandimpartiallyifitdoesnotgivea
partyanopportunityofdealingwithargumentswhichhavenot
beenadvancedbyeitherparty.(93)
Wherethetribunalproceedstodecideacaseonalegalbasis
differentfromthatpleadedbytheparties,suchasprinciplesof
lexmercatoria,withoutseekingargumentthereonfromthe
parties.(94)
Overall,however,thecourtsarereluctanttointerferewitharbitral
awardsongroundsofproceduraldefects,providedthattheparties'
rightstodueprocess(whetherthatbebyregardtothepleaded
issues,proceduraltimetableorotherwise)havebeenrespected.(95)
InHongKong,theCourtofAppealhasconfirmedthatonlyserious
oregregious'proceduralviolationsbythearbitraltribunalcouldlead
toanawardbeingoverturnedthere.InPacificChinaHoldingsLtdv.
GrandPacificHoldingsLtd,(96)theclaimantcomplainedthatthe
tribunalhad(i)refusedtograntitleavetorespondtocertainissues
ofHongKonglawraisedlateintheproceedings(ii)refusedto
consideradditionalauthoritiesonwhichtheclaimantwishedtorely
and(iii)amendedthearbitrationprocedureinfavourofasequential
(ratherthansimultaneous)exchangeofsubmissions.Thatmeant
thattheclaimantonlyreceivedthedefendant'ssubmissionsonthe
Fridaynightbeforethehearingcommencingonthefollowing
Mondaymorning.However,theCourtofAppealheldthat
nonetheless,theclaimanthadstillhadreasonableopportunityto
presentitscase(e.g.,ithadtwoopportunitiespreviouslyinthe
proceedingstoaddressHongKonglawissues).
LondonUndergroundLtdv.CitylinkTelecommunicationsLtd,(97)isa
particularlyrelevantexampleinaconstructioncontext.The
defendantallegedthatbreachesbytheclaimanthadcauseddelay
totheworks,seekinganextensionoftimeofsixtyfiveweeks.The
tribunalfoundthattherehadbeenadelayoffortyeightweeks(they
hadrejectedtheconclusionsofthecriticalpathanalysisonwhich
thesixtyfiveweekclaimwasbased).Bothpartiesappliedtohave
theawardsetasideonthebasisthattheyhadnotbeengiven
properopportunitytoaddressthetribunal.Thecourtheldthatthe
findingofadelayoffortyeightweekswaswellwithinthepleadings,
submissionsandevidence.Nothingrequiredthearbitratortoseek
furthersubmissions.Itisoftenthecasethataclaimordefencehas
notwhollysucceededandthetribunalmustdetermine
page
"174" theconsequencesofthepartialsuccessorfailure.Provided
thattheresultsarebasedonprimaryfactsthathadbeeninissuein
theproceedings,therecouldbenoobjection.
SimilarlyintheUS,Courtsappeartoacknowledgetheflexibilityof
arbitralprocedurewhenexaminingwhetherdueprocesshasbeen
adheredto.Inthatregard,rigidcompliancewithparticular
proceduralrulesisnotexpectedandarbitratorshavediscretionin
themannerinwhichhearingsareconducted.Nonetheless,the
overarchingrequirementisthateachpartyhasaproperopportunity
tohaveitscaseheardortheopportunitytobeheardata
meaningfultimeinameaningfulmanner.(98)InoneUScase,the
courtrejectedoneoftheparties'argumentthatthearbitratorshad
actedimproperlyinlimitingitsabilitytocrossexaminethewitness
oftheotherparty,statingthatthearbitratorswerechargedwiththe
dutyofdeterminingtherelevanceofevidenceandthatbarringa
clearshowingofabuseofdiscretion,thecourt[would]notvacatean
awardbasedonimproperevidenceorthelackofproperevidence.

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(99)

Further,anarbitratorisnotboundtohearallevidenceormay
excludesomeevidence,providedthatdoesnotproduceanunfair
hearing.(100)
TheEnglishcaseEgmatrav.Marco(101)concernedtheaward
renderedinanarbitrationundertheauspicesoftheLondonMetal
Exchange,whichtherespondentchallengedonthebasisthatthe
arbitratorshadrejecteditsrequesttohearexpertevidenceon
certainissues.Thecourtupheldtheaward,statingthatthe
arbitrators,whowereexpertsinthemetalindustry,wereentitledto
decidethattheydidnotrequireexpertevidencetoassistthem.
Finally,inaSwisscase,theSwissFederalTribunalheldthatan
interimawardoncostspreventingthepartyagainstwhomitwas
issuedfromoffsettingthepaymentofthecostsagainstany
possibleclaimforcompensationthatmightbegrantedinafinal
awarddidnotviolatetheprincipleofequaltreatmentorSwisspublic
policy.(102)Overall,therefore,ithasbeencommentedthatthetrend
ofthedayisdefinitelynoninterventionistcourtsoflawdonot
interveneiftheydonothavetoduringtheproceedingsarbitrators
enjoylargefreedomtorenderproceduraldecisionsknowingthat
localcourtsoflawwillnotinterfere.(103)
[B].TheArbitralTribunalsDutytoActExpeditiously
Forthepurposesofcomplyingwithitsdutytoactfairly,aswellas
ensuringproceduralfairness,thetribunalmustconductthearbitral
proceedingsdiligently,efficientlyand
page"175" withinthe
shortesttimespaninordertoavoidunnecessarycosts.According
toonecommentator,thediligentexerciseofthearbitration
procedureisthebestantidoteagainstdilatorytacticsin
arbitrationprocedures'.(104)
Adutytomanagetheproceedingssoastoavoidunduedelayand
expenseisexpresslyimposedonthearbitraltribunalbysome
institutionalrulesofarbitration.Forinstance,theLCIARulesstate
thatthetribunalhasadutytoadoptproceduressuitabletothe
circumstancesofthearbitration,avoidingunnecessarydelayor
expense,soastoprovideafairandefficientmeansforthefinal
resolutionoftheparties'dispute.(105)TheAAARulesstatethatthe
tribunalshallconducttheproceedingswithaviewtoexpeditingthe
resolutionofthedispute.(106)The2012ICCRulesstatethatthe
partiesandthetribunalshallmakeeveryefforttoconductthe
arbitrationinanexpeditiousandcosteffectivemanner,having
regardtothecomplexityofthedispute.(107)Fromapracticalpointof
view,themainmeansbywhichanarbitraltribunalmaymanagethe
proceedingsmoreeffectivelyistheuseofmeetingswiththeparties
whereproceduralissues(suchasissuesrelatingtodocument
production)maybethrashedout.TheAAARulesmakespecific
referencetothis,statingthatthetribunalmayconducta
preparatoryconferencewiththepartiesforthepurposeof
organising,schedulingandagreeingtoprocedurestoexpeditethe
subsequentproceedings'.(108)Thenew2012ICCRulesrequirethat
thetribunalconveneaCMCthatmayresultinordersusingspecific
casemanagementtechniquesfortheproceedings,optionsforwhich
arelistedinAppendixIVtotheRules.ThatAppendixIVhighlights
theimportanceofproportionalityoftimeandcosts,particularlywith
regardtocaseswithlowercomplexity.Asanalternative(orin
addition),insomejurisdictions,aswellasundertheICCRules,a
specifictimelimitwithinwhichtorendertheawardisimposedon
thearbitraltribunal,(109)althoughthiscanusuallybeextended.(110)
Failurebythearbitraltribunaltocomplywithitsdutytoact
expeditiouslymaygiverisetosanctionssuchasthefollowing:
terminationofthetribunal'smandate(111)deprivationof
remuneration(112)orevenremovalbyacompetentcourt.(113)There
isalsothe(slim)possibilitythatthemembersofthearbitraltribunal
couldbemadeliablefordamagesforunduedelay,onthebasisofa
contractualdutyofcare(although
page"176" arbitratorsoften
seektoexcludesuchliabilityintheirtermsofappointment).(114)The
AAA'sCodeofEthicsalsoprovidessomeguidanceonthetypesof
behaviourlikelytobesanctionedbyacourt,byindicatingthatfor
thepurposesofactingfairlyandefficiently,anarbitraltribunalmust
makereasonableeffortstopreventdelayingtactics,harassmentof
thepartiesorotherparticipantsorotherabuseordisruptionofthe
arbitrationprocess.(115)
Concerningthesortofbehaviourlikelytoconstituteafailuretoact
expeditiouslyonthepartofthearbitraltribunal,theEnglish
constructioncaseofPillarv.Edwards (116)ishighlyinstructive.In
thiscase,adisputeconcerningthefinalvalueofbuildingworkswas
referredtoarbitrationbythecontractorandinthecourseofthe
arbitrationproceedingsthecostsandfeesincurredbybothparties
mountedtonearlyfourtimesthevalueoftheoriginalclaim
(100,000).Thejudge,statingthatthere[was]somethinginherently
wrongwithanarbitralprocesswhichinvolve[d]suchlargesums
beingspentincostsrelativetothesizeofthesumsindispute,
heldthatthearbitratorhadbreachedhisdutytoadoptprocedures
avoidingunnecessarydelayorexpenseundersection33(1)(b)of
theEnglishArbitrationAct,onthebasisofthefollowing:(i)the
arbitratorhadfailedtodirectthepartiestoputrighttheirpleadings,
whichwereprolixanddiffuse,aswellastheschedulestheyhad
producedsummarisingtheirrespectivecases,which,inbreachof
thearbitrator'soriginaldirections,werenotScottSchedulesand
failedtoconsolidateallaspectsofeachdisputedworkitem(ii)the
arbitratorandthepartieshadnotconsolidatedthetwoarbitrations

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intoonesoastokeepcoststoaminimum(iii)thehearingwas
disproportionatelylong(tendays),asaresultofthenumberof
expertwitnesses,thefailureofthepartiesandtheexpertstodefine
andreducethenumberofissuesandtheabsenceoftimelimited
crossexaminationand(iv)theaward,whichtookseveralmonthsto
beprepared,wasdiffuse,lackedsubstantialreasoning,incorporated
verbatimtheextensivepleadingsandcontainedasignificant
numberoferrorsandomissions,resultinginalargenumberof
correctionsbeingrequired.
However,aswithproceduralfairness,atribunal'sdecisionnotto
takecertainmeasuresinthenameofefficiencydoesnot
automaticallyprovidegroundsforasuccessfulchallenge.Inan
Englishcaseonthispoint,oneofthepartiessoughttochallengean
awardonthegrounds,interalia,thatthearbitrator'sdecisionto
determinehisownjurisdictionasapreliminarypoint,
notwithstandingthefactthatitinvolveddecidinganissueclosely
relatedtothesubstanceofthedisputetobearbitrated,constituted
aseriousirregularityundersection68oftheEnglishArbitration
page"177" Act.Thejudgerejectedthiscontention,statingthat
itwascommonplaceininternationalarbitrationforjurisdictionand
liabilitybothtobedisputedandthatthemerefactthatthearbitrator
choseacoursewhichmightinvolvetheissueofhisjurisdiction
beingfirstdeterminedbyhimonapreliminarybasisandthenall
overagaincouldnotconstituteabasisforanallegationofbreachof
hisdutyundersection33(1)(b)EnglishArbitrationAct.(117)
Inthelightoftheabove,whetherornotanarbitraltribunalmaybe
heldtohavebreacheditsdutytoactexpeditiouslyappearstobea
questionofdegree.Costsanddelaysthataregrossly
disproportionatetothecomplexityofthedisputeand/ortherelief
claimedwill,inanyevent,beasureindicatorthatthetribunalhas
failedtomanagetheproceedings.

RedfernandHunteronInternationalArbitration,para.506.
Section2(1)ArbitrationAct1996appliestoanyarbitrationwitha
seatinEnglandandWales.
3
Section34(1)ArbitrationAct1996:Itshallbeforthetribunalto
decideallproceduralandevidentialmatters,subjecttotherightof
thepartiestoagreeanymatter.
4
Sections37,38,38(3),38(4),38(5)and38(6)ArbitrationAct
1996.
5
SeeHansPatrickSchroeder,Dielexmercatoriaarbitralis,at239
etseq.(Abschnitt3.A.II.2),(SellierLegalPublishersMarch2007).
ForadiscussionofGermanlawonthisissue,seeJoachimMnch,
MnchenerKommentarzurZivilprozessordnung,3rdedition,(Beck,
2002),1049paras27and35.
6
SeeSulamricaCiaNacionaldeSegurosSAv.Enesa
EngenhariaSAinwhichtheEnglishCourtofAppealsetoutathree
stagetest:(i)havethepartiesmadeanexpresschoiceoflawto
governthearbitrationagreement?(ii)ifnot,havethepartiesmade
animpliedchoice?(iii)ifnot,whatlawhastheclosestandmost
realconnectionwiththearbitrationagreement?TheCourtofAppeal
clarifiedthatunderEnglishlaw,intheabsenceofanyindicationto
thecontrary,anexpresschoiceofsubstantivelawforthe
underlyingcontractwillbeastrongindicationoftheparties'
intentioninrelationtothelawgoverningthearbitrationagreement.
7
See,e.g.,BulgarianForeignTradeBankLtdv.AlTradeFinance
Inc,SwedishSupremeCourt,27Oct.2000,CaseNo.T188199,in
YearbookCommercialArbitrationXXVI291298(2001).Forfurther
discussionseeGaryBorn,InternationalCommercialArbitration
443451(2009).
8
SeeArt.19UNCITRALModelLawandArt.19(1)ICCRules.
9
PrivateInternationalLawAct(AS1987,17791831SR291)(the
SwissPILA),whichgovernsinternationalarbitrationswithaSwiss
seat.DomesticarbitrationsaregovernedbytheConcordatof27
Mar.1969onArbitration(theConcordat),auniformcantonal
legislationgoverningdomesticarbitration.
10
ArbitrationLaw1998,inforce1Jan.1998(ActontheReformof
theLawrelatingtoArbitralProceedingsof22December1997,
Bundesgesetzblatt(FederalLawGazette)1997PartI,3224).This
lawiscontainedinthe10thBookoftheZivilprozeordnung,or
GermanCodeofCivilProcedure(theZPO).
11
SeeArt.182(1)and(2)oftheSwissPILA.TheConcordat
containsaprovision(Art.24)tosimilareffectfordomestic
arbitrations.SeealsoZPO,1042,especially1042(3)and
1042(4).
12
Article17(1)UNCITRALArbitrationRulesandArt.16(1)AAA
Rules.
13
Availableat,
http://www.uncitral.org/pdf/english/texts/arbitration/arbnotes/arb
notese.pdf(accessed10Sep.2013).
14
Fairnotice(oftheappointmentofthearbitratorsandtheconduct
oftheproceedings)issometimesraisedasanindependentdue
processprinciple,althougharguablyitfollowsfromtheprinciplesof
equaltreatmentandtheparties'righttobeheard.
15
SocitBKMIetSiemensc/SocitDutco,CourdeCassation,
7Jan.1992,reportedinYearbookCommercialArbitrationXVIII
(1993),pp.140142.
16
SeeArt.1.1UNCITRALRules,Art.18UNCITRALModelLaw,
Art.14.1(i)LCIARules,Art.22.4ICCRules,Art.16.1AAARules,
2

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s.33(1)(a)EnglishArbitrationAct,Art.182(3)SwissPILAandthe
ZPO,1042(1).
17
SeeWilliamRobinson&BorisKasolowsky,WilltheUnited
Kingdom'sHumanRightsActFurtherProtectPartiestoArbitration
Proceedings?Arb.Intl.18,45366(2002).SeealsoNeilMcDonald,
whostatesart.6(1)guaranteesarecertainlypresentwithin
internationalpublicpolicy(NeilMcDonald,MoreHarmthanGood?
HumanRightsConsiderationsinInternationalCommercial
Arbitration,J.Intl.Arb.20,52338(2003)).
18
See,e.g.,Soleimanyv.Soleimany[1999]3AllER847,inwhich
theEnglishCourtofAppealheldthatanarbitralawardpurportingto
enforceanillegalcontractwasunenforceableinEngland.TheCourt
stated:Theremaybeillegalorimmoraldealingswhicharefroman
Englishlawperspectiveincapableofbeingarbitratedbecausean
agreementtoarbitratethemwoulditselfbeillegalorcontraryto
publicpolicyunderEnglishlaw.SeealsoAJUv.AJT[2011]4SLR
739.
19
Article19ICCRulesandArt.19(1)UNCITRALModelLaw.
20
RedfernandHunteronInternationalArbitration,paras617.
Examplesofmandatoryrequirementsimposedbyinstitutionalrules
ofarbitrationinclude,interalia:theobligationofthearbitraltribunal
todrawupTermsofReferenceinanICCarbitration(Art.23ICC
Rules)andrequirementsconcerningtheconsecutiveexchangeof
writtensubmissionsunderUNCITRALArbitrationRules(Arts20and
21).
21
Article15.215.5LCIARules.
22
Article20(1)LCIARules.
23
Article24(2)ICCRules.
24
Article25(1)ICCRules.
25
Article20(1)and20(2)UNCITRALRules.
26
Article27(3)UNCITRALRules.Similarly,undertheDIAC
ArbitrationRules,aStatementofClaimmustbefiledwithin30days
ofnotificationofestablishmentofthetribunalunlessalreadyfiled
withtheRequest.InadditiontotheStatementofClaimand
StatementofDefence,thetribunalmayallowfurtherwritten
statements:Arts2325.
27
Acts.34(2)(c)EnglishArbitrationAct.
28
Article15.1LCIARules.
29
Article23(1)UNCITRALModelLawandArts20(1)and21(1)
UNCITRALArbitrationRules.
30
SeeSchroeder,Dielexmercatoriaarbitralis,187etseq.
(Abschnitt3.A.).
31
InternationalBarAssociation,availableat,
http://www.ibanet.org/publications/IBA_Guides_Practical_Checklists_Precedents_and_Free_Materials.cfm
(accessed10Sep.2013).TheIBARulesconstituteasteptowards
establishinganinternationalstandardonthetakingofevidence.
32
Thecommonlawconceptofdisclosureisquiteforeigntothe
civillawsystems.SeeRichardHill,TheNewRealityofElectronic
DocumentProductioninInternationalArbitration:ACatalystfor
Convergence?25Arb.Intl.87102(2009).SeealsoCh.12infra.
33
Article25ICCRulesArt.9(2).IBARulesandArt.27DIS
ArbitrationRules(DeutscheInstitutionfrSchiedsgerichtsbarkeit
e.V.,DISSchiedsgerichtsordnung1998,arbitrationrulespublished
bytheGermanInstitutionofArbitrationandavailableinboth
GermanandEnglishat,http://www.dis
arb.de/scho/schiedsvereinbarung98e.html(accessed10Sep.
2013).
34
Redfern&HunteronInternationalArbitration,para.696.
35
Article25(1).
36
Article25(2)(abilityofthetribunaltohearthepartiestogetherin
personontherequestofeitherpartyorofitsownmotion).
37
Article25(3)(abilityofthetribunaltohearwitnessesandexperts
inthepresenceofthepartiesorintheirabsence,providedthey
havebeendulysummoned)andArt.25(5)(abilityofthetribunalto
summonanypartytosubmitadditionalevidence).
38
Article22(3).
39
Article25(6).
40
Article22.1.
41
Article22.1(c)(f).
42
Article20.2.
43
Article20.5.
44
Article20.1,20.2and20.3.
45
Article27.3UNCITRALArbitrationRulesandArt.19.2and19.3
AAARules.
46
Article28.2UNCITRALArbitrationRulesandArt.20.4AAA
Rules.
47
Article27.4UNCITRALArbitrationRulesandArt.20.6AAA
Rules.UndertheAAARules,inparticular,thetribunalhasthe
discretiontodirecttheorderofproofandexcludecumulativeor
irrelevantevidence(seeArt.16.3).
48
Article19.
49
Article20(2).
50
Article41.
51
Article42.
52
Article27.
53
ZPO,s.1042(3)and(4)ands.1043(2).
54
Section34EnglishArbitrationAct,especiallys.34(d)(f)and
(h).
55
SeeArt.184(1)SwissPILA.
56
Article1(5)IBARules,whichstatesthat,insofarastheIBA
Rulesandanyapplicableinstitutional/adhocrulesaresilentandthe
partieshavenotagreedotherwise,thetribunalmayconductthe

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takingofevidenceasitdeemsappropriate.
57
Article3(9)IBARules.
58
Article3(10)IBARules.Therelevantpartymayobjecttosucha
requestonvariousgroundsofinadmissibility,setoutinArt.9(2).
59
Article4(11)IBARules.
60
Sees.34(2)(h)EnglishArbitrationAct,whichstatesthatthe
tribunalmaydecidewhetherandtowhatextentthereshouldbeoral
orwrittenevidence.
61
See,e.g.,s.37EnglishArbitrationAct1996andZPO,s.1049.
62
Article21.1(b)LCIARulesArt.27.2UNCITRALRulesArt.26(1)
(b)UNCITRALModelLawArt.22(2)AAARulesandArt.6(3)IBA
RulesArt.42CIETACRules.
63
Article25(4)ICCRulesArt.6(1)IBARules.
64
Article6(2)IBARules.
65
Article25(4)ICCRulesArt.21.2LCIARulesArt.29.4
UNCITRALRulesArt.22(4)AAARulesArt.26(2)UNCITRAL
ModelLaws.37(1)(b)EnglishArbitrationActandZPO,s.1049(2).
66
Anarbitraltribunaldoesnotusuallyhavethepowertocompel
theattendanceofwitnesses,asreflectedbyArt.27UNCITRAL
ModelLaw,whichstatesthatthearbitraltribunalmayrequest
fromacompetentcourtofthisStateassistanceintakingevidence.
67
Article25.1and25.2LCIARulesArt.26UNCITRALRulesArt.
17UNCITRALModelLawArt.21AAARulesandArt.28ICC
Rules.Seealsos.38EnglishArbitrationActArt.183SwissPILA
andtheZPO,s.1041.
68
See,e.g.,Art.26(9)UNCITRALRulesArt.28(2)ICCRulesand
ZPO,s.1033.
69
Section44(3)(5)EnglishArbitrationAct.ThecaseofHiscox
UnderwritingLtdv.DicksonManchester&CoLtd[2004]EWHC
479,confirmedthatthecasesofurgencyinwhichthecourtcan
issueinteriminjunctionsarenotlimitedtoapplicationsforordersto
preserveassetsorevidence,buteffectivelyextendtoanyformof
interiminjunction.
70
SeeZPO,s.1050.
71
Article25.3LCIARules.
72
Article28(2)ICCRules.
73
Seealso,e.g.,UNCITRALRules,Art.26(1)LCIARules,Art.
25.
74
ForexampleGermanZPO,s.1041(2).
75
SeeArt.15(2)UNCITRALRulesArt.24(1)UNCITRALModel
LawArt.19LCIARulesArt.25(2)and(6)ICCRuless.34(2)(h)
EnglishArbitrationActandZPO,1047(1)Art.33CIETACRules
Art28DIACRules.
76
See,e.g.,s.34(2)(a)EnglishArbitrationAct,Art.26(1)ICC
Rules,andArt.19.2LCIARules.
77
SeeH.M.Holtzmann,FactfindingbytheIranUnitedStates
ClaimsTribunal,inFactfindingBeforeInternationalTribunals101,
paras610(RichardB.Lilliched.,TransactionalPublishers1991).
Holfzmannstatesthatitiswiseforanarbitraltribunaltotakean
activeroleinaugmentingtheparties'presentationofthefacts
Arbitrationismoreeffectiveandefficientwhenthearbitrators
activelyseektoelucidatethefacts,ratherthanmerelyevaluating
whatthepartieschosetopresent.
78
SeeUNCITRALNotesonOrganizingArbitralProceedings,para.
80:arbitrationrulestypicallygivebroadlatitudetothearbitral
tribunaltodeterminetheorderofpresentationsatthehearingsit
mayfosterefficiencyoftheproceedingsifthearbitraltribunal
clarifiestotheparties,inadvanceofthehearings,themannerin
whichitwillconductthehearings,atleastinbroadlines.
79
SeeWolfgangPeter,WitnessConferencing,Arb.Intl.18,4758
(2002),andChapter12.
80
See,e.g.,Art.25UNCITRALModelLaw.
81
See,e.g.,Art.27(1)ICCRules.
82
SeegenerallyRedfern&HunteronInternationalCommercial
Arbitration,para.62436246.
83
E.g.,s.33(1)EnglishArbitrationAct1996andArt.14.1LCIA
Rules.
84
E.g.,s.33(1)EnglishArbitrationAct1996andArt.14.1LCIA
Rules.
85
GeorgiosPetrochilos,ProceduralLawinInternationalArbitration
para.4.87(OxfordU.Press2004).Petrochiloscitesasanexample
thepossibilitythatthearbitraltribunalmayhavetoallocatecostsin
unequalterms,intheeventofoneofthepartiesbeingimpecunious,
inordertomaintainalevelplayingfieldbetweentheparties.
86
AccordingtoPetrochilos,ProceduralLawinInternational
Arbitration,para.4.89,itseemstobeaquestionofdegree,rather
thananythingelse,towhatextentatribunalmaystray,asitwere,
fromtheparties'submissionsingeneral.
87
BankSaintPetersburgPLCv.ATAInsaatSanayiveTicaret
Ltd,2Mar.2001,ASA3/2001531.
88
SeealsoUnidentifiedv.Unidentified:SwissFederalTribunal7
Jan.2011.
89
SanghiPolyestersLtd(India)v.InternationalInvestorKCSC
(Kuwait)[2000]AllER(D)93.
90
[2007]2Lloyd'sRep.302(Comm.Ct.).
91
PacolLtdv.JointStockCoRossakhar[1999]2AllER(Comm)
778.
92
GuardcliffePropertiesLtdv.City&StJamesPropertyHoldings
[2003]EWHC215(Ch).
93
Gbangbolaandanotherv.Smith&SherriffLtd[1998]3AllER
730.
94
SeePetrochilos,ProceduralLawinInternationalArbitration,

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para.4.90,statingthatinnocaseshouldanarbitratorproceed,
withoutseekingargumentfromtheparties,todecideacaseon
principlesoflexmercatoriaorthelike,whosecontentisonany
viewindeterminate.
95
SeeDanielM.Kolkeyetal.eds.,Practitioner'sHandbookon
InternationalArbitrationandMediationpara.8.05(JurisPublg.
2012).
96
PacificChinaHoldingsLtd(InLiquidation)v.GrandPacific
HoldingsLtd[2012]HKCU971.
97
LondonUndergroundLtdv.CitylinkTelecommunicationsLtd
[2007]EWHC1749.
98
Mathewsv.Eldridge,424U.S.319,333.
99
LaminoirsTrfileriesCableriesdeLens,SAv.Southwire
CompanyandSouthwireInternationalCorporation,484F.Supp.
1063(D.Ga.1980),1067.
100
IranAircraftIndustriesv.AvcoCorp.,980F.2d141(2dCir.
Conn.1992).
101
EgmatraA.G.v.MarcoTradingCorporation[1999]1Lloyd's
Rep862.Thiscaseemphasisedthatsubstantialinjusticeunders.
68EnglishArbitrationAct1996wouldonlyariseinextremecases
wherethetribunalhasgonesowronginitsconductofthearbitration
thatjusticecallsoutforittobecorrected.
102
A,BandCv.D,SchweizerischesBundesgericht,17Dec.
2002,4P.196/2002.
103
SeeSigvardJarvin,Towhatextentareproceduraldecisionsof
thearbitratorssubjecttocourtreview?ICCACongressParisNo.9
(1998).
104
SeeJuanEduardoFigueroa,EthicsinInternationalArbitration,
Mealy'sIntl.Arb.Report18,4150(July2003).
105
Article14.1(ii)LCIARules.
106
Article16(2)AAARules.
107
Article22(1)ICCRules.
108
SeeArt.16(2)AAARules.
109
Article30(1)ICCRules(sixmonths),andArts813and820of
theItalianCodeofCivilProcedure.
110
Article30(2)ICCRules.
111
Article14(1)UNCITRALModelLaw,statingthatifanarbitrator
failstoactwithoutunduedelay,hismandateterminatesifhe
withdrawsfromhisofficeorifthepartiesagreeonthetermination.
112
E.g.,inColombia(seeMantillaSerrano,Colombiain
InternationalArbitrationinLatinAmerica121(NigelBlackabyetal.
eds.,AspenPublishers2003).
113
Section24(1)(d)(ii)EnglishArbitrationAct,statingthataparty
mayapplyfortheremovalofanarbitratoronthegroundthathehas
refusedorfailed(1)properlytoconducttheproceedingsor(2)to
useallreasonabledespatchinconductingtheproceedingsor
makinganaward,andthatsubstantialinjusticehasbeenorwillbe
causedtotheapplicant.
114
Forafullerdiscussion,seeRedfern&HunteronInternational
CommercialArbitration,para.5155.66.
115
SeeCanonI(F)oftheAAACodeofEthicsforArbitratorsin
CommercialDisputes,inforcesince1Mar.2004,whichstates:An
arbitratorshouldconductthearbitrationprocesssoastoadvance
thefairandefficientresolutionofthematterssubmittedfor
decision.Anarbitratorshouldmakeallreasonableeffortstoprevent
delayingtactics,harassmentofpartiesorotherparticipants,or
otherabuseordisruptionofthearbitrationprocess.Availableat:
http://www.adr.org/aaa/ShowProperty?
nodeId=%2FUCM%2FADRSTG_003867&revision=latestreleased
(accessed10Sep.2013).
116
RCPillar&Sonsv.Edwardsandanother[2001]AllER(D)232.
117
KalmneftJSCv.GlencoreInternationalAG[2002]1AllER76.

Chapter9:PreparationandCollectionof
Evidence
9.01.Introduction
Thecollectionofevidencefortheconductofaconstruction
arbitrationwillalmostinvariablyinvolvethefollowingtasks:
reviewingdocumentsrelevanttoaclaim(includingforinstance,
headofficecorrespondence,sitecorrespondence,sitediaries,
invoicesandreceipts)
interviewingwitnesseswhocangiveanaccountofthefacts
relevanttotheclaimand
obtainingexpertevidenceastotheimplicationsorrelevanceof
certainfacts(from,forinstance,programming,soilmechanics,
accountingorquantumexperts).

Source
Chapter9:Preparation
andCollectionof
EvidenceinJane
Jenkins,International
ConstructionArbitration
Law(SecondEdition),
ArbitrationinContext
Series,Volume3
(JaneJenkinsKluwer
LawInternational2013)
pp.179212

Whenthebulkofthisworkisdoneis,intheend,aquestionof
judgment.Clearly,undertakingallthisworkpriortothe
commencementofanarbitration(whilstacounselofperfection)will
leadtodelayandconsiderableexpenditurewhichmayeventuallybe
wastedifmattersareultimatelyacceptedbytheotherpartyorthe
casetakesadifferentturninthelightoftheotherparty's

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presentationofitsowncase.However,draftingpleadings(orthe
RequestforArbitrationwheretherequestisrequiredtocontaina
substantialpartoftheclaimant'scase)withouthavingfirst
thoroughlyreviewedtheevidenceisrisky.Assertingapatently
unmeritoriousclaimmayleadtoanawardforcostsintheother
party'sfavourtotheextentthattheotherpartywastedcosts
defendingtheunmeritoriousclaim.
Ideally,therefore,apartywillattheveryleastmakesurethatthe
factsunderpinningthelegalargumentssetoutinitspleadingsare
supportedbytheevidencebeforefilingthatdocumentwiththe
tribunalandmayincludekeywitnessstatementswiththepleadings
toreinforcethestrengthofcriticalelementsofthecaseatthe
outset.Time,however,doesnotalwayspermitanexhaustive
reviewoftheevidenceatthetimeofdraftingstatementsofcase,in
whichcaseapartymayneedtoamendits
page
"179" statementsofcaseoncetheprocessofcollectingevidence
hasbeencompleted.Whetherandtheextenttowhichaparty
mayinfactamenditsstatementsofcasetointroducenewclaims
orcounterclaims.dependsonthetermsoftheparties'agreementto
arbitrateandthetermsofreference.
Ultimately,themethodbywhichdocumentsaremanagedduringthe
arbitralproceedingsisamattertobeagreedbetweenthepartiesor
orderedbythetribunal(dependingontheparties'agreementto
arbitrateand/orthetermsofreference).Thischaptersetsoutsome
oftheissuessurroundingthereview,analysisandmanagementof
documentaryevidenceininternationalconstructionarbitrations.
9.02.TheValueofaChronologyandOtherAids
Particularlyinlargedisputes,thevolumeofevidencerelevanttothe
factsinissuemaybeformidable.Moreover,theevidencemaywell
becontradictoryinplaceswitnessesmaydifferastothedateon
whicheventsoccurredanddocumentsmaycontradictthe
witnesses'recollections.Reviewingandsynthesisingsuch
informationinordertoassessthemeritsofaclaimcanbea
particularlydauntingtask.
Perhapsthebestwaytoreviewevidenceisbypreparinga
chronology.Thisisnottosaythatpreparationofevidenceby
referencetospecificissuesisnotausefultool.Onthecontrary,
oncethestructureofthecasebyreferencetoatimelinehasbeen
established,itisnormalforparticularissuestobeidentifiedandthe
evidencerelevanttothosespecificissuesseparatelycollated.But
thefirststep,inallbutthosecaseswiththemostlimitednumberof
issues,istheestablishmentofthattimelineorchronologyinwhich
theanalysisoftheindividualissuessits.
Therearenohardandfastrulesabouttheformatofachronology,
buttypicallyitwillbesetoutasshown:
Date
2May

Event
SiteinstructionXissuedrequesting
contractortocarryoutYwork.

35May
(approx)
8May

ContractorcommencesYwork.
Siteisshutdownbystrike.

Source
Site
instruction
X
Witness
statement
Sitediary
Zand
witness
statement.

Invariably,thefirstcolumnofachronologywillbethedateonwhich
theeventrelevanttoaclaimoccurred.Sometimesitwillbedifficult
tostatetheexactdateonwhichtheeventinquestionoccurred.In
thatcaseitmaybeusefultoplacetheeventapproximatelywithin
thechronologyuntilsuchtimeasthedatecanbepinpointedby
betterevidence.
Typically,thesecondcolumnistheeventorfactrelevanttothe
claim.Thereareanumberofissuestoconsiderwhendecidingwhat
toincludeinthechronology.Itis,
page"180" forinstance,
importanttobediscerningintheselectionofthefactstobe
included.Achronologywhichislitteredwithirrelevantfactsmay
becomemeaninglessandunwieldy.Havingsaidthis,certainfacts
orevents,whilenotdirectlyrelevant,mayneedtobeincluded
becausetheyputotherrelevantfactsincontext.Ofmoreconcern
atleastifthechronologyistobepresentedtotheotherpartytothe
arbitrationistheextenttowhichtheselectionofrelevantfacts
providesinformation,bywhatisincludedandwhatisnotincluded,
oftheinternalthoughtprocesseswhichunderlietheapproachtothe
case.
Finally,itisusefultohaveacolumnwhichsetsouttheevidence
provingthefactsinthechronology.Linkingthefactstothe
availableevidenceinthiswayallowsapartytoassesswherethe
evidenceislacking,asthesourcecolumnwillbeemptywherefacts
remaintobesubstantiatedontheevidence.
Additionally,thesourcecolumnallowsapartytoseewhetherthere
areanypossibleinconsistenciesintheevidence.Reviewofboth
sourcesofevidenceshouldobviouslybeundertakenfor
consistencyand,ifthereisamajorinconsistencywhichcannotbe
resolved,thecorrectnessofthefacthastoberegardedasbeing
uncertain.

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Agoodchronologywillformthebackbonenotonlyofaparty's
pleadings,butalsoofitswitnessstatementsandanyexpertreports
itrequires.Programmingexpertsinparticularcannotassessaclaim
fordelayordisruptionunlessthereasonsfor,andthedatesof,the
delaytotheclaimantareknownwithprecision.
However,thisisnottheendofthechronology'svalue.Arbitral
tribunalsandcourtsalikeoftenrequirechronologiestobesubmitted
bytheparties.Eventhemostcarefullydraftedpleadings,
statementsandsubmissionscanbedifficulttoreadanddigest.In
thisregard,theICCConstructionArbitrationReport(1)notes:
Ifthereareanyclaimsfordelayordisruption,a
chronologyofeventswillberequiredfromtheparties.
Thisshouldbeideallyincludedwiththeclaimant's
requestforarbitrationortherespondent'sanswers.
Sincemostconstructionarbitrationsareaboutthe
performanceofarelativelylongtermcontract,itisin
ourviewhighlydesirablethatthetribunalshould
scrutinizeanychronologywithcare.(2)
Insomecasesanarbitratorwillrequirethepartiestosubmitan
agreedchronologysettingouttheundisputedfactsrelevanttothe
dispute.Experienceunfortunatelysuggeststhatthecompilationof
anagreedchronologycanbeacomplexandtimeconsumingaffair.
Whilstmostofthegenuinelykeyfactsarelikelytobeundisputed,it
istheinclusionofotherfacts'whichtendtocausetheproblems.In
thenatureofthings,therewillbedisputesastowhethersomething
didordidnothappenasdescribed,thedateonwhichitdidordid
nothappen,andthesignificanceoftheevent.Accordingly,itisnot
unusualfortheretobeonlytheverybarestofanagreed
chronology,witheachpartysupplementingthiswithitsown,more
detailed(andprobablymorepartial)spinonwhattookplace.Insofar
asdisputedfactsareconcerned,theICCConstructionArbitration
Reportencouragesthearbitraltribunalto:
page"181"
compileacompositechronologyfromthematerial
providedandsendittotheparties,askingthemto
clarifyanydiscrepancies.Thetribunalshould
thereaftermaintainthechronology,amendingitasthe
casedevelops,circulatinganyrevisions,andasking
thepartiestocompleteanygapsinit.(3)
Thereisaclearstrategicadvantagetohavingone'sown
chronology,wherepossible,formtheprimarybasisofthetribunal's
chronology.Forthisreason,itmakesgoodsensetopreparea
chronologywhichisaccurate,reliable,relevantanduserfriendly.In
manycases,timewillbefarbetterspentinthepreparationofthis
documentthaninattemptingtoarguethecasethroughtheprocess
ofagreeingachronology.
TheICCConstructionArbitrationReportalsosuggeststhatarbitral
tribunals:
requestinformationtoenableittocreate
organisationcharts,layoutsandglossaries.(4)
Suchaidsarealsoofgreatbenefittothepartiesinsofarasthey
servetopresentcomplicatedfactsordifficultlegalargumentsand
maybeworthpreparinginadvanceofpleadingsorsubmissions.
9.03.DocumentManagement
[A].DocumentReviewandDisclosure
Duringthecourseofanarbitrationapartywillreviewitsown
documentsforthepurposesofpreparingitspleadings,providingthe
backupdocumentationforwitnessstatementsorthegivingof
evidenceinchiefandinreply,briefingexpertwitnessesand
preparingfordisclosuretoanotherparty(wheresuchdisclosureis
agreedbetweenthepartiesororderedbythetribunal).
Ineachcase,thedocumentsrequiredtobereviewedmaybe
voluminous.Asthenumberofdocumentsrequiredtobereviewed
grows,theimportanceofusinganappropriatesystemforthe
managementandanalysisofthosedocumentsincreases.Ifthe
systemformanagingdocumentsisinadequate,thencertain
documentsmaygounreviewedand/orcertainanalysismaygoun
captured.Suchinefficienciesinflatethecostofproceedingstothe
extentthatadditionaltimeisrequiredtobeexpendedreviewingthe
samematerialonmultipleoccasions.
[1].TheScopeoftheDisclosure
Thescopeofthedisclosureisdeterminedbytheparties'agreement
orbythetribunal'sdirection.Generally,however,thescopeofthe
disclosureisdefinedaccordingtotheissues'requiredtobe
resolvedforthepurposesofdeterminingthedispute.Inthecontext
ofaconstructionarbitration,theICCConstructionArbitrationReport
notes:
page"182"
Thetribunalshouldmakeitclearattheoutsetthatthe
documentsshouldbedirectlyrelevanttotheissues
asdefinedbythetribunalandshouldbeconfinedto
thosewhichapartyconsidersnecessarytoproveits
case(ortodisposeofthecaseoftheotherparty)or

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whichhelptomaketheprincipledocuments
comprehensible.(5)
Thisiswelcomeguidanceontheprocessofthedisclosureof
documentsandthepreparationofmaterialstobeusedatthe
hearing,whetherconductedinacommonlawjurisdictionor
elsewhere.Ofcourse,anorderfordisclosureforthepurposesofan
internationalarbitrationistypicallynarrowerinscopethananorder
fordisclosureofacommonlawdomesticcourtforthepurposesof
litigation.InthisregardtheICCConstructionArbitrationReport
notesthat:
Fewarestillinfavourofthewholesaleand
indiscriminateproductionofdocumentsbymeansof
thecommonlawprocessofdiscovery.Inany
event,suchaprocessaspracticedindomesticfora
mustbejustifiedifappliedtoaninternational
arbitration.OtherwiseithasnoplaceinICC
arbitrations.(6)
Oncethescopeofthedisclosureisknown,thetribunalandthe
partieswillbeinapositiontoassessthevolumeofdocuments
requiredtobemanagedforthedurationoftheproceedings.Itisat
thisstageofthearbitralproceedingsthatthetribunalandtheparties
arebestplacedtodecidethemostappropriatewaytomanage
documents.
SeeChapter11forfurtherdiscussionondisclosure.
[2].ElectronicDocumentManagement
Itiscommonplaceininternationalconstructionarbitrationfor
tribunalstorequireor,ifnotrequire,tosuggesttheuseof
electronicdocumentmanagementsystems(EDMSs).(7)Tothe
extentthatthepartiesmaybeabletoagreeonwhetherornotsuch
systemsshouldbeusedbythetermsoftheiragreementto
arbitrate,thefollowingadvantagesanddisadvantagesoughttobe
considered.
EDMSsaregenerallylessexpensivetouse(8)andmoreaccurate
thanpaperbasedmethodsofdocumentmanagement,forthe
followingreasons:
Storage:Whileitisunrealistictoassumethattheneedtobring
originalpaperdocumentstogetherinoneplacewillbeeliminated,
electronicstorageofdocumentsreducesthecostinvolvedin
maintaininglargedocumentlibrariesinmultiplelocations,witha
consequentsavinginpaperandrelatedstationery.Additionally,
totheextentthatelectronicdocumentsareaccompaniedby
metadata(whichwouldinclude,forinstance,informationasto
wherethedocumentwascreatedandtowhomthedocumentwas
sent),thatinformationmaybecapturedbycertainEDMSs.
page"183"
Coding:typicallydocumentsstoredonEDMSsarecodedwith
objectiveandsubjectivedatafields.Objectivedatafields
capturesuchinformationasthedate,authorandsubjectmatter
ofthedocument,whereassubjectivefieldscaptureinformation
suchastherelativerelevanceofadocument,ortheissueto
whichadocumentrelates.ManyEDMSsallowforcontrolled
dataentrybythecreationofpicklists'fromwhichthedataentry
operatorisrequiredtoselectwhencodingadocumentthereby
promotinggreaterconsistencyindataentry.Additionally,certain
EDMSsallowrelateddocumentstobedatalinked,foreaseof
navigation.
Searching:specificdocumentsorrangesofdocumentsmaybe
retrievedquicklybyusingsearchterms.Typically,EDMSspermit
searchingaccordingtobothsubjectiveandobjectivedatabase
fields.CertainEDMSs,however,alsoallowforfulltextsearching
ofthestoreddocumentitselfbymeansofopticalcharacter
recognitionprocesses.
Clearlyasystemwhichretrievesdocumentsquicklyandaccurately
islikelytoreducetheamountoftimerequiredtobespentsearching
forrelevantdocumentsand,indoingso,reducethecostof
documentmanagementgenerally.AdditionaladvantagesofEDMSs
include:
Printingandreporting:searchresultsmaybereported
electronicallyandprinted,wherenecessary.Largevolumesof
documentsmaybeprintedrelativelyquicklyforthepurposesof
disclosureorforthecreationofevidenceortenderbundleslater
intheproceedings.
Portabilityandmultipleusers:EDMSsmaybeoperatedby
multipleuserssimultaneouslyandareusuallyaccessiblefrom
anycomputerterminalinstalledwiththerelevantsoftware
connectedeitherthroughalocalnetworkor,morecommonly,
throughtheInternet.Additionally,informationfromEDMSsmay
bedistributedelectronicallyandquicklytoothers(including,for
instance,thearbitraltribunal,clients,counselortootherparties
forthepurposesofdisclosure).
Thereare,ofcourse,disadvantagesassociatedwithEDMSs,
includingthecostofpurchasingthenecessaryhardwareand
softwareandthecostoftrainingdataentryoperatorsandusers.To
theextentthattheequipmentandusersarelikelytobethesame,
thesecostsmaybespreadacrossseveraldisputes.However,the

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costsinvolvedinsettinguptheEDMS(includingthecostof
scanning,loadingandcodingdocuments)willbespecifictothe
arbitrationathandandthesearelikelytobeconsiderable.
[3].MarketTrends
EDMSsarecommonlyusedbylawfirmsintheUnitedKingdomto
managedocumentsrelevanttodisputes.Mostlargelawfirmshave
bought,orhavedevelopedforthemselves,largescaleEDMS
software.Wheresuchcapabilitiesarenotavailable
page
"184" inhouse,itispossibletooutsourcedocumentmanagement
requirementstolitigationsupportagenciesinpossessionofan
EDMS,asandwhentheneedarises.
Insomecases,organisationsaresofrequentlyinvolvedindisputes
thatitiscosteffectiveforthemtomanagealloftheirdocumentsby
meansofanEDMS,irrespectiveofwhetheradisputeisanticipated.
Consequently,documentsarestoredandcodedautomaticallyupon
theirconceptiononthepresumptionthattheywillberequiredforthe
purposesofpreparingordefendingaclaiminfuture.Evenwhere
not,theincreasingtrendtowardsthepaperlessofficeandelectronic
projectcommunicationismakingEDMSusageverymuchthe
norm.Situationswherethebacklogofdocumentstobeloadedonto
anEDMSistoogreattoallowitseffectiveimplementationshouldin
thefuturebecomefewandfarbetween.Thisissupportedbythe
resultsofastudybytheUniversityofCalifornia(9)whichfoundthat
92%ofnewinformationin2002wasstoredelectronically.Giventhe
rateoftakeupofelectronicstorageandinterchangeofdatasince
thattime,itislikelythatEDMSusewillgrowinthefuture.
[4].EDMSSoftwareandWebBasedPackages
EDMSsoftwareand/orwebbasedpackagesareavailablefroma
varietyofsources.Moreover,eachparticularsoftwareandweb
basedpackagehasitsownparticularstrengthsandweaknesses.
Insofarasproducttrendsareconcerned,thereisanincreasing
tendencytouseweborintranetbasedproducts.
[B].ManagingDocumentsduringtheHearing
Inadditiontorequiringamethodformanagingtheinternalreview
andexternaldisclosureofdocuments,apartymayalsowishto
consideramethodformanagingdocumentsduringthehearing.
Includedinthedocumentsrequiredtobemanagedatthisstagewill
bethecontemporaneousdocumentaryevidence,witness
statements,expertreports,pleadingsandsubmissions.
TheICCConstructionArbitrationReportagainsuggeststhatthese
documentsbemanagedelectronically:
Thetribunalwillneedtoascertainattheoutset
whetheritispracticabletoworkfromprintoutsor
whetheritwouldbebetterifthematerialwere
accesseddirectlybythetribunal,inwhichcaseitwill
benecessaryforthetribunalandeveryotherpartyto
beprovidedwiththenecessarysoftware.(10)
Clearlysuchasystemispotentiallyexpensive,requiringthe
presenceofcomputers,softwareandtherelevantsupportstaff
duringthehearing.However,theabilityforallinvolvedinthe
arbitrationtoaccessthesamesetofdocumentshasavery
considerablebenefitwhichisdifficulttoquantify.Providingallthe
usersarecomfortablewiththe
page"185" operationofsucha
system(andthismaystillbeagenerationalissueforcertainusers,
includingwitnesses),commonaccesstoaunifieddatabase
eliminatesthetimeconsumingandfrustratingprocessofensuring
thatallpartiesare(literally)onthesamepage.
Totheextentthatitisdecidedthatthetribunalwillworkfrom
printouts,thereisnothinginanyarbitrationrulescommonlyused
todaythatrequiresdocumentstobemanagedinaparticularway.
Consequently,themannerinwhichdocumentsaretobemanaged
islikelytobedictatedbyorderofthetribunal.(11)TheICC
ConstructionArbitrationReportsuggeststhatdocumentsbe
collatedintoagreedworkingfiles(containing,forinstance,
completesetsofsiteminutes,programmesorinstructions)(12)and
agreedissues'files(containingdocumentsrelevanttoaparticular
issue).(13)Insomecasesthetribunalmayrequestexhibitsto
witnessstatementstobepresentedinthesamefile,in
chronologicalorder.Muchdependsonthepreferenceandcollective
prejudicesofthetribunal,thoughhereaselsewherethereismuch
tobegainedbytakingtheinitiativeandpersuadingthetribunal(if
necessaryagainstitsfirstinclinations)toadoptthewayofworking
whichwillmostsuitthepresentationofyourowncaseandtheease
andcomfortofyouradvisers,witnessesandexperts.
Inagreeingworkingorissuesfiles,however,thepartiesarenot
agreeingtheadmissibilityofthosedocumentsortheirevidentiary
value,ratheritisonlytheauthenticityofthedocumentswhichisin
question.Documentswhoseauthenticityisdisputed(arareeventin
internationalcommercialarbitrations)maybekeptseparatelyuntil
suchdisputeisresolved.Certainly,agreeingworkingandissues
bundlesservestoeliminateanyunnecessaryduplicationinthe
documentsandisapracticeusedwidelybydomesticcourts.

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Furthermore,whereapaperbaseddocumentmanagementsystem
isemployed,theICCstressestheimportanceofuniquely
identifyingeachofthedocumentsbyanagreednumbersystem(14)
andhighlightingtherelevantsectionsofthosedocumentsforease
ofreference.(15)Anothersimplebuteffectivesuggestionisto
colourcodefilesaccordingtotheircontentforinstancepleadings,
exhibitbundles,workingandissuesfilesmighteachbeassigned
theirowncolours.Theimportanceofensuringthatwheremultiple
setsofdocumentsareused(i.e.,notashareddatabaseonan
electronicmanagementanddisplaysystem)thatalldocumentsare
identicalandthereisareadilyunderstandablesystemofunique
identificationforeverypageofeverydocument,cannotbeover
estimated.Presentationmaynotbeeverythingbutifthetribunal
cannotreadilybedirectedtothematerialthatisbeingconsidered,
theimpactofthepresentationcanbemateriallydamaged.
page"186"
9.04.ScottSchedules
Duringthecourseofaconstructionarbitrationitwouldbetypicalfor
alargenumberofpleadingsandamendedpleadings,particularsand
soontobefiledbytheparties.TheStatementofCase,for
instance,willsetoutnumerousclaimsgenerallyeachclaimfor
defectivework,forinstance,willbeseparatelypleaded.(16)Given
thelargenumberofclaims,itcanbedifficultforthetribunaland
partiesaliketoquicklyidentifywhichoftheclaimsare
particularised,defended,thesubjectofareplyorthesubjectof
factualorexpertevidence.
Forthisreasonithasbecomethepracticeforschedulestobe
preparedsettingoutthestateofthepleadingsoneachindividual
issue.KnownintheEnglishcourtsasScottSchedules'(17)these
summarisethepleadings(andsometimestheevidence)intoa
singledocument,sothatthepartiesandtribunalmayveryquickly
identifythestatusofagivenclaim.Theymightbedescribedas
ancillarytothemainpleadings.
Aswithchronologies,therearenohardandfastrulesfortheformat
ofScottSchedules.Usuallytheirformisdictatedbythetribunal's
order.However,theyareusuallysimilarintheformtothe
spreadsheetsetoutbelow.Typically,claimsofasimilarnature
(suchasclaimsfordelay,variationsand/ordefectivework)are
dealtwithinthesameschedule.
page"187"
Table9.1
Delay Particulars
Claim
2022 Truck
June
blocking
2006
accessto
sitefrom
Breach 06.0020
of
June2006
contract until17.00
(clause 20June
23)
2006.
failure
togive [Witness
access. statement
ofJ
Builder
dated2
December
2006
Paragraph
54]

Defence

Particulars

Response Particulars Quantum Particulars

Denied:
claimant's
workforce
wason
strike.

Industrial
Notallof
action
the
commenced claimant's
15.0019
workforce
June2006 wason
andended strike
17.0024
duringthe
June2006. period19
24June
[Witness
2006.
statement
ofJOwner
dated2
December
2006
Paragraph
34]

JThoms, 50,000.
PHarmer,
andH
Harriswere
onsiteand
readyfor
duties.
[Witness
statements
ofJ
Thoms,P
Harmer,
andH
Harris
dated2
December
2006
Paragraph
14]

Wasted
labour
costs
30,000.
Wasted
site
overheads
2,000.
Wasted
concrete
mix
18,000.
[Reportof
quantum
prepared
byE
Expert
dated4
December
2006at
Paragraph
32].

page"188"
Typically,theScottScheduleiscompletedbyboththeclaimant(s)
andrespondent(s).First,theclaimantsetsoutthebasisofits
claim,includingparticulars.Theclaimantalsosetsoutthequantum
claimed,includingparticulars.Thentherespondentsetsoutits
defence,includingthebasisonwhichtheclaimisdeniedornot
admitted,includingparticulars.Nexttheclaimantsetsoutits
responseandthebasisonwhichitresponds,includingany
particulars.(18)Clearly,thisisbestachievedbypassingthe
schedulefrompartytopartyinelectronicform.Oftenacolumnon
therightisleftblankfortheuseofthetribunal.
PartiesshouldapproachthetaskofcompletingtheScottSchedule
constructivelythesimpledenialofaclaimunsupportedbyreasons,
forinstance,doesnotassistthetribunaltodistiltherespondent's
argument.(19)TheuseofScottSchedulesisendorsedbytheICC:
Intherighthandsitisausefultool.Itdefinesthe
positionsofthepartiesandultimatelyitwillorcanbe
usedbyatribunaltorecorditsviewsanddecisions.
Attheprehearingstageitsmainvalueisthat,if

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properlycompiled,itestablishesthepositionofeach
partywheretheexistingsubmissionsorpleadingsdo
notalreadydosoadequately.(20)
TheICCConstructionArbitrationReportsuggeststhatScott
Schedulesbepreparedbeforetheparties'evidenceisfiled.(21)At
thisstageintheproceedings,aScottScheduleassistsin
determiningthefactsrequiredtobeproveninsupportoftheparties'
claims.Oncetheevidencehasbeenfiled,however,itmaybe
worthwhilerequiringeachpartytocrossreferencetheclaimssetout
intheScottScheduleagainsttheirlayandexpertevidence.Inthis
way,claimswhichareunsupportedbytheevidencemaybequickly
andeasilyidentified.Additionally,asispointedoutintheICC
ConstructionArbitrationReport:
Iffullyandproperlycompleted,theseschedulesshow
whichpointsarenotindisputeandthusirrelevantand
whichhavetobedecided.(22)
ScottSchedulesareoflessusewheretheclaimantseekstobring
aglobalclaim.Theproblemsraisedwithglobalclaimsare
discussedinmoredetailbelow.
9.05.Evidencerequiredforcommonconstructionclaims
[A].Introduction
Verybroadly,claimsinconstructioncasescanbedividedintotwo
mainclasses.Globalclaimsi.e.,claimswheretheclaimantdoes
notattempttoidentifyanydirectcorrelationbetweenindividual
eventsandtheireffectsandclaimsarisingoutofspecificevents.
Eachofthesebroadclassescanbefurtherdividedintoclaimsfor
page"189" additionaltimeandforadditionalcost.Thispartof
thischapterlooksatthepreparationofevidenceforclaimsfor
additionalcosts,includingthosearisingfromdelay.Before
discussingthetypesofcostsrecoverableinconstructionclaims,it
isworthwhiletouchinguponthesortsofevidenceconventionally
requiredtoprovethatsuchcostswereorwillbeincurred.
Dependingonthenatureoftheclaimandthefactsofthecase,a
claimantmayclaimitsactual,reasonableorestimatedcosts.For
instance,claimsmadeonaquantummeruitbasisareforthe
contractor'sreasonablecosts,whereasclaimsfordefectivework
arefortheemployer'sestimatedcosts(incircumstanceswherethe
relevantrectificationworksremaintobecarriedout).Ofcourse,if
theworkshavebeencarriedout,theclaimthenbecomesonefor
theemployer'sactualcosts.
Insuchacase,wheretheclaimantseeksitsactualcoststhen,as
ageneralrule:
aclaimantoughttoberequiredtoproducethe
primarydocumentsthatconfirmtheamounts
claimed(23)(emphasisadded).
TheICC'sreferencetoprimarydocuments'inthisregardisa
referencetothereceiptsorinvoiceswhichevidencetheclaimant's
costs,whichwillincludeitsowndirectcostsandthecostsof
subcontractors,planthireandthelike.Collatingthereceiptsand
invoicesunderpinningaclaimcanbealaboriousandtedious
process,especiallywheretheclaimantdidnothaveasystemfor
managingthosedocumentsinthefirstplace.Solaboriousand
tediousisthisexercisethatinmanycasesthearbitraltribunal
(beinghuman)willwishtoavoidtheneedtoexaminesuch
documentsthemselves.Thusinmanylargecasesdirectionswillbe
givenforsomeformofaccountingexperttoreportontheaccuracy
ofthesumsclaimed.Indeed,whileoneparty'sprimarydocuments
inalargecasemay(intheoryatleast)bemadeavailabletothe
otherparty,itisnotunknownforthevalidityofthisevidencetobe
demonstratedbyexaminationofastatisticallysignificantsample,
ratherthanofallthedocuments.Theimportanceofdocument
managementhasbeendiscussedingreaterdetailaboveandis
nowheremoreimportantthaninthisarea.Forwhile,inpractice,
shortcutsofthetypedescribedabovemaybeandoftenare
adopted,thetheoryremainsthatlossesofthistypeshouldbe
capableofbeingprovedbytheproductionofprimaryevidence.Woe
betideanypartywhocannot,whenchallenged,satisfythetribunal
ofitsobligationsinthisregard.
Where,however,theclaimisnotforactualbutforestimatedor
reasonablecosts,theevidencecannotbetheinvoicesforthework
done.Instead,theevidenceoflossisalmostalwaysamixtureof
documentaryandexpertopinion.Thedocumentaryevidencetends
toincludequotes,estimatesortendersfortheworktobedoneor
costsandratesforthematerialsandtradesrequiredfortheworkin
question.Ineverycaseexpertevidenceisrequiredtodemonstrate
thelikelihoodorreasonableness'ofacostclaimed.Theroleof
expertsandexpertevidenceisdiscussedingreaterdetailbelow
andinChapters12and13.
page"190"
[B].ContractorsClaimsforDelayorDisruption
Someofthemostcommonclaimsfoundinconstructionarbitrations
areclaimsfordelay,bothbythecontractorfordelayscausedbyits

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employerandbytheemployer(typicallyfordelayliquidated
damages)forlatedeliveryoftheproject.Ofcourse,oncedelayis
established(atopicinitsownright)thedeterminationofthe
employer'sclaimrequiresnoparticularevidenceatleastwhere
thecontractprovidesforliquidateddamages.Thecontractor's
claims,however,requireconsiderablymoreeffortandevidenceto
establish.Thewaytheseclaimsarepresentedoftenincludesthe
matterssetoutbelow.
[1].ClaimsforOverheads
[a].SiteOverheadsandPreliminaries
Wherethecontractorsuffersdelayforwhichtheemployeris
responsible,thenthecontractormayclaimtheactualcostsincurred
whilemaintaininganidlepresenceonsiteduringtheperiodofdelay.
Wherecontractsprovideacontractualrighttothesecosts,itisnot
uncommonforthecontractortoberequiredtotakereasonable
stepstoavoidthesecosts.Thesameiseffectivelytrueiftheclaim
fordelayisnotbasedonacontractualrightforadditionalpayment
butfordamagesforbreach,whenthecontractorgenerallybecomes
underanobligationtomitigateitslosses.Subjecttothese
obligations,thecontractor'sclaimfordelaywillinclude:
thecostofpayingsalariedorcontractedsitestaffduringthe
periodofdelay
thecostofleasingsiteequipmentorplantduringthedelay
thecostofmaintainingownedsiteequipmentorplantduringthe
periodofdelay(perhapsincludinglosthirefees'ifthecontractor
canshowtheequipmentwouldhavebeenhiredoutbutforthe
delaykeepingitonsite,depreciationandfinancecharges)
thecostofmaintainingwaterandelectricitytothesiteduringthe
periodofdelayand
certainmiscellaneouscostsincludingthecostofpostage,
stationeryand/ortelephonecallsassociatedwiththedelayevent.
Ineachcase,thecontractorwillneedtoshowthecostsincurredby
referencetotherelevantinvoicesorreceiptsforthecostsclaimed
(seediscussionabove)includingforinstance,invoicesevidencing
hirecharges,stationeryorlabourcosts.
Insomecases,however,ratherthanprovingeachcostonanitem
byitembasisthecontractormaychoosetoclaimthesecostsby
extrapolatingfromtheratesforpreliminariessetoutinitsbillof
quantities.Thisprocess,whichissometimesreferredtoasan
extendedpreliminariescalculation,canberegardedasamini
globalclaimandisfrequentlyviewedwithsomescepticism.(24)
page"191"
[b].HeadOfficeOverheads
Inadditiontocostsatthesitelevel,theremaybecostsincurredat
theheadofficelevelwhicharerecoverabletotheextentthatthey
couldnothavebeenavoidedbythecontractor.Again,suchcosts
includethecostofsalariedorcontractedheadofficestaff,thecost
ofidleofficeequipmentandothermiscellaneouscostssuchas
postage,stationeryandtelephonecallsincurredorwastedin
connectionwiththedelay.Dependingonthetermsofthecontract,
thecontractormayalsobeabletoclaimcertainfinancingcosts
incurredbyhimasaconsequenceofthedelay(where,forinstance,
hemustpaytomaintainabankguaranteeorfundingduringthe
periodofdelay).Wherethecontractorchoosestoaddaclaimfor
financingcostsitneedstodemonstratenotonlytheadditionalcost
butalsothecausalconnectiontothedelay.
Infact,demonstratingthatthecostsincurredaredirectlyreferable
tothedelayistheprincipaldifficultyinclaimingheadoffice
overheads.Projectspecific,timerelatedcosts(suchasfeesfora
bankguarantee)presentnoparticularproblems,butgeneral
financingcharges,suchasthecontractor'soverdraft,arelesseasy
todemonstrateaslosses(oradditionalcosts)causedbythedelay
toanyparticularproject.Similarlyitmaybedifficultorimpossibleto
demonstratewhatproportionofanemployee'stimewaswastedas
aconsequenceofthedelaywheretherelevantindividualworkedon
anumberofdifferentprojectsattherelevanttime.
[2].NetLostProfits
Wherethecontractwasprofitable,thecontractormayseekto
recoverprofitlostasaconsequenceofthedelay.Typically,such
claimsareestimatedaccordingtoformulaewhichseektodetermine
thecontractor'slostnetprofitthatis,grossprofitminussiteand
headofficeoverheads.
ThemostcommonofthesecalculationsaretheHudson,Emden
andEichleayformulae.TheHudsonformula,(25)forinstance,
calculatesnetlostprofitasfollows:
HO/ProfitPercentage
100

X ContractSum
X Periodof
Delay
ContractPeriod(inweeks)

AsisnotedinBuildingContractDisputes:PracticeandPrecedents:

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Theeffectoftheformulaistocalculatetherateat
whichthecontractorwouldhaveearnedgrossprofit
hadthecontractruntotimeandtoextrapolatethat
rateintotheperiodofdelay.(26)
page"192"
Aswiththeextendedpreliminariescalculation,however,therehas
beensomedoubtexpressedastothecorrectnessofrelyingonthe
Hudsonformulawherebetterevidenceoftheclaimant'slossis
available.(27)
Incertaincircumstancesthecontractormaywishtoclaimthenet
lostprofitthatwouldhavebeenmadeonothercontracts,hadhenot
beendelayed.Generally,thecontractorwillmakethisclaimwhere
thedelayedcontractwaslessprofitablethanothercontractsbeing
awardedatthattime.Suchaclaimrequiresevidencethatother
contractswouldhavebeenawardedtothecontractorhadhenot
beendelayedandproofoftheprofitmarginsthatwouldhavebeen
recoveredonthoseothercontractshadhecarriedthemout.
Obviously,evidenceisrequiredtoshowthatotherworkwas
available,thatitwouldhavebeenprofitableandthatthecontractor
wouldhavewonit.Forthisreason,evidenceoftendersforother
workwithestimatesofprofitmarginsbasedonthetenderpriceare
unlikelytobesufficienttodemonstrateagoodclaimforlostprofits.
[3].IncreasedCostsinExecutingRemainingWorksFollowing
Delay
Acontractormayclaimforincreasedcostssufferedasa
consequenceofdelayincluding,forexample,theincreasedcosts
involvedincompletingtheworksinaseasonorinamarketother
thanthatcontemplatedatthetimeoftenderingforthework.Items
recoverablemightincludetheincreasedcostofmaterials(including
handlingcosts),increasedlabourandplantcosts.Aswithother
claims,theevidencerequiredisamixtureofdocumentaryand
expertopinion.Wheretheclaimisforworkinginaseasonormarket
differentfromthatanticipatedatthetimeofthecontract,thecosts
ofboththeworkdoneintheoriginalcircumstancesandthose
prevailingasaresultofthedelaywillneedtobeproven,andthe
tribunalmustbesatisfiedthatanyadditionalcostarisesasaresult
ofthechangeincircumstancesandnotforanyothermatterfor
whichthecontractormayberesponsible.
[C].DisruptionandAcceleration
Whereanemployerisresponsiblefordisruptiontotheprogressof
theworks(i.e.,wherehehasdisturbedprogresstoitemsoffthe
criticalpathsothatthecontractorisnotdelayedinthecompletion
oftheworkbuthassufferedadditionalcostsincompletingthe
works),thecontractormayclaimthecostofwastedorincreased
overheadsincurredasaconsequenceofthedisruption.Likewise,
wherethecontractorisrequiredtoaccelerate(perhapsonthebasis
ofaconstructivechangeorder),hemayclaimthecostof
increasedoverheadsincurredbyhimasaconsequenceofthe
instructiontoaccelerate.Aswithotherclaims,theprincipalproblem
withprovidingevidenceinsupportofsuchclaimsisnotsomuchin
identifyingtheactualcostincurredbutinsatisfyingthetribunalthat
anyadditionalcostclaimedarisesasaresultoftheeventrelied
upon.Inotherwords,thechallengeistosatisfythetribunalthat,but
for
page"193" thedisruptiveevent,thecosttothecontractor
wouldhavebeenlessthanitactuallyturnedouttobeandthatthat
differencearoseasaresultofthedisruption.
[D].ContractorsClaimsforRepudiation
Thereareoccasionallyextremecaseswhereabuildingcontractis
terminatedinitsentirety.Wherethecontracthasbeenterminatedin
accordancewithitsterms,itislikelythatthecontractitselfwill
provideamechanismfordeterminingwhatsumsaretobepaidto
whom.Where,rarely,thecontractisbroughttoanendbythe
employerfornogoodreasonandoutsidethecontractmechanisms,
thecontractorwillhavetheopportunityoftreatingthecontractas
repudiated,thatisashavingbeenbroughttoanendbythe
employer'sactions.Inthesecircumstances,thecontractoris
generallyundernofurtherobligationtoperformbutmayclaim
whateverlossitcanestablishasdamagesongeneralprinciples.
[1].RepudiationbeforetheDateforPossessionoftheSite
Whereacontractisimproperlyrepudiatedbytheemployerbefore
workcommencesonsite,thecontractormayclaimthenetlost
profithewouldhaveotherwisemadeontheentiretyofthework.
Alternatively,thecontractormayclaimitswastedcosts,including
itspreparationandmobilisationcostssolongasthosecostswere
reasonablyknowntotheemployer.
Clearly,theevidencerequiredinsupportofthesetwoclaimsis
completelydifferentandacallideallyneedstobemadeatthetime
ofpreparingtheclaimdeterminingwhichroutethecontractorwill
follow(thoughitisnotimpossibletoclaiminthealternativeasa
safetymeasure).
Wheretheclaimisforlossofprofitonthecompletedproject,the
contractorwillneedtoshowthathewouldhavebeenableto

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completetheprojectasanticipatedandthathewouldhavemadea
profitindoingso.Whilethisclaimisalittleeasiertopresentthana
claimforlostotherworkincasesofdelay,itstillrequiressatisfying
thetribunalofthecontractor'sabilitytocompletetheworkina
profitablemanner.Suchaclaimisalsosubjecttoanobligationto
mitigate,inthiscase,perhaps,byobtainingotherwork.Ifother
workisgenerallyavailableinthemarketwithinwhichthecontractor
isworking,andthisworkisatleastasprofitableasthecancelled
work,theimpactontheclaimmaybelarge.However,inthiscase,
thebootisontheotherfootanditisfortheemployerto
demonstratebyitsevidencethatsuchother,profitableworkexisted
andwouldhavebeenavailabletothecontractor.Inbothcases,the
evidencewillinvolveasignificantamountofexpertopinionin
connectionwiththelikelyprofitmarginsofthecontractorandthe
availabilityofotherwork.
Where,perhapsbecauseofthecontractor'sinabilitytoshowthathe
wouldhavecompletedthecancelledprojectprofitably,orperhaps
becauseofanupturninthemarketleadingtoother,profitablework
beingfreelyavailable,theclaimisbasedonwastedcosts,the
evidencechangescompletely.Inthiscasetheclaimbecomes,in
page"194" essence,asimpleaccountingexercisebasedon
theprimarydocumentationreferredtoabove.
[2].RepudiationSubsequenttotheDateforPossessionofthe
Site
Whereworkhasbeencarriedoutbythecontractorpriortothe
employer'simproperrepudiationofthecontract(andforwhichhe
hasnotbeenpaid)thenthecontractormayclaimforsuchwork
underthetermsofthecontractaswellasdemobilisationcostsand
thelostnetprofitontheremainingportionofthework.
Inthiscasetheevidenceisanamalgamofstraightforward
documentaryevidencetodemonstratetheamountproperlyearned
underthecontracttodateand,asdescribedabove,expertopinion
ontheamountthatthecontractorwouldhaveearnedonthe
remainingpartofthecontract,hadhebeenallowedtocompleteit.
[E].GlobalClaims
Alloftheexamplesoutlinedabovearebasedonthepremisethat
theclaimisbeingpresentedinatraditionalmanner(inotherwords,
thatthereisoneeventwhich,whetherunderthecontractorasa
resultofabreachofcontract,entitlesthecontractortoaclaimfor
additionalpayment).Whereapartymakessuchaclaimhemust
demonstratethatthedelayorextracostscomplainedofwere
causedbytheeventforwhichtheotherisresponsible(anevent).
Ofcourse,inreallifeitiscommonforanumberofeventstooccur
inthesametimeperiod.Despitethis,wheretherearemultiple
eventsthecontractor(itistypicallythecontractor)mustshowhow
eachofthoseeventscontributedtothedelayortheincreasedcosts
complainedof.
Occasionally,thecontractorwillbeunabletoprovetheeffectof
eachindividualeventonprogressandcostsbecause,giventheir
complexity,itisimpracticableor(rarely)impossibletodisentangle
theindividualeffects.(28)Thismayarisebecausethecontractorhas
beenonthereceivingendofsomuchmisfortunethatithasbecome
difficulttoseparateoutcauseandeffect,oritmaybethatasa
resultofthefailuretomaintainadequatesiteandotherrecordsthat
atthetimeofthemakingoftheclaimthisexercisehasbecometoo
difficult(ortooexpensive)toundertake.Whicheveristhecorrect
reason,insuchcircumstances,contractorsaregenerallyinclinedto
makeaclaimfortimeandcostsonthebasisofthoseevents
collectively,requiringthearbitratortoinferthattheemployer's
breachescausedtheentiretyofthedelayandextracostsincurred.
Suchclaimsarereferredtoasglobalorrolledupclaims.
Fromthestartitneedstobesaidthatglobalclaimsareapproached
withaconsiderabledegreeofscepticism,becausetheyeffectively
ignoretheissueofcausationinanypropersense.(29)Additionally,
pleadingsandevidenceinsupportofglobalclaimstendtolack
precisionandcontainirrelevantorredundantmaterial.Thiscreates
page"195" furtherworkforthearbitraltribunal(30)andallowsthe
contractoreffectivelytosidestepmuchoftheevidentialburdenof
provingitscase.Inmanycases,thepresentationofaglobalclaim
isseenasanattemptbytheclaimanttosweepitsownfailings
underthecarpetwhilstlayingfullresponsibilityforthosefailingson
therespondent.However,inmorerecenttimesinEngland(and
neighbouringScotland),therehasbeenjudicialacceptanceofthese
typesofclaimsasamatterofprinciple.(31)
Implicitintheconceptofglobalclaims(thoughnotoftenhighlighted
intheclaimitself)isthefundamentalnotionthatthecontractoris
not,itself,responsibleinanywayforthedelayorextracosts
complainedof.Atypicalglobalclaimcomprisesalitanyofmatters,
allofwhichareeventsfallingwithintheemployer'sresponsibility,
followedbyasimpleassertion(normallyeasilydemonstrated)that
theactualcostsexceededthecontractualpricebytheamountof
theclaim.Consequently,whereaglobalclaimispresentedthe
employerwillnormallyattempttodemonstratethatsomeorallof
thedelayorcostscomplainedofwerecausedbyeventsforwhich
thecontractorisresponsibleincluding,forinstance,poorproject
management,technicalfailuresorafailureproperlytoscopeor
pricetheworkbeforethecontractwasenteredinto.Clearly,any

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suchevidencetearstheheartoutofaglobalclaimand,wherethe
contractorhasnotpresentedanyalternativeevidencetosupportits
claim,islikelytoresultinthedismissaloftheentireclaim.
However,thisisariskystrategyforanemployerifthetribunalis
mindedtoaccepttheprincipleofaglobalclaim.Thismightariseas
aresultofgenuinedifficultiesindisentanglingtheeffectsfrom
numerouspotentialcauses,thevastmajorityofwhichareprobably
oneswithintheemployer'sresponsibility.Insuchcases,much
dependsontheidentityofthemember(s)makingupthetribunal,
theirprofessionalbackgrounds,theircollectiveprejudicesandtheir
attitudestostrictrulesofevidenceandofpleading.Forthese
reasons,anemployerfacedwithaglobalclaimmightbewell
advisednotsimplytoseektoshowthatcertainoftheeventsset
outintheglobalclaimarematterswithinthecontractor's
responsibility,therebyhopingtopulltheentireglobalclaimdown.
Thealternative,thoughrequiringmuchmoreevidenceandeffort
fromtheemployer,istoundertakethetaskthat(arguably)the
contractoroughttohavedone,carryingoutablowbyblowanalysis
oftheeventsreliedonandtheirprobableeffects.
Thereare,however,problemswiththissecondapproach.Tostart
with,itmaywellbethecasethattheemployerhasinsufficient
recordstocarryouttheexercise,
page"196" thoughtosome
extenttheavailabilityofdisclosurefromthecontractoroughtto
providesomeofthematerialrequired.Ofmoresignificanceisthat,
whilsttheapproachmayguaranteetherejectionoftheglobalclaim,
itmaywellbeatthepriceofestablishingforthecontractor(butat
theemployer'sexpense)whatthecontractor'sentitlementactually
is.Forthesereasons,anemployerfacedwithaglobalclaimneeds
toconsiderverycarefullyitsbestdefencestrategyinthelightofall
thecircumstances,includingthelikelyattitudesofthetribunalto
theclaim.
[1].PreparingaGlobalClaim
Despitethecriticismsoftheglobalclaimimplicitinthepreceding
paragraphs,thereareoccasionalinstanceswhereaglobalclaimis
legitimate.Indeed,itmaybetheonlywaytopresentacasewhere
itisgenuinelyimpossibletodisentangletheeffectsofmultiple
causes.However,becauseofthepotentialvulnerabilityoftheglobal
claiminthefaceofarobusttribunalaccustomedtostrictrulesof
evidenceandproofofcausation,itshouldberegardedasthelast
resortandnotthenorm.Accordingly,andtotheextentthatitis
possibleandpracticaltodoso,acontractorshouldstartby
establishingacausallinkbetweeneacheventcomplainedofand
thecorrespondingdelayordisruptionandcosts.(32)Where,following
thisexercise,thereremaindelaysorcostswhichcannotbe
attributedtospecificeventsthenthecontractormightwishtomake
aglobalclaiminrespectofthem.(33)Indoingsoitshouldtakegreat
caretoremovefromthisresidualglobalclaimanyeffectswhichcan
positivelybeidentifiedasflowingfrommatterswithinits
responsibility.Ifacontractorfollowsthiscourseitmaystillnot
recoveritsglobalclaiminthefaceofadeterminedattackbythe
employer,butitschancesofsuccessontheglobalelementofthe
claimwillhaveimprovedanditwill,ofcourse,alwaysbeableto
recoverthoseelementsoftheclaimforwhichevidencewas
producedshowingcauseandeffect.
[F].EmployersDelayClaims
[1].LossofProfits
Justascontractor'sclaimsaretypicallyforadditionalcosts
(whetherasaresultofchangeordelay)incompletingtheproject,
employer'sclaimsaretypicallyforthecosttothemofdelayed
deliveryoftheproject.Wheretheworksaredelayedthroughthe
faultofthecontractorthentheemployermaybeunabletodraw
revenuefrom,oruse,thoseworksasfromthetimeoriginally
intended(i.e.,thedateforpracticalcompletionasadjustedunder
thecontract).Insuchcircumstances,theemployermay(in
principle)claimthelosswhicharisesfairlyandreasonablyasa
naturalconsequenceofthedelay.Thismightincludelossofrentor
lossofproductiondependingonthenatureof
page"197" the
works.Toclaimtheselosses,theemployermustprovethatthe
relevantcircumstancesweresuchthathewouldhavemadeaprofit
hadhebeenabletousetheworks.Inadditiontotheselosses,
whicharepotentiallyrecoverableinallcircumstances,theemployer
mayalsoclaimforspeciallosses(i.e.,lossesotherthanthose
whicharisefairlyandreasonablyasanaturalconsequenceofthe
delay)wherehecanshowthatthecontractorknewofthespecial
purposetowhichtheprojectwouldbeputandthelikelylosstothe
employerasaresultofdelay.
Ashasbeendiscussedabove,theevidentialburdenofprovingloss
ofprofitsisconsiderable,thoughperhapseasierforemployersin
certaincircumstances.Where,forinstance,thepropertyistobelet
forcommercialoccupation,theavailabilityoftenantsandthelikely
rentscanbereadilyestablishedbyamixtureoffactual(comparator)
andexpertevidence.Sotoocanthelossofprofitforaprocess
plant,basedonevidenceofthemarketpricesforthefeedstockand
theproductandexpertevidenceofthecostofprocessing.
Despitethis,therearecircumstanceswhereevidenceofactualloss
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notbeingabletomoveintoanewheadquartersbuilding.Perhaps
forreasonssuchasthese,itiscommonplaceforthecostof
employerdelayinthecommercialsectortobepreagreedas
liquidateddamages.Insuchcases,noevidenceoflossoughttobe
requiredtoprovetheclaim.However,incertainjurisdictions(such
asEngland)liquidateddamagesmayberecoverableonlyifshown
bytheevidencetobeagenuinepreestimateofcosts.(34)Inother
jurisdictionsevenmoreevidenceofactuallossmayberequired.
[2].WastedExpenditure
Asanalternativetoaclaimforlossofprofits(andintheabsenceof
agreedliquidateddamages)anemployermayclaimforwastedor
additionalexpenditure.Aclaimforwastedexpendituremightarise
outofcancelledcontractsrelatingtotheoccupationofthebuilding,
whilstadditionalexpendituremightariseincaseswhereadditional
shorttermaccommodationhastobeorganisedatincreasedcost
totakeaccountoftheunavailabilityofthecompletedbuilding.
Similarclaimsmightariseincaseswherefeedstockhadbeen
contractedforaprocessplantandhadtobesoldinthemarketata
loss,oradditionalproductboughtontheopenmarketathighercost
wheretheplantwasintendedfordomesticsupply.Obviously,the
evidenceinsupportofwastedoradditionalexpenditurecostswill
varygreatly,dependingonthecircumstancesoneachcase.
[3].RepudiationbytheContractor
Wherethecontractorimproperlyrepudiatesthecontractandits
repudiationisaccepted,thentheemployermayrecoverthe
differencebetweentheoriginalcontract
page"198" priceand
theactualorestimatedcostofcarryingouttherelevantworks
(dependingonwhetherornotthoseworkshavebeencarriedout).In
eachcase,theemployermustshowthattheworkswere,orwillbe,
completedsubstantiallyasoriginallyintended,inareasonable
mannerandattheearliestreasonableopportunity.(35)Generallythe
natureoftheevidencerequiredwilldependonwhethertheworks
havebeencarriedoutatthetimeoftheclaimorareyettobe
carriedout.Wheretheworkshavebeencarriedoutinaccordance
withtheintentionoftheoriginalcontract,theevidencewillin
essencebepurelyfactual,subjectpossiblytotheneedforsome
expertevidenceastothereasonablenessofthemannerinwhich
theworkshadbeencompleted.Where,however,theworkshave
notbeencompletedthequestionbecomesoneforexpertevidence
astothelikelyfuturecostoftheworks.
[4].DefectiveWorks
Wheretheworksaredefectivethroughthefaultofthecontractor,
thentheemployermayclaimeitherthediminutioninpropertyvalue
ortheactualorestimatedcostofreinstatingtheworks.(36)
Wheretheemployerclaimsforreinstatement,hemustprovide
evidencethattheworkwillbe(orhasbeen)completedsubstantially
asoriginallyintended,inareasonablemannerandattheearliest
reasonableopportunity.Where,however,theemployercannotor
doesnotintendtoreinstatetheworks,orwherethetribunal
considersthatitwouldnotbereasonabletorequirethecontractorto
reinstatetheworks,theemployermayclaimfordiminutionin
propertyvalue.Generally,aclaimfordiminutioninvaluewillbeno
greaterthanacorrespondingclaimforreinstatement.Tomakethis
claimtheemployermustshowthatthevalueoftheworkasbuiltis
lessthanthelikelyvalueoftheworkhaditbeenbuiltasoriginally
intended.
Additionally,wheretheemployerhasoptedtoreinstatetheworks,
hemayalsoclaimforanyresidualdiminutioninvalueofthework
followingreinstatement.Again,tomakethisclaimtheemployer
mustshowthatthevalueoftheworkasbuiltislessthanthelikely
valueoftheworkhaditbeenbuiltasoriginallyintended.(37)
Theemployermayalsobeabletoclaimforcertainmiscellaneous
expensesincurredasaconsequenceofthedefectiveworks,
includinganyincreaseininsurancepremiumsand/orthecostsof
inspectionsorreportscarriedoutinidentifying,assessingor
managingthedefectiveworks.
Incertaininstances,thecontractormayclaimthatthe
reinstatementoftheworkswillcausetheemployertogetsomething
betterthanhebargainedfor.Thisargumentmayberesistedon
groundsthattheemployerhadnoreasonablechoicebuttocarry
outthereinstatementworksinthewaythathedid.
page"199"
9.06.ExpertEvidence
[A].Introduction
Whileitcanbeseenthatmuchofaparty'spreparationfor
proceedingscentresaroundthecollectionoffactualevidence,a
partytoaconstructiondisputewill(asindicatedabove)almost
invariablyneedtoadduceexpertevidenceinsupportofitsclaimor
defence.Forinstance,whereaparty'sclaimisthatthedefendant
hasnotactedinaccordancewithacceptedindustrypractice,that

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partywillneedtoestablishexactlywhatacceptedindustrypractice
is.Generally,thisisdonebywayofexpertopinionbasedonthe
knowledgeandexperienceofapersonsuitablyacquaintedwiththe
relevantindustry.
Expertevidenceisalsousedtomakesenseofcomplicatedfacts.
Where,forinstance,evidenceofalargenumberofdelaysis
adduced,expertevidenceiscommonlyifnotinvariablyusedto
demonstratewhetherandtowhatextenttheeventscomplainedof
causeddelaytotheclaimant(byreferencetotheeffectofthose
delaysonthecriticalpath,forinstance).(38)
Although,inthecontextofinternationalconstructionarbitration,one
mightexpectmembersofthearbitralpanelitselftopossessa
certaindegreeofexpertise,itisstillverycommonforseveral
expertswithknowledgeandexperienceinquiteseparatefieldstobe
requiredfortheproperconductofacomplexconstructionclaim.As
theauthorsoftheICCConstructionArbitrationReportfound:
constructiondisputesoftenraiseavarietyoftechnical
issues,someofwhichmaybehighlyspecializedand
liebeyondthecompetenceofanordinaryexpertand
othersmaynecessitateadecisionbetweentwo
differentschoolsofthought,towardsoneofwhicha
tribunalmembermayhavealeaning,asaresultof
trainingorexperience.(39)
Forexample,programmingexpertsmayberequiredtogive
evidenceinrelationtodelayclaims,accounting(orquantity
surveyor)expertsmayberequiredtogiveevidenceonquantum,
andexpertengineersmayberequiredtogiveevidenceinrelationto
defects.Theresultisthatexpertevidenceininternational
constructionarbitrationisverymuchthenorm.
Thissectionaddressestheroleofexpertsinarbitrations,the
factorstobeconsideredwhenselectingandbriefinganexpertfor
anarbitrationandthenatureandformatofexpertevidence.
page"200"
[B].TheRoleofExpertsinArbitration
[1].AppointingExperts
Whereanarbitraltribunaldoesnotpossesstheexpertisenecessary
todeterminetheclaimbeforeittheneitherit,ortheparties,may
appointanexpert(s),dependingonthetermsoftheparties'
agreementtoarbitrateorthetermsofreference.Generally,the
termsofreferenceortheagreementtoarbitratewillexpresslystate
whetheritisthepartiesand/orthetribunalwhomayappointan
expert.Thisiscertainlythecasewherethepartieshaveagreedto
arbitrateinaccordancewithoneorotheroftheacceptedsetsof
institutionalrules.(40)
Wherethematterisnotdealtwithexpresslythenthepowerto
determinehow,andinwhatmanner,expertevidenceistobe
adducedwillgenerallyliewiththetribunalasanimpliedterminthe
agreementtoarbitrate.Itmay,however,benecessarytoreferto
thelawoftheplacewherethearbitrationistakingplacetoseewhat
powersthearbitratorshavetoappointexpertsortoadmitexpert
evidence.
[a].PartyAppointedExperts
Partiesfromcommonlawjurisdictions,whoareaccustomedto
adversarialstyleproceedings,typicallyprefertoappointtheirown
expertstogiveevidenceonthetechnicalaspectsofthedispute.
Suchpartiesvaluetheirabilitytoconsultwiththeexpertashe
prepareshisevidencetoensurethatallrelevantfactsandmatters
havebeenproperlyconsidered.
Wherenotalreadyprovidedforintermsofreference,thenumberof
expertseachpartymayretainisusuallyagreedduringaprehearing
conferenceordirectionhearing.Thescopeofeachexpertwitness's
remitandthemannerinwhichhisevidencemustbepresentedis
alsocommonlyagreedbythepartiesordirectedbythearbitral
tribunalatthistime.
[b].TribunalAppointedExperts
Occasionally,thetermsofreferencewillprovide(orthetribunalwill
direct)thatitisthetribunalandnotthepartieswhomayappointan
expert.Thesetribunalappointedexpertsarealsocommonlyreferred
toasneutralassessors'.Whilecertainparties(particularlythose
fromcivillawjurisdictions,whoareaccustomedtoinquisitorialstyle
proceedings)maybecomfortablewiththisarrangement,most
partiesfromcommonlawjurisdictionsarenot.Manypartiesare
waryoftheinclusionofafurther,unendorsedmemberintheir
carefullyselectedarbitralpanelwhoseopinionandviewsexpressed
inprivateconversationswiththetribunalmembers,althoughnot
binding,arelikelytobehighlyinfluentialonthedecisionmaking
process.
page"201"

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Again,whetherornotthetribunalmayimposeatribunalappointed
expertonthepartiesdependsonthetermsofreferenceand/orthe
agreementtoarbitrate.Tribunalappointedexpertsarecertainly
contemplatedinmostsetsofinstitutionalrules.(41)
Whereanarbitraltribunaldecidestoappointitsownexpert,the
consensusisthatitshouldinvolvethepartiesintheselection
process(byrequestingthatthepartiesagreeonanexpertfroma
list,forinstance).Indeed,consultationisanecessaryprerequisite
tothetribunalappointinganexpertundertheICCRules.(42)The
partiesshouldalsohavetheopportunitytoseeanyreportprovided
bytheexperttothetribunal,andtoquestionthetribunal'sexpertat
thehearing.
Whetheratribunalcanpreventpartiesfromappointingtheirown
expertsalsodependsonthetermsofreference.UndertheICC
Rulesforinstance,thearbitraltribunalisundernoexpress
obligationtohearpartyappointedexperts.However,theconsensus
isthat:
Eveniftheyintendtoappointaneutralexpert,ICC
arbitratorsarenotwelladvisedtorejectthe
presentationofexperttestimonybytheparties.(43)
Inthisregarditshouldbenotedthatanarbitraltribunalmayrelyon
expertassistanceonlytoobtainanytechnicalinformationthat
mightguideitinthesearchfortruth(44)andmustnotdelegateany
ofitsdecisionmakingpowerstotheexpert.Tothisend,the
tribunalappointedexpertshouldnotparticipateinthetribunal's
ultimatedeliberationsnorshouldhisopinionsbetreatedasbinding
bythetribunalmembers.
[2].TribunalandPartyAppointedExperts
Inthecaseofpartyappointedexperts,itisforthearbitraltribunalto
determinewhichexpertopinionistobepreferredinthecaseof
conflictingevidence.Thismaybedifficultwherethearbitraltribunal
lackstherelevantexpertise.Inthesecircumstances,thearbitral
tribunalmaytaketheviewthatitrequiresitsownexpertadviser(in
additiontothosealreadyappointedbytheparties)toassistin
distinguishingbetweenthevaryingopinions.
Asidefromanyconcernstheymayhaveastotheinfluencesuch
anexpertadvisormighthaveonthedecisionmakingprocess,the
partiesmayresentthecostofanadditionalexpert.Nevertheless,in
thecaseofhighlytechnicalclaims,thisarrangementmaybe
unavoidable.
page"202"
[3].SelectinganExpert
[a].FindingCandidates
Mostlawyerspractisinginternationalconstructionarbitrationkeep
listsofexpertsinthemajorfieldsofexpertise(includingfor
instance,quantumanddelay,andprogramming).
Occasionally,partiesrequireexpertiseofamoreobscurenaturea
claimfordefectsinconnectionwithsteamturbinesforinstance,
wouldrequiretheexpertiseofaspecialistmechanicalengineer.In
suchcircumstancesandiftheclientisunabletosuggest
candidates,itmaybenecessarytorequesttheassistanceofan
institutionsuchastheICCInternationalCentreforExpertise,in
ordertolocateanappropriateexpert.(45)
[b].QualificationsandExpertise
Ideally,anexpertwillpossessrelevantprofessionalqualifications
andcurrentexperienceintheindustry.Additionally,wherethe
expertislikelytogiveoralevidence,ortobecrossexamined,he
shouldbeabletocommunicatehisopinionsinacredibleand
authoritativemanner.Theremay,however,beatensionbetween
thepossessionofuptodateexperienceintherelevantfield,and
theabilitytopresentfluentlyandpersuasivelyinthesomewhat
artificialsettingofanarbitrationhearing.Alltoooftenitisthe
currentdaytodayexperiencethatislacking,withtheemphasis
beingplacedontheforensicskillsofprofessionalexpert
witnesses.
Thereis,infact,nothingatlawwhichrequiresexpertwitnessesto
possessanyprofessionalqualifications.AsMrJusticeLloydputit:
anexpertmaybequalifiedbyskillandexperience,
aswellasbyprofessionalqualifications.(46)
Nevertheless,suchqualificationsareofundoubtedvalueinsofaras
theylendweighttotheexpert'sevidenceandcredibility,generally.
However,recentindustryexperienceiscrucial.(47)Expertevidence
maybeentirelyrejectedifitcanbeshownthatthesupposedexpert
isnot:
someonewhohadexperienceofthepractices[in
theindustry]ofthetimerelevanttothe[claim](48)

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page"203"
irrespectiveoftheexpert'sprofessionalqualifications.(49)Likewise,
expertevidencewillberejectedwhereitcanbeshownthatthe
expert,althoughpossessingexpertise,doesnothaveexpertisein
thepreciseareawhichisthesubjectofdispute.(50)
Theimportanceofensuringthattheexpertpossessesexpertisein
theappropriateareacannotbeoverstated.Opinionsinrelationto
mattersinwhichtheexperthasnoexperienceareinadmissibleon
groundsofirrelevance(inthesamewaythattheopinionsoffactual
witnessesaregenerallyinadmissibleinthatregard).AsAuldJputit
inthecontextofengineers,architectsandsurveyors:
itisonlytheevidenceofthesurveyors,MrDyson
andMrGreenham,thatmaybeofvalueinthisissue.
MrShaw(acivilengineer)andMrFairhurst(an
architect),howeverconfidenttheymaybeintheirown
professionscannotspeakwithauthorityonwhatis
expectedofanordinarycompetentsurveyor.(51)
Itisimportanttochecktheexpert'scurriculumvitaetoensurethat
hepossessesqualificationsandrecentexperienceinthefield
relevanttotheclaimathand.Itisthereforeimportanttonotethat
experienceasanexpertwitnessdoesnotamounttoexperiencein
theindustry.Consequently,itisimportanttobewareofprofessional
expertwitnesseswhohavelosttouchwithcurrentindustry
practices.
[c].Credibility
Inmostcommonlawcourts,expertwitnessesoweadutytothe
courttoofferdispassionateanddisinterestedassistanceand
advicetothecourtinthecourt'sdeterminationofthefacts
relevanttotheclaim.Thecourtstakeadimviewofexpertswho
takeupontheirownshouldersthemantleofadvocacyand
themselvestoseektopersuadethecourtthedesiredresult,(52)or
considerthatitis[their]jobtostandshouldertoshoulder
throughthickandthinwiththesidewhichispayinghisbill.(53)
While,strictlyspeaking,itisprobablytruethatanexpertowesno
dutytoanarbitraltribunal,thegreatertheapparentindependence
oftheexpert,themoreweightthetribunalwillgivetohisevidence.
Tothisextent,thecaselawsurroundingthedutyofexpertsincourt
proceedingsisrelevanttotheassessmentoftheircredibilityin
arbitralproceedings.
Whileanassessmentofthecandidate'slikelycredibilityislargelya
matterofjudgment,thefollowingoughttobeconsideredwhen
selectinganexpertwitness:
First,doesthecandidatehaveanyconnections'withtheclient?If
theexpertisinanywayconnectedwiththepartywhichretainshim
(sayforinstance,heisanemployeeorotherwisereceiveswork
fromtheclient),hiscredibilitywillbecalledinto
page
"204" question.Itisthereforeimportanttoensurethatthereisno
connection,oraslittleconnectionaspossiblebetweentheexpert
andtheclient.
Second,doesthecandidatecommunicatehisopinionscredibly?
Expertsaregenerallyregardedasimpressivewheretheyrefrain
fromactingasanadvocateforthepartywhichretainsthem(54)and
showawillingnesstoconcedepointswheresensibleand
appropriatetodoso.(55)Theviewsofanexpertthatare
communicatedauthoritativelybutdispassionatelyaremorelikelyto
beadoptedthanthosethatarenot.
Wherepossible(andinadditiontoformingyourownopiniononthe
generaldemeanouroftheexpert),wheretheexperthasgiven
evidencebefore,itisessentialtoreviewanyrelevantjudicialor
arbitraldecisionsforcommentaryonthecandidate'sperformance
asanexpertwitness.Inparticular,whenappointinganexpertitis
importanttoestablishthattherehasbeennoadversecriticismof
theexpert'sperformance,integrityorjudgmentasthiswillinevitably
impactadverselyontheweightgiventohisevidence.
[d].TimingofAppointment
Incertainfields,theremayberelativelyfewpeoplewhoare
sufficientlyqualifiedtogiveanexpertopinion.Theremaybefewer
still,oncethosewhoareconnectedwiththeclienthavebeen
eliminatedfromthelistofcandidates.Inthesecircumstances,it
maybewisetoidentifyandretainanexpertassoonaspossible,to
preventanyotherpartytotheproceedingsobtainingtheservicesof
thebestor(worststill)theonlyexpertinthefield.
[C].BriefinganExpert
[1].BriefingPartyAppointedExperts
Themannerinwhichtheexpertisbriefediscrucialtothecase,
especiallywheretheexperthasnevergivenevidencebefore(in
whichcasehewillneedtobecarefullyguidedthroughthetaskof
preparingareportandtheprocessofgivingoralevidence).The
followingaresomeoftheessentialpointsforapartyandits

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adviserstoconsiderwhenputtingtogetherabrieftoinstructan
experttoprepareareport:
[a].Scope
Asmentionedabove,oftenthescopeoftheexpertevidence
requiredtobeadducedbythepartiesisagreedbetweentheparties,
ordirectedbythearbitraltribunalduringaprehearingconference.
Wherethisisthecase,itisimportantthattheexpertberequested
topreparehisreportwithintheconfinesofthescope.Opinionsthat
ventureoutsidethemandatedremitmaybeinadmissibleanda
wasteofcosts.Forinstance,in
page"205" PozzolanicLytag
Ltdv.BryanHobsonAssociates,(56)(inproceedingsbroughtunder
theEnglishArbitrationAct)itwasheldthattheexpertevidence
adduced(theexperts'reportsdirectedtoissueswithwhichthey
shouldnothavebeenconcerned)bybothsideswentwellbeyond
whattheofficialrefereehadauthorised,everythingpossibleshould
havebeendonetodiscouragethis.
Wherethescopeofexpertevidencehasnotbeenagreedor
directed,thenitwillbeforthepartytodefinethematterstobe
addressed.Usually,thepartywilldefinethescopeoftheexpert
reportbyreferencetoaseriesofcarefullyformulatedquestions,
whichassisttheexpertindirectinghisattentiontotherelevant
factsthatneedtobeproventomakeouttheclaimordefence.In
formulatingthesequestionstakecarenottorequest:
evidencethatreallyamountstonomorethanan
expressionofanopinionbyaparticularpractitionerof
whathethinkshewouldhavedonehadhebeen
placed,hypotheticallyandwithoutthebenefitof
hindsight,inthepositionofthedefendants,[which]is
oflittleassistancetotheCourtthatisthevery
questionwhichitisthecourt'sfunctiontodecide.Itis
oftensaidthatanexpertmaynotbeaskedthevery
questionwhichthecourthastodecide,forthereason
thatthatwouldbetousurpthecourt'sownfunction.(57)
[b].WhattogivetheExpert
Dependingonthestageoftheproceedings,abriefshouldinclude
thefollowingdocuments:
allportionsoftheclaimandanycorrespondingdefence
alldocumentsandotherevidenceand
allportionsoffactualwitnessstatements.
thatarerelevanttothefactswhichtheexpertisrequiredtoanalyse.
Itisnotwisetoholdbackdocumentsoranywitnessstatement
(especiallythosefromtheotherparty)whichmightbeprejudicialto
theclient'sclaim.(58)Theotherpartywillbelikelytopickupon
theseomissionsandrequiretheexperttodealwiththemincross
examination.(59)
Wherecertainfactsarenotknown,itmaybenecessarytoprepare
alistofassumptionsuponwhichtheexpertmustpreparehis
opinion.Inthatcase,itisimportanttoensurethatthereportis
amendedandupdatedasandwhenthecorrectnessofthe
assumptionsbecomesclear.
page"206"
[c].Instructions
Anybrieftoanexpertshouldinclude,amongotherthings,
instructionsinthefollowingterms:
Thereportshouldbepreparedbyyoualone(thecourtshave
shownadistasteforexpertreportswhichareprimarilyprepared
bysubordinatesandwithwhichtheexpertisonlyvaguely
familiar).(60)
Answeronlythosequestionswhichfallwithinyourareaof
expertise(seeaboveastotheimportanceofexpertise).
Setouttheassumptionsuponwhichyouropinionisbased(which
shouldincludeanyassumptionssetoutinthebrief).(61)
Setoutthedocumentsconsideredbyyouinreachingyour
conclusions(whichshouldincludealldocumentsaccompanying
thebriefandrelevantcodesandstandards).(62)
Setoutthemethodologyemployedinreachingyourconclusions.
(63)

Adviseifyouareoftheviewthatmoreinformationisneeded
beforeyoucanreachafinaldecision.Placeacaveatinyour
reportinthatregard,statingthatyouropinionsareprovisional.(64)
Eachoftheseinstructionsisaimedatimprovingthetransparency
oftheexpert'sdecisionmakingprocesssothatitmaybeopento
analysisandreviewbytheotherparties.Itisthistransparency
whichlendscredibilitytotheexpert'sevidence.
[2].DirectingTribunalAppointedExperts
Wheretheexpertisappointedbythetribunaltheusualpracticeis

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forthetribunaltopreparespecificquestionsfortheexpertto
addressonthebasisoftheevidencefiledbythepartiesinthe
proceedings.Theconsensusisthatarbitratorsshouldinvitethe
partiestocommentonthequestionspriortotheirsubmissiontothe
expert.Likewise,itiscommonpracticetoallowpartiestocomment
ontheanswersprovidedbythetribunalappointedexpertandto
replywithexpertevidenceoftheirown.Allowingthepartiestobe
involvedindeterminingthetribunalappointedexpert'sremit,and
analysinganyreportpreparedbyhim,willreducelaterobjectionsto
thatevidence.
page"207"
[D].WhatFormDoesExpertEvidenceTake?
Aswithfactualevidence,expertevidencecanbewrittenororal.
Generally,therulesofevidenceappliedbythearbitraltribunalin
connectionwiththepresentationofexpertevidencewillbeidentical
tothoseappliedinthecaseoffactualevidence.Whiletherulesof
evidencemayvaryacrossproceedings,expertevidencewhich
straysbeyondtheagreedordirectedscopeistechnically
inadmissible.Insuchcircumstances,thepartiesmayagree,orthe
tribunalmaydirect,thattheoriginalremitshouldbeexpandedon
theconditionthateachotherpartybegiventheopportunityto
respondtotheadditionalexpertevidence.
[1].Reports
Writtenexpertevidenceisusuallypresentedtothearbitraltribunal
intheformofareport.Thesereportsaregenerallyfiledwiththe
tribunalafterthefactualwitnessstatements,sinceinmostcases
theexpertreportsdependonmatterscoveredbythefactualwitness
evidence.Occasionally,thoughrarely,thereisacaseforexpert
reportstoprecedethedeliveryofthefactualwitnessstatementsas
itcanbehelpfulforthepartiestohaveafullunderstandingofa
technicalmatter(forinstancethecauseofaspecificfailure)inorder
toestablishwhatfactualevidenceisrelevanttothequestionof
responsibilityforthefailure.Whicheversequenceisadopted,party
appointedexpertsmaynormallyprepareadditionalreportsduring
thearbitralproceedings,settingoutcriticismsoftheexpert
evidencepresentedbyanopposingpartyor,indeed,defending
criticismslaunchedbyothers.Likewise,tribunalappointedexperts
mayneedtoprepareadditionalreportsaddressingpointsof
criticismraisedbytheparties.
Thepartiesshouldalsogivethoughttotheformatofthatexpert
evidencetoensurethat:(i)thekeyissuesfortheresolutionofthe
disputearedefined(ii)theevidenceisobjectiveandindependent
and(iii)theevidenceispresentedinawaythatiscogentandeasily
understoodbythearbitraltribunal.Onthelatter,sometechniques
forpresentingexpertevidencearesetoutbelow.
Inkeepingwiththeinstructionsdiscussedabove,theexpertreport
shouldinclude,amongotherthings,thefollowing:(65)
acurriculumvitae,settingoutrelevantprofessionalqualifications
andexperience
alistofthedocumentsreviewedbytheexpert
alistoftheassumptionsrelieduponbytheexpertand
astatementofthemethodologyunderpinninghisanalysisofthe
facts.
page"208"
[2].OralEvidence
Anexpertwillnormallyberequiredtosubmittocrossexamination
onthecontentsofhisreport.Hemayalsoberequiredtoface
questionsfromthearbitraltribunal.Itisatthispointthathisgeneral
demeanourasawitnessbecomesparticularlyimportant.
Anincreasinglycommonmethodofdealingwithexpertevidenceis
toarrangeexpertconclavesorjointexpertmeetings,whichare
attendedbytheexpertsaloneandinwhichtheexpertsarerequired
toidentifythepointsuponwhichtheyagreeordisagree.Insuch
circumstancestheexpertswillprepareajointreport,forsubmission
tothetribunal(andtheparties)settingouttheoutcomeofthe
conclave.Inthiswaythetechnicalmattersindisputecanberefined
quickly.Suchconclavespresentanumberofissuesfortheparties
andtheiradvisers.
First,giventhedifferentexpertiseofexpertwitnessesattendinga
conclaveandthedifferinginstructionsreceivedbyeachparty
appointedexpert,thereistheriskthat,duringconclave,theexperts
willengageonmatterswhichareoutsideoneexpert'sexpertiseor
arenotstrictlydirectedtothemattersindispute.Asaresult,itis
common(anddesirable)forthepartiestofirstengageonthe
questionstobeputtotheexpertsinconclave.
Second,giventhefactthattheseconclavesaregenerallynot
attendedbythepartiesortheiradvisers,thereisageneral(ifnotin
manycasesagenuine)concernthattheexpertmaygiveawaya
partofthecaseofthepartyemployinghim.Thisisthecaseeven
thoughexpertconclavesareusuallyconvenedonawithout
prejudicebasis(withthatprivilegebeingwaivedinthefinalversion

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oftheirjointreport)and,unlessagreedotherwise,apartyisnot
boundbyanyadmissionsmadebytheirappointedexpert.
Thereisnoeasywayroundallaspectsofthisproblem.Issuesof
factcanbedealtwithbyspecifyinginadvancethattheexpertsare
notpermittedtoexpressviewsontheexistenceorvalidityoffacts
onwhichtheiropinionsdepend.Thisis,afterall,amatterforthe
factualevidenceofthepartiesandthedeterminationofthetribunal.
Itismostdefinitelynotforexpertstopurporttoreacha
determinationoftherelevantfacts.Theexperts'views,however,
arenotsomethingwhichthepartiescandemandarenotexpressed
intheseconclaves.Norwoulditbeappropriatefortheparties'
representativestobepresenttoguidetheexpertintheviewshe
expressesinthecourseoftheconclave.Forthisreasonthereis
(fromtheparties'perspective)aconsiderableriskinherentinthe
courseofexpertconclaveswhichcanbemanagedbutnot
eliminated.Inparticular,theexpertnewtotheprocessneedsto
understandtheusestowhichtheproductoftheconclave(typically
alistofagreedandnotagreedissues)maybeput.Anewcomer
needstobewellbriefedastothelegitimateboundariesofthe
processandmustunderstandthatitisquiteproperbothtomaintain
divergentviewsandtoresistexpressinganyviewswherethe
factualmatrixnecessarytoformthatviewisindisputebetweenthe
parties.
Inaddition(or,perhaps,asanalternative)toexpertconclaving,
sometribunalsrequiretheexpertstogiveoralevidenceduringthe
hearing(seeChapter12andhottubbingbelowforfurther
discussion).Inthesecircumstances,theexpertsarerequiredto
answerquestionsraisedbythetribunaland/orthepartiesand/orthe
other
page"209" expertsimultaneously.Thismethodoforal
presentationisusefulinsofarasitallowsthetribunaltoconsider
bothparties'evidenceatthesametime.Aswithexpert
conclusions,thisapproachmayeliminatetheneedforexcessive
writtenevidenceinreply.
[E].TechniquesforPresentingExpertEvidence
Anumberoftechniqueshavebeendevelopedandareusedin
Englishengineeringandconstructionarbitrationforpresenting
expertevidence.Theseincludethefollowing:
Buildinginformationmodelling(BIM)(discussedinChapter4)is
gainingtractionasatooltoassistinthepresentationofexpert
evidenceinEnglishengineeringandconstructionarbitrationwith
snapshotsoftheBIMincludedinthereportandthefullversion
availableelectronically.Thisislargelybecauseitisbecominga
morecommonfeatureofconstructionprojectsthemselvesand
hencethedataisavailabletouseBIMaspartofthedispute
resolutionprocess.BIMcanbeusedtodemonstratean
engineeringanalysis.Forexample,a3Dmodeloverlayingthe
mechanicalandelectricaldesignonthestructuraldesignto
demonstratewheretherehadbeenalackofcoordinationbythe
designteam.Thealternativeistogleanthisinformationfrom
multiplegeneralarrangement,crosssectionanddetaildrawings.
BIMcanalsobeusedtodemonstrateexpertprogramming
evidencebypresentinga4Dmodelshowingacomparisonofthe
plannedversusactualconstructionsequenceovertime.Thisis
morecomprehensible,andhencepersuasive,thanexpert
evidenceintheformofmultipleversionsof2Dprogrammes
showingpotentiallythousandsofinterlinkedactivities.
WhenconsideringwhethertouseBIMtopresentexpert
evidence,itisimportanttobeawarethatitwillbenecessaryto
proveboththatthemodelisbaseduponfactsandthatthe
softwaredoesnotwarpthosefacts.Thislatterissueisoften
dealtwithonamorepragmaticlevelinarbitrationascomparedto
nationalcourtsand,asaresult,itislikelytobemorecommonto
seethistoolbeingdeployedinarbitration.
Jointreports.Inadditiontotheproductionofindividualreports
frompartyappointedexperts,expertsofalikedisciplinemeet
(usuallyonawithoutprejudicebasis)toidentifyareasof
agreementandhencedisagreement.Theoutcomeofthese
meetingsisthenpresentedinajointreportinwhichanywithout
prejudiceprivilegeiswaivedbytheexperts.Forexample,in
relationtoadelayclaim,itispossiblethattheexpertscanagree
ontheprogressdatathatunderpinseachexpert'sprogramming
analysis.ThisisaverycommontoolinEnglishengineeringand
constructionarbitrationasitcansignificantlylimittheexpert
issuesindispute.
Hottubbing.Thisiswhereexpertsofalikedisciplinepresent
evidenceandarecrossexaminedtogetheratthehearing.This
permitsthetribunaltohearandtesttheviewsofexpertson
specifictopicsatthesametime,ratherthanperhapsweeks
apart.Anexperttakinganextreme(anduntenable)positionis
page"210" morelikelytomakeconcessionswhencross
examinedinparallelwithhis/hercounterpartascomparedwith
theconventionalcrossexaminationprocess.Hottubbingis
becomingmorecommoninEnglishengineeringandconstruction
arbitration,particularlywherethetribunalismadeupof
engineeringorconstructionspecialistswhohaveanindependent
understandingoftheexpertissuesandarecapableofhandlingan
inquisitorialapproach.

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1

ICC,FinalReportonConstructionIndustryArbitrations,ICCIntl.
CourtArb.Bull.12/No.2(2001).
2
Ibid.,para.21.
3
Ibid.
4
Ibid.,para.22.
5
Ibid.,para.52.
6
Ibid.
7
SeeICCConstructionArbitrationReport,para.51,which
paragraphpresupposestheuseofanelectronicdocument
managementsystem.
8
ThecostofcreationofthedataforanEDMSwherenotalreadyin
asuitablestateisanotherissue.
9
UniversityofCaliforniaatBerkeley'sSchoolofInformation
ManagementandSystems,HowMuchInformation2003?available
at,http://www.sims.berkeley.edu/research/projects/howmuchinfo
2003/(accessed10Sep.2013).
10
ICCConstructionArbitrationReport,paras51and52.
11
JanPaulssonetal.,InternationalChamberofCommerce
Arbitrationpara.24.02(3ded.,OceanaPublications2000).
12
ICCConstructionArbitrationReport,para.53.
13
Ibid.,para.52.
14
ICCConstructionArbitrationReport,para.53.
15
Ibid.,para.51.
16
Seefurtherbelowfordiscussionconcerningdelayclaims.
17
See,e.g.,s.5.6oftheTechnologyandConstructionCourt
Guide,SecondEdition,SecondRevisionOctober2010and
McGlinnv.WalthamContractorsLtd[2007]EWHC149(TCC),
paras6and280281.
18
ThisapproachisendorsedintheICCConstructionArbitration
Report(paras36and37).
19
ICCConstructionArbitrationReport,para.36.
20
Ibid.
21
Ibid.,para.39.
22
Ibid.,para.38.
23
ICCConstructionArbitrationReport,para.45.
24
WraightLtdv.PH&THoldings[1980]13BLR26.
25
I.N.DuncanWallace,Hudson'sBuildingandEngineering
ContractsVol.I,para.8182(11thed.,2vols,Sweet&Maxwell,
1995),asoriginallyputforwardinthe10theditionofthattext,in
1970.
26
RobertFenwickElliott,BuildingContractDisputes:Practiceand
Precedents,13thRelease,para.1422(Sweet&Maxwell2004).
27
Tate&LyleFoodandDistributionLtdv.GreaterLondonCouncil
[1982]1WLR149.
28
WharfPropertiesLtdv.EricCumineAssociates(no2)[1991]53
BLR1.
29
BritishAirwaysPensionTrusteesLtdv.SirRobertMcAlpine&
Sons[1995]72BLR26andHolland(John)Construction&
EngineeringPtyLtdv.KvaernerRJBrownPtyLtd[1996]82BLR
81.
30
RugbyLandscapesLtd(Bernhard's)v.StockleyPark
ConsortiumLtd[1997]82BLR39.
31
InEnglandandWales:AmecProcessandEnergyLtdv.Stork
Engineers&ContractorsBY[2002]AllER(D)98(Feb)(TCC)
(althoughthecourtdeterminedthatthesubjectclaimwasnotinfact
aglobalclaimatpara.784),LondonUndergroundv.Citylink
Telecommunications[2007]BLR391(TCC)(althoughtheparties
hadacceptedtheapproachtoglobalclaims,withwhichthecourt
agreedatpara.141),PetromecIncv.PetroleoBrasileiroSA
Petrobrasandothers[2007]EWCACiv1372(althoughinthese
circumstancesthecourtdeterminedthattheextraworkcontent
shouldbespecifiedwithsufficientitemisedparticularityandthata
causalnexushadtobeestablishedatpara.40)andWalterLilly&
CoLtdv.Mackay[2012]EWHC1772(TCC),at474487(although
thecourtdeterminedthatthesubjectclaimwasnotinfactaglobal
claimatpara.491).InScotland:JohnDoyleConstructionLtdv.
LaingManagement(Scotland)Ltd[2002]BLR393(affirmedbythe
InnerHouse:[2004]BLR295).
32
LondonBoroughofMertonv.StanleyHughLeachLtd[1985]32
BLR51.
33
BritishAirwaysPensionTrusteesLtdv.SirRobertMcAlpine&
Sons,supra.
34
SeeDunlopPneumaticTyreCoLtdv.NewGarageMotorCoLtd
[1915]AC79fortheEnglishposition.
35
Mertensv.HomeFreeholdsCo[1921]2KB526.
36
RuxleyElectronicsandConstructionLtdv.Forsyth[1996]AC
344.
37
GeorgeFischerHoldingLtd(formerlyGeorgeFischer(Great
Britain)Ltd)v.MultiDesignConsultantsLtd(RoofdecLtdand
others,thirdparties)[1998]61ConLR85,145.
38
Thecriticalpathandprogrammingarediscussedinfurtherdetail
inChapter10.
39
ICCConstructionArbitrationReport,para.58.
40
Article27UNCITRALArbitrationRulesArt.20(4)ICCRules
1998,Art.25(4)ICCRules2012Art.12LCIARulesArt.22AAA
RulesandArts5and6IBARules.
41
See,e.g.,Art.21.1LCIARules.SeealsoArt.20(4)ICCRules
1998,Art.25(4)ICCRules2012Art.27UNCITRALArbitration
RulesandArt.22(1)AAARules.
42
Article20(4)ICCRules1998,Art.25(4)ICCRules2012.
43
Paulssonetal.,InternationalChamberofCommerceArbitration,

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442.
44
SeeStarrettHousingCorp.v.TheGovernmentoftheIslamic
RepublicofIran,AwardNo.314211,para.264(14Aug.1987)16
IranU.S.C.T.R.112,196quotingtheICJintheCorfuChannel
Case(1948)ICJReps15.
45
See,http://www.iccwbo.org/productsandservices/arbitration
andadr/expertise(accessed10Sep.2013).
46
Longley(James)&CoLtdv.SouthWestThamesRegional
HealthAuthority[1983]25BLR56,62.
47
RoyalBromptonHospitalNHSTrustv.Hammond(No7)[2001]
EWCACiv206.
48
Ibid.,166.
49
Ibid.,166.
50
Whalleyv.Roberts&Roberts[1990]1EGLR164perAuldJ.
51
Ibid.,169.
52
ArabBankplcv.JohnDWood(Commercial)Ltd[1998]EGCS
34.
53
CalaHomes(South)Ltdv.AlfredMcAlpineHomesEastLtd
[1995]FSR818asperLaddieJ.SeealsoLondonUndergroundLtd
v.KenchingtonFordplc(Harris&Sutherland,thirdparty)[1998]All
ER(D)555andMunkenbeck&Marshallv.TheKensingtonHotel
Ltd[2000]AllER(D)561.
54
GreatEasternHotelCoLtdv.JohnLaingConstructionLtd
[2005]EWHC181.
55
Ibid.,para.111.
56
PozzolanicLytagLtdv.BryanHobsonAssociates[1999]BLR
267.
57
Longley(James)&CoLtdv.SouthWestThamesRegional
HealthAuthority,supra.
58
Seecriticismofanexpertforfailingtohavehadregardtoallof
theevidenceatinGreatEasternHotelCoLtdv.JohnLaing
ConstructionLtd,supra,para.117.
59
AswasthecaseinGreatEasternHotelCoLtdv.JohnLaing
ConstructionLtd,supra,para.128.
60
SkanskaConstructionUKLtd(FormerlyKvaernerConstruction
Ltd)v.Egger(Barony)Ltd[2004]EWHC1748,para.415.
61
NationalJusticeCiaNavieraSAv.PrudentialAssuranceCoLtd,
TheIkarianReefer[1995]1Lloyd'sRep455.
62
Ibid.
63
Ibid.
64
Ibid.,andNewman,ExpertWitnesses'.
65
Itshouldbenotedthattherearepublishedguidelinesonthe
contentofexpert'sreports.ForexampleArt.5(2)oftheIBARules
ontheTakingofEvidenceinInternationalArbitrationprovide
requirementsforthecontentofpartyappointedexperts'reports.
Guidancecanalsobetaken(particularlywhenthetribunalismade
upofoneormorecurrent/exEnglishjudges)froms.13oftheCivil
JusticeCouncilProtocolfortheInstructionofExpertstoGive
EvidenceinCivilClaims,amendedOctober2009andCPR35.10
andPD35.3.

Chapter10:ProgrammeAnalysis
10.01.Introduction
Oneofthemostcommonfeaturesofanyconstructionprojectis
thattheprojecttakeslongertocompletethananticipated.Thismay
ariseasaresultofchangesinthescopeoftheworkrequiredbythe
employer,failuresbytheemployertoprovideaccessortodeliver
informationrequiredbythecontractor,failurebythecontractorto
performitsownobligationsasexpeditiouslyasitintendedtoor
(occasionally)justplainbadluck.Whateverthereason,thedelay
almostinvariablygivesrisetoaclaimbythecontractorfor
additionalpaymentand/oranextensionoftime.Atthesametimeit
willalsogenerateaclaimbytheemployerforthecoststoitof
delayedaccesstothecompletedproject,mostoftenintheformof
delayliquidateddamages.

Source
Chapter10:
ProgrammeAnalysisin
JaneJenkins,
International
ConstructionArbitration
Law(SecondEdition),
ArbitrationinContext
Series,Volume3
(JaneJenkinsKluwer
LawInternational2013)
pp.213232

Theperformanceoftheconstructionindustryinachievingontime
(andonbudget)deliveryofprojectsisconstantlyimproving.Despite
this,thenatureoftheconstructionprocess,involvingchange
broughtaboutasaresultoffactorsbothwithinandoutsidethe
parties'controlandtheinevitablediscoveryoroccurrenceofthe
unexpected,meansthattherewillalwaysbedelaytosome
projects.Asaresult,disputesinvolvingtheanalysisofdelayswill
continuetobeafeatureofconstructionarbitrationsforthe
foreseeablefuture.
Forthisreasonthischaptersetsouttoidentifytheparticularissues
whichdelayclaimsraiseinthecontextofaconstructionarbitration.
Inparticularthischapterdiscussestheroleoftheprogramme,the
significanceandmeaningofcriticalpathanalysisandthelegaland
practicalissuessurroundingthethornyquestionsofconcurrent
delayandownershipoffloat.Tosomeextentthesetopicscannot
beexaminedindependentlyofasystemoflaworofcontractterms
andconditionswhichregulatehowthepartiesintendedtodealwith
specificmatters.However,neitherthisbooknorthischapteris
intendedtobeanauthoritativetextonsuchissues,withtheresult

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thatthematterswillbeapproached,wherepossible,froma
relativelytheoreticalstandpoint.Thisisnottodenythebenefitsof,
forinstance,reviewoftheconsiderable
page"213" bodyof
caselawthatcanbefoundasaresultofconstructioncasesinthe
UnitedStatesbeingmorecommonlydeterminedinthecourtsthan
inprivatearbitrations.However,theextenttowhichcaseson
specificformsofcontractinthelightofspecificpreviousdecisions
willberecognisedasrelevantinanotherjurisdictionremains
uncertain.
10.02.DateforCompletionandtheRoleoftheProgramme
Thestartingpointforanypartytoaconstructionprojectthathas
taken,orislikelytotake,longerthanintendedistoestablishboth
whendeliveryofthecompletedprojectwastotakeplaceandhow
thatwastobeachieved.Thisinvolvesthedeterminationofatleast
threeseparateissues,namely,whatstatewastheprojecttobein
whendeliveredtotheemployer,whenwasthedeliverydateand
howwasthenecessaryworkintendedtobe,andactually,carried
out.
Thefirstandsecondofthesethreeissuesmightseemtobereadily
determinable.Sofarasthestatetheprojecthastobeintobe
readyfordelivery,itisgenerallyrecognisedthattheprocessof
constructionmeansthataconstructionprojectneednotbe100%
finishedinordertobecompleteandreadyfordeliverytothe
employer.Moststandardformsofcontractcontainaconcept
equivalenttopracticalcompletion.Thoughrarelydefinedinentirely
adequateterms(andinsomecasesnotdefinedatall)theconcept
isimmediatelyrecognisabletoanyoneintheindustry.Inshort,a
projectwillbecompletewheneverythingessentialforitsusehas
beencompletedandshowntowork.Inaddition(andthisis
important),whatremainstobefinishedoffmustalsonotaffectthe
useoroperationoftheprojectbytheemployer,eitherbecauseof
thefactthatithasnotbeendoneorbecauseofthenecessary
disruptiontotheemployer'suseandoccupationoftheprojectwhile
theworkiscompleted.Unsurprisinglythisconceptoftengivesrise
toheateddisputes,particularlywherelooselydefinedandwhere(for
instanceinprocessplants)theexecutionoftheremainingworkhas
tobecarriedoutinanoperationalplantsubjecttoahealthand
safetyregimetheconstructionindustryhasyettocomecloseto.In
suchcircumstancescompletionofevenminoromittedmatterscan
acquireconsiderablesignificance.
Recognisingthatinsomecircumstancesthedefinitionof
completionforthepurposesofdeliverymaybeproblematic,itought
atleasttobepossibletodeterminewhenthatpointshouldbe(as
opposedtohasbeen)reached.Afterall,virtuallyeverystandard
form(andmostnonstandardforms)ofconstructioncontractwill
specifythedatewhentheprojectistobecompletedby.That,
however,isonlythestartingpointsinceitisalmostequallytruethat
almosteveryformofconstructioncontractwillcontainsomeformof
mechanismforchangingthedateforcompletionoftheproject.As
hasalreadybeendiscussedinChapter2,theoriginalreasonforthe
grantingofextensionsoftimewasinordertoprotecttheemployer's
righttoclaimliquidateddamagesincircumstanceswherethe
employerhadhimselfdelayedthecontractorincompletionofthe
project.Nowadays,extensionsoftimemaybegivenforanynumber
ofreasons,includingmatterswhichmightwellberegardedaswithin
thecontractor'srisk(suchastheavailabilityoflabourormaterials)
aswellasforforcemajeureand
page"214" similarevents
whicharegenerallyregardedasrelievingbothcontractingpartiesof
theirobligationstotheextentaffected.
Asaresult,atthetimeofanyarbitrationitislikelythattherewillin
thefirstinstancebeafactualquestionofwhetheranyextensionsof
timehavealreadybeenawardedand,ifso,whattheireffectis.
Fortunately,theeffectonthecompletiondateofissuedawardsfor
theprojectislikelytoberelativelysimple,amountingtonomore
thanasimplecalculationoftheadditionaltimethecontractorhasto
completetheworkssubject,ofcourse,totherebeingnolive
disputeabouttheamountoftimeawarded.
Inadditiontodeterminationofthissimpleelementofthedispute,
thecontractorwillalsobelookingforafurtherextensionoftimeto
covertheperiodbetweenthecontractualcompletiondate(as
alreadyextended)andtheactualoranticipatedcompletiondatefor
theproject.Thisstatementmaybealittleunfair,fortheremaybe
instanceswhereacontractoranditsadvisersrecognise,asdoes
theemployeronequallyrareoccasions,thatitmighthavehad
somethingtodowithwhytheprojectislate.However,experience
indicatesthatinthisareaunlessanduntiladeterminationofthe
parties'relativerightsandobligationshasbeenmade,thedebate
tendstobealmostcompletelypolarised.
Fromtheemployer'sperspectivethedelayisusuallyseentobeall
downtothecontractorandtheissueisonlyaboutwhenitgetsits
delayliquidateddamages(and/orcallsontheperformancebondfor
payment).Atthesametime,theissueforthecontractorisnot
abouthowmuchtheemployerhascontributedtothedelay
(normallyatleastasignificantproportionofit)buthowmuch
additionalpaymentthecontractorisentitledtoupontheissueofthe
awardforanextensionoftime.Asaresult,basedonthesame
factualmatrix,itisbynomeansuncommonforeachpartytobe
claimingtensorevenhundredsofmillionsofdollarsonaprojectof
anysubstance(suchasalargepowerstationorapetrochemical
facility).

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Thekeyelementsinthefactualmatrixreliedonbyeachpartyare
whatthecontractorintendedtodoandwhatinfacthappenedwhich
affecteditsprogressinaccordancewiththatplan.Centraltothe
firstissueistheprogramme.Unfortunately,despitethehuge
advancesinthepreparation,presentationandanalysisof
programmeswhichhasbeenmadepossiblebythedevelopmentof
computerbasedsystems,thecontractualpositioninrelationto
programmesisnormallyunsatisfactory.Itis,ofcourse,
understandablethatinmostcasesthecontractor'sactual
programmeshouldbeamatterforittodecideinthelightofits
assessmentofhowbesttocompletetheworksontimeandinthe
mostefficientandeffectivemanner.Thatsaid,wherethe
contractor'sprogressreliesoninputoractionsfromthirdparties,it
isappropriateforittohavetodeclareitshandtolettheemployer
knowwhentherelevantinputsintotheprocessadoptedbythe
contractorhavetobeprovided.Itisnotbyanymeansacceptable
fortheemployertolearnoftheserequirementsaspartofitsreview
ofaclaimfordelaytotheprojectbasedonlateorinadequate
supplyofinformation.
Thisdoesnot,however,meanthatacontractorshouldbeobligedto
prepareadetailedprogrammeandsticktotheletterofit,since
specifickeyinterfacesbetweenthecontractor'sworkandmatters
withinthecontroloftheemployer,orthoseitemploysorcontracts
with,canbespecified.Wherethisisimpractical(asitprobablyis
page"215" formatterssuchasnoncriticaldesignapprovalsor
routineinformationsupplywithlittleornoleadtimeinvolved)the
interfacecanbemanagedbyaprocesswhichrequiresthe
contractortogivenoticeoftheneedforsuchinputsonanadhoc
basis,withtheemployerrespondingwithinspecifiedperiods.If
necessary,differingperiodsforthegivingofnoticesofneedand
respondingtothosenoticescanbespecified.
Forthesereasonsitisgenerallynotappropriatetomake
compliancewithacontractor'sprogrammeandcertainlynota
detailedprogrammemandatory.Ifthisweredonetherewouldbe
noflexibilityinthemanagementoftheprojectandboththe
contractorandtheemployerwouldbeperpetuallyinbreachoftheir
obligations,eithertoperforminaccordancewiththecontractornot
tointerferewiththeother'sdueprogress,andinpracticethisisthe
case.Whilemostcontractscontainsomeformofcontractually
bindingprogrammeitisoftenonlyarudimentarybarchartgivingnot
muchmorethanabroadindicationofwhatistohappenandthe
sequenceofactivities.Wheretherearekeyinterfacesbetweenthe
employerandthecontractor,suchasaccessdates,datesfor
decisionsonlongleadtimeitems,datesfordeliveryofpossession
ofpartsoftheworkstotheemployeroraneedfortheemployerto
providestaff,feedstockorenergy(inaprocessplant,forinstance)
onspecificdates,thesemaybedealtwithasactivitiesonthebar
chartormaybeidentifiedintextforminascheduleseparatefrom
theprogrammeitself.
Despitethefactthatthereisnotnormallyadetailedcontractual
programme,theneedforadetailedprogrammewhichiskeptupto
datethroughouttheprojectisabsolutelyessentialtotheanalysisof
delayclaims.Again,sadly,thisinformationisrarelyavailable,orif
itisavailableitisnotmadeavailabletoallparticipantsina
constructionproject.
Thereasonwhythisinformationisessentialisthatthefirsttwo
questionsthatanarbitraltribunalhastoanswerinclaimsbasedon
delayis:(i)whatactuallyhappenedinthecourseofconstructionof
theprojectand(ii)howdidthisimpactonitsprogress?Thefirst
questioncangenerallybeansweredbyreferenceto
contemporaneousrecords.Traditionallythiswouldbethesitelogs
andthediariesthateveryengineer(andsomeothers)seemtobe
trainedfrombirthtokeep.Wheretheyexist,thesesourcesof
informationareextremelyvaluable,sincerarelyisthereanythingas
contemporaneousorasuntaintedbysubsequentexpostfactore
analysisofwhathappenedasamanuscriptdiaryornotepad.
However,thelikelihoodis,onmostprojectsbeingcarriedouttoday,
thatasmuchormoreinformationwillbefoundinanalysisofthe
emailtrafficwhichsurroundsanysignificantproject.Indeed,since
emails:
arealreadyinaconvenientelectronicformfacilitatingcollection,
review,analysisandpresentationoftheircontents
arequitedifficulttoerasecompletelyfromanysignificant
corporation'srecordsand
tendtobecomposedcontemporaneouslyandusedinaway
whichmakestheminherentlymorelikelytobefreefromspin.
page"216"
itisemailswhicharelikelytobetherichestseamtominewhen
determiningwhathappenedinaprojectonanyparticulardayand
whattheimmediateimpactofthateventwas.
Thesecondquestionwhatwastheimpactoftheeventcanonly
beansweredbyafullunderstandingofwheretheprojectwasatthe
timeoftheevent,whattheplanwasatthattimeforthecompletion
oftheprojectandwhatinfacthappenedaftertheevent,preferably
withanunderstandingofnotjustwhathappened,butwhy.Of
course,thisunderstandingcan,laboriouslyandexpensively,bere
createdtosomedegreebyaretrospectivedelayanalysis
undertakeninthecourseofthearbitration.
Generally,recreationofaproject'shistoryisunsatisfactoryfortwo

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reasons.Thefirstistheonejustmentioned.Itisfareasier,cheaper
andmoreaccuratefordatatobecollectedandrecordedatthetime
thanitistorecreatethedatafrommiscellaneousrecordsatalater
stage.Andthesecondpointderivesfromthefirst.Itisinevitable
thatanyretrospectiveanalysiswillsufferfromalackofsome
information,bothharddataandmoresubjectivedatasuchasthe
intentionsofthepartiesinresponsetotheeventinquestion.Thisin
turnleadstoaneedforeachparty(oritsexpert)tomakeaseries
ofassumptionsorsubjectivedecisionsinthecourseofthe
retrospectiverecreationofeventsandtheiranalysis.
Whereoriginaldataismissingandrecreationtakesplace,the
resultisthatthereisnosingle,objectivelydeterminablesetoffacts
availabletothepartiesfromthemomenttheprojectisfirstdelayed
totheconclusionofanysubsequentdispute.Whatinsteadhappens
isthattwoselectivesetsoffactssupportingeachparty'sexpert
programming(scheduling)evidenceareidentifiedandusedbyeach
party'sexperttopreparehisexpertopinionontheextenttowhich
eachpartyisresponsibleforthedelay.Inevitablytheexpert
evidenceispreparedbeforeanyprimaryfindingofthefactson
whichtheanalysisisbasedhasbeenmade,occasionallyleadingto
academicallycorrectanalysesbeingrendereduselessasaresultof
thefactsrelieduponnotbeingacceptedbythearbitratororjudge.
This,coupledwiththelivelydebateonthecorrectmethodof
analysingdelayclaims,meansthattheoutcomeofthewhole
processbecomesincapableofaccurateassessmentinadvanceof
anyhearing.Inturnthisresultsinunnecessarytimeandmoney
beingspentintheresolutionofdisputeswhich,ifaccuratesitedata
hadbeenavailablefromthestart,couldhavebeenavoided.
Theanswertothisbeginswiththepreparationofanappropriately
detailedprogrammeatthestartoftheproject.Whatisappropriate
foraprojectwilldependonthenatureoftheproject,itscomplexity,
thesophisticationofthesubcontractsupplybaseandtheamounts
inissue.Itis,forinstance,notnecessaryorappropriatefora
contractoronasimpleprojectinvolvingnothingmorethan
sequentialsiteclearance,foundationinstallation,envelope
constructionandfittingouttoberequiredtohaveafullyfunctioning
CPM(1)programme(thoughtherewouldbenoargumentagainst
havingoneifthecontractorconcernedwasequippedtoproduceand
operateone).However,evenwhereafullydetailedprogrammeis
notproduced,allkeyinterfacesofthetypeidentifiedaboveneedto
berecognisedintheprogrammeorassociated
page
"217" documentation,sothatitisclearlyunderstoodwhat
constraintsthereareonthecontractor'sabilitytocarryoutthework.
Suchconstraintswouldnotonlyincludemattersrequiredbythe
contractortoprogresstheworkasplannedbutalsoconstraintson
itsabilitytodosoforinstancehavingonlylimitedaccesstothe
siteorneedingtogiveearlypossessionofpartorpartsoftheworks
totheemployer.Traditionallyacontractorwouldonlynormallybe
expectedtogiveearlypossessionirrevocably,inaccordancewith
sectionalcompletion(seeChapter2).Nowadaysacontractor'slife
ismademoredifficultbysometimesbeingrequiredtogiveearly
possessiontotheemployeronatemporarybasis.Forinstance,in
morecomplexschoolsPPPprojects,temporarypossessionofpart
completedworksmayneedtobegiventotheemployerinorderto
allowanoperationalschooltocontinuetofunctionaround
constructionactivitieswithoutsignificantimpairmentoftheservices
offeredtopupils.Thisraisesadditionalgroundsfordisputeover
boththeconditionoftheworksathandovertotheemployerandon
returntothecontractor.
Aswellasbeingappropriatelydetailedtheprogrammemustalso
beaccurate.Thisdoesn'tmeanthattheprogrammemustbethe
programmethatwillactuallybecarriedoutbythecontractor
whateverthecircumstances.Onthecontrary,changeisafactof
lifeinconstructioncontractsandthemanagementofchangeisone
ofthemaincontractor'sprincipaltasks.Rather,theprogramme
mustbeaccurateinthesensethatitmustproperlyreflectthe
contractor'sgenuineproposedschemeforthecarryingoutofthe
works.Thereisabsolutelynopurposeorbenefitinthecontractor
presentingaprogrammewhichbearslittleifanyresemblanceto
whatisproposedtobecarriedout.Becauseofthisneedfor
accuracyitiscommonplacetofindthatprovisionsinconstruction
contractsdealingwiththepreparationandsupplyofdetailed
programmesfrequentlyrefertotheprogrammebeinganapproved
programme.Therationaleforthisisobvious.Wheretheprogramme
isnotsuppliedatthetimethecontractisexecuted(andafully
detailedprogrammerarelyis),itobviouslymakessensefroma
projectmanagementperspectivefortheprogrammeofferedbythe
contractortobeacceptedbytheemployerasthebasisonwhich
theworkwillbecarriedout.Inotherwords,onewhichtheemployer
anditsprofessionaladvisersfeelproperlyreflectsthecontractor's
obligationsandexpectationsandalsoonewhichprobably
representsthelikelysequenceofconstruction,allthingsgoingto
plan.
Despitetheobviouscommonsenseofthisapproach,suchclauses
oftenthemselvesgiverisetofurtherdisputes,namelywhetherthe
programmeofferedbythecontractorisorisnotanapprovedonefor
thepurposesofthecontract.Alternatively,whether,despitethe
employer'srefusaltoapproveit,theprogrammeshould
neverthelessberegardedasonewhichshouldbetreatedasan
approvedprogrammeunderthecontract.Suchissuesoccasionally
findtheirwayintoconstructionarbitrationsbywayofanelementof
theclaimthecontractorarguingthattheemployer'srefusalto
approvetheprogrammegaverisetodelay.Wherethishappensthe

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numberofissuestobedeterminedbythetribunalisincreased,
ratherthan,asintended,reduced.
Forthisreason,amongothers,itmakeslittlesensetomake
employerconsenttoorapprovalofadetailedprogrammea
contractualrequirement.Insteadthecontract
page"218" should
spellouttheobjectiverequirementsofthedetailedprogramme.
Theserequirementsshouldincluderecognitionofthekey
contractualinterfaces,properreflectionofthelogicthecontractoris
workingtoandcompliancewiththelevelofdetailsetoutinthe
contractspecification.Theseareordinarycontractualobligationsof
thecontractor,breachofwhichwouldcarrytheusualsanctions.
Thiswouldpossiblyincludeadeductionfromsumsotherwisedueor
alimitationonthecontractor'sremediesunderthecontracttothe
extentthattheemployerwouldhaveincurredlesscosthadthe
programmebeenproperlypreparedandthecorrectinformation
madeavailabletotheemployer.Givensuchobligations,the
employerortheemployer'srepresentativewillprobablyhave
sufficientammunitiontoobtaincontemporaneousprogramming
information.Assumingthatthesepowersareexercisedandasound
initialprogrammeobtained,thedegreeofuncertaintyinthe
subsequentanalysisoftheeffectsofdelayshouldbeverymuch
reduced.
Obtainingasoundinitialdetailedprogrammewasdescribedabove
asthebeginningofthesolution.Suchaprogrammeishelpful,
thoughnotinitselfsufficient.Buildingonthatinitialprogramme,the
contractorneedstosupplyregularupdatestothedetailed
programme.Theseupdatesshouldreflectnotonlyactualprogress
todatebutalsochangestotheproposedsequenceforcompletion
oftheworks,whetherchangedforthecontractor'sownconvenience
orasareactiontoexternalevents,includingmattersforwhichthe
employerisresponsible.Theneedtohavesuchaprogramme
seemsobviousand,inreality,inmostprojectsonewillprobably
existsomewhere,ifonlyasaworkingtooltoallowthecontractorto
managethedaytodayworkbeingcarriedonbyitssubcontractors.
Afterreceiptofthefirstdetailedprogramme,theissuetendsto
revolvenotonwhetheranupdatedprogrammeisactuallyprepared
butonhoweffectivelyitispreparedandwhetherthatinformationis
openlysharedwiththeemployer.Alltoooftenwheretheprojectis
delayedtheprogrammesproducedresolutelyshowcompletionon
thecontractualdateandretaintheexistinglogicdespiteitbeing
evidentthattheprojectisindelayandthatsomethinghastogive.
Whatthentendstohappeninsuchcasesisthatactivitydurations
becomeshortenedor(insomecases)activitiesareomitted
completely,leadingtoanincreasingdisparitybetweenwhatis
happeningatsiteandwhatishappeningatthecontractuallevel.
Theanswertothislookingglasssituationistobuildonthe
productionoftheinitialprogrammeandtorequirethedeliveryof
regularupdateswhichdemonstrablyshowwheretheprojectactually
isandhowthecontractorproposestocompletetheworksfrom
whateverthecurrentpositionhappenstobe.Logically,amended
programmesshouldinallcircumstancesidentifytheactual
anticipatedcompletiondate,withanyidentifieddelaybeing
accompaniedbyanapplicationforanextensionoftime,tothe
extentthoughtappropriate.Toencouragethisitwouldhavetobe
accepted(intheinterestsofobtainingaccurateinformationand
avoidinginflatedclaims)thatanyfailuretomatchanticipateddelay
withanextensionoftimewouldnotamounttoanadmissionbythe
contractorthatthebalanceofthedelaywasforthecontractor's
account.
Aswiththeoriginalprogramme,itprobablydoesn'tmakeagreat
dealofsensetorequireupdatedprogrammestobeapprovedbyor
onbehalfoftheemployer,sincethis
page"219" willonlygive
risetoasmanydisputesasitresolves.Thesolutionis,asbefore,
toprovideconstructiveguidancetothepartiestoparticipateingood
projectmanagementpractices,atthesametimeprovidingthe
partiesandanyconstructionarbitratorwiththerawdatafromwhich
aproperanalysisofanydelaytotheprojectcanbeundertaken.If
bothenlighteneddraftingandprofessionalprojectmanagementfail
toproduceaprogrammewhichisproperlyupdated,theonlyoption
andonewhichshouldcertainlybeundertakenwhereaprojectisin
delayinthesecircumstancesisfortheemployertotakestepsto
procurefortheprojectanditsownpurposestheprogrammedata
necessarytoanalysethecausesfordelay.Whileitistruethatsuch
datawillnothavethebenefitofthecontractor'snodoubtextensive
programming/schedulingresourcesandwillnotbeabletoreflectthe
contractor'sfutureintentions(savetotheextentobviousfrom
objectivescrutiny),thecollectionofcontemporaneousasbuiltdata
willproveinvaluableifamatterhastobereferredtoarbitration.
Thereislittledoubtthatsomeonewhocanspeakauthoritatively
fromapersonalandintimateknowledgeoftheeventsaffecting
progresssupportedbyaccuratedatawillbeamuchmore
compellingwitnessthananexpertsubsequentlyemployedwhois
remotefromtheactionandworkingfromasetofhypothesesand
unprovenfacts.
10.03.CriticalPathandDelayAnalysis
Giventherelevantdata,thenextissueishowitistobeanalysed.
Invariablythiswillinvolveoneormoreexpertsanditislikelythat
theexpertsfromthevariouspartieswillapproachthetaskarmed
withadifferentsetoffactsandapproachtheanalysisfromdifferent
possiblywidelydifferenttheoreticalbases.Quitewhatthetask

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iswilldependontheextensionoftimeandotherdelayprovisionsof
theparticularcontract.Verybroadly,however,thequestionislikely
toresolveitselfintowhatcausedthedelayandwhetherthecause
ofthedelaywasamatterwithintheriskoftheemployerorthe
contractor.
Leavingononesideboththequestionofthemethodofanalysing
theeffectsofoneormoreeventswhoseeffectsontheproject
overlap,andthethornyandmuchdebatedissueofwhoownsfloat
intheproject,bothofwhicharediscussedbelow,theissueisin
essenceoneofcausation.Inotherwords,lookingattheregular
processoftheworks,whatisitthathascausedtheprojectnotto
becompletedbytheanticipateddate?
Ofcourse,oneanswertothisisthatnothinghashappenedto
disrupttheregularprogressoftheworkandthatitwasalwaysgoing
totakelongerthananticipatedbecauseofanerrorinthe
determinationoftheoriginalprogrammeduration.Itisnot
uncommoninanalysingtendersfortheconclusiontobereached
thatonthebasisoftheinformationsuppliedthereisapossibility,
perhapsasignificantpossibility,thatthecontractor,withthe
resourcesandtechnologyidentifiedatthetenderstage,willnot
achievecompletionwithinthecontractedtimescale.Whileitwould
bearecklessemployerwhichwentaheadwithacontractwhichit
hadanalysedashavinglittleornohopeofbeingcompleted
anywherenearontime,itisnormalforprojectstoproceedonthe
basisthatthereisaprobabilitythattherewillbesomedelay.
Naturally,fromthe
page"220" employer'sriskperspectivethis
willbecoveredinthecontractprovisionsforcompensationfor
delay.Inaddition,theemployerwillalsohavemadeanassessment
oftheabilityofthecontractornotjusttocompletetheworkbutalso
tomakegoodtheemployer'spotentialfinanciallosses.Wheresuch
ariskisidentified,itwillbeallthemoreimportantthatappropriate
stepsaretakentoprovideforpropermanagementofdelayandfor
theinformationanddataidentifiedabovetobecollectedand
retainedasalreadyobserved,thechancesarethatadelayto
completionwillgiverisetoaclaim.
Inadditiontotherebeingadistinctpossibilitythattheprogramme
asoriginallyconceivedwasoverlyambitious,withariskofdelay
evenwithoutanymaterialadverseproblemsarising,itisalsoa
distinctprobabilitythatthecontractor's(oritssubcontractors')own
executionoftheworkswillgiverisetosomedelay.Thismightarise
eitherasaresultofmatterstakinglongertocompletethanmight
reasonablyhavebeenexpectedorasaresultofreworkof
defectivepartsoftheworks.Anyformofanalysismusttake
accountofthesepossibilitiessincetheseareatleastaslikelytobe
thecausesforanydelaytoprojectcompletionasthetypesof
externalmatterstypicallycoveredbystandardformsonextension
oftimeprovisions.
[A].TheCriticalPath
Inpractice,expertevidencewillbesubmittedwhichrelieson
identifyingthecriticalpathtocompletionandtheeffectthat
identifiedeventshaveonactivitiesfallingonthecriticalpathbyone
ofanumberofrecognisedformsofanalysis.Abriefdescriptionof
thosemorecommonlyfoundaresetoutbelow.Itis,however,
importanttounderstandthenatureofthecriticalpathandsome
elementsofprogramming(orschedulingasitisoftencalled)to
appreciatethestrengthsandweaknessesofthevariousformsof
analysis.
Thecriticalpathinaprojectcanbedefinedasthatseriesof
connectedactivitiescommencingatthestartoftheprojectand
finishingattheendwhichdeterminestheoverallprojectduration.
Thisisdeterminedbyreferencetoaprogrammewhichidentifiesthe
natureoftheactivities,theirdurationsandthelogicalconnection
witheachother.Forinstance,inasimpleprojectforthefabrication
ofahouse(excludingfitout)thecriticalpathwouldliethrough:(i)
siteclearance(ii)foundationconstruction(iii)erectionofwallsand
(iv)completionoftheroof.Delaytoanypartoftheseactivitiesis
likelytoimpactonthetotaltimeforcompletionsinceeachofthe
foursuggestedactivitiesreliesoncompletionoftheprecedingone
beforeitcanstart.Eachoftheseactivitiesis,therefore,onthe
criticalpathoracriticalpathactivity.
However,someothermatterswhichdoneedtobedonebeforethe
houseshellcanbecompletewillnotnecessarilylieonthecritical
path.Forinstance,glazingofthewindowsandhangingofdoors
maybescheduledtotakeplaceaspartoftheconstructionofthe
walls,butdelaytotheseactivitieswillnotaffecttheoverall
completiondateastheycanbecompletedeitheraspartoferection
ofthewallsorwhiletheroofisbeingputon.Ofcourse,ifthese
activitiesareverymuchdelayedandcannotbecompletedbefore
theroofiscomplete,thentheprojectwillbedelayedandthese
items,notformerlyonthecriticalpath,willnowbecriticalpath
itemsonwhose
page"221" completionprojectcompletionwill
depend.Thissimpleexampledemonstratesnotonlytheconcepts
ofactivitiesandthecriticalpathbutalsothatthecriticalpath,even
onasimpleprojectsuchasthis,isaflexibleandvariablecreature.
Ofcourse,mostprojectsareconsiderablymorecomplexthanthis
andtheidentificationofonesinglecriticalpathbecomesmore
difficult.Inpractice,morethanonecriticalpathmayexistasa
resultoftherebeingtwoparallelworkstreamsofthesameoverall
duration.Thedisentanglingofthevariousstrandsandthe
assessmentoftheimpactofvariouseventsmaybecarriedoutby

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anyofthefollowingformsofexpertanalysis.
[B].Asplannedv.Asbuilt
Perhapsthesimplestmethodofanalysis(notactuallyinvolving
determinationofacriticalpath)isthedirectcomparisonbetween
theoriginalplanandwhathasactuallyhappenedonsite.Apartfrom
knowledgeoftheoriginalprogrammeandanaccurate(and
sufficientlydetailed)asbuiltprogramme,littleadditionalinformation
apartfromthenatureoftheeventsallegedtohavedelayedthe
projectisrequired.Thismakestheprocesssimplebutrestrictsits
abilitytotakeaccountofmorecomplexactivitiesormultipleevents
causingdelays.Givenasimpleprojectsuchastheconstructionof
theshellofthehousereferredtoabove,anasplannedv.asbuilt
analysismightbeappropriate(bearinginmindthelikelysizeofthe
sumsinissue)andsufficient(asaresultofthesimplelogicflow
throughthelimitednumberofactivities).However,evenhere,this
approachwouldonlybeappropriatewherethereisasimpleand
acceptedlogicintheasplannedprogrammewhichflowsthrough
unchangedintotheasbuiltprogramme.Ifthiswerenotthecase
thiswouldinvolvecomparingappleswithpears.
Inaddition,inordernottocoverupthepossibleoptimismoftheas
plannedprogrammeandpossibleinefficienciesinthemethodsof
workingadoptedbythecontractor,theasplannedprogrammemust
benotonlylogicallyacceptablebutalsobasedonreasonable
durationsandresources.Finallyitwouldonlybeappropriatetouse
thisformofdirectcomparisonwheretherewererelativelyfew
identifiedeventsimpactingontheprojectdurationwithdiscrete,
identifiableresults.Forthesereasons,thistechniquewouldnotbe
appropriateformorecomplexsituations,otherthan,perhaps,asa
startingpointforamoresophisticatedanalysis.Suchananalysis
wouldnormallyberequiredbecauseasimplecomparisonbetween
plannedandactualactivitiescannotproperlytakeaccountof:
theconsequencesofdelay(suchasresequencingoftheworks)
whichtakesplaceinamorecomplexprojector
themyriadoffactorswhichinpracticeaccountforthedifference
betweenwhatwasexpectedatcontractinceptionandwhatinfact
happensbeforeprojectcompletion.
page"222"
[C].Asplanned,Impacted
Amorecomplexanalysis,andoneusedcommonlywithinthe
constructionindustry,istheasplanned,impactedmethod.Asits
namesuggests,thismethodofanalysistakestheasplanned
programmefromimmediatelybeforetheevent(s)whichis(are)the
subjectoftheinvestigationandaddstoit,asdiscretenew
activities,theeffectsoftheeventswhichentitlethecontractortoan
extensionoftime.Theseevents,theirdurationsandtheircorrect
categorisationasexcusableevents'areassessedbytheexpert
fromthematerialavailabletohim.
Aswithallmethodsofanalysis,aconsiderabledegreeofsubjective
orexpertassessmentisrequiredinordertoundertaketheprocess.
Tostartwith(similartotheprocessundertakeninrelationtotheas
plannedv.asbuiltmethoddescribedabove)theavailableas
plannedprogrammehastobeinvestigatedtodeterminewhetherit
isaproperprogrammetouseasthebasisforthefurtheranalysis.
Assumingthatitis,delayeventswithintheemployer'srisk(i.e.,
thoseentitlingthecontractortoanextensionoftime)areidentified
anddurationsofactivitiesrepresentingtheeffectoftheseeventson
theprogrammearedeterminedbytheexpert.Indoingsotheexpert
assumestheuseofsimilarresourcesplannedbythecontractorto
beavailabletoitinotherwordsusingthesameassumptions
madebythecontractorinpreparingtheoriginalprogramme.The
newactivitiesaretheninsertedintheprogrammecurrentatthe
startofthedelayingeventswiththeappropriatelogicandthe
programmerecalculatedusingtheexistinglogicmodifiedonlyas
necessarytoaccommodatethenewevents.Thenewenddate
obtainedthenrepresentsthetheoreticalimpactofthedelaying
eventsontheprogramme.Since,byselectionanddefinition,the
addedactivitiesrepresenteventswhichentitlethecontractortoan
extensionoftime,thedifferencebetweenthenewcompletiondate
andthepreviouslyplannedcompletiondaterepresentsthe
extensionoftimethatthecontractorisentitledto.
Thisprocess,thoughoftenused,issubjecttotwoprinciple
criticismsoverandabovetheconsiderabledegreeofsubjective
inputtheexpertisrequiredtomake.Thefirstcriticismisthatits
usedependsontheexistenceofareliableprogrammeatthestart
oftheeffectoftheeventsbeinganalysed.Iftheprogrammeisnot
reliable,eitherbecauseitslogicisnotbeingfollowedortheduration
ofitsactivitiesarenotproperlyrepresentativeoftheworktobe
undertaken,theanalysishasnosoundfoundationsonwhichitmay
proceed.Inthesecircumstances,theexpertmayfeelthathisfirst
taskistoreconstructareliableasplannedprogrammewhichcanbe
usedasabaseline.Whilethismaybeamorereliableplacetostart
fromthantheavailabledocumentation,neverthelessthisintroduces
yetfurtheradditionalsubjectiveelementsintotheprocessandwith
itmoregroundsforconcernthattheresultisnotreliable.
Thesecondcriticismisthattheresultisentirelytheoretical.The
productoftheasplanned,impactedanalysisreliesonthe

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assumptionthatthecontractorwouldproceedwiththethencurrent
plansubjectonlytotheeffectsoftheeventsidentifiedbytheexpert
andimposedontheplaninthecourseoftheanalysis.Theresult
doesnot,forinstance,takeaccountofthecontractor'sfailureto
proceedasfastasanticipated,or,perhaps,tobringadditional
resourcesintoplay,therebyacceleratingitsprogress.
page"223"
Forthesereasons,asplanned,impactedanalysisisonlysuitable
forrelativelysimpleprojectsand(perhaps)morecomplexprojects
wheretheeventscausingdelayarecapableofclearidentification
andtheireffectscanbedeterminedwithsomecertainty.Overallthe
techniqueisregardedasbeingmoretheoreticalthanreal,more
suitedtodeterminingextensionsoftimewheretheworkhasyetto
becompletedthanwheretheprojecthasbeencompletedandonly
rarelyappropriateforuseindetermining,retrospectively,a
contractor'sentitlementtoanextensionoftime.Asaresult,
particularlywheretherearerecordstoshowwhatactuallyhappened
inthecourseoftheproject,otherformsofanalysisarelikelytofind
favourwithtribunals.
[D].Asbuilt,ButFor
Atonelevelthismightberegardedastheoppositeprocesstothat
adoptedintheasplanned,impactedmethodofanalysis.Assetout
above,wheretheasplanned,impactedmethodisadopted,the
contractor'sprogrammeistakenasthestartingpointandactivities
areaddedtoreflectmatterswhichentitlethecontractortoan
extensionoftime.Bywayofcontrast,theasbuilt,butformethod
takeswhatfactuallyhappened(i.e.,theasbuiltprogramme)and
deductionsaremadefromittoreflectmatterswhicharethe
employer'sresponsibility,producingtheearliestdateatwhichthe
contractorcouldhavecompletedtheworkwithouttheeffectof
matterswithintheemployer'srisk.
Theactualmethodofcarryingoutanasbuilt,butforanalysisis
complicatedandoutsidethescopeofthisbook.Theshortpointis
thatthemethodisverydefinitelynotatheoreticalexercisesinceit
isrootedinwhatactuallyhappenedoverthedurationoftheproject.
Forthatreasonitisgenerallyregardedasbeinganappropriatetool
bywhichtocomparewhatactuallyhappenedwithaverifiable
alternativeprogrammewhichmapsoutwhatwouldhavehappened
hadthecontractor'sprogressnotbeendelayedbyeventswhich
entitleittoanextensionoftime.
Ofcourse,thereareweaknessesinthemethodofanalysis.These
startwiththefactthatboththepreparationoftheasbuilt
programmeandtheidentificationandclassificationofevents
impactingtheproperperformanceoftheworkwilltakea
considerableamountoftime,effortandmoney.Inaddition,theas
builtprogrammenecessarilycontainswithinittheactualcritical
pathtocompletiondeterminedasatthecompletiondate.In
undertakingandreviewinganasbuilt,butforanalysisithastobe
recognisedthatthecriticalpathandtheconstructionlogicat
variouspointsintimethroughouttheprogressoftheworkswouldin
allprobabilitynothavebeenthesameastheywereattheendof
theproject.Thiscreatesthepotentialfortheretobedifferent
consequencestoeventsoccurringatearlystagesinthecompletion
oftheworksfromthoseindicatedintheanalysis.
[E].TimeImpact
Thefinaltechniquediscussedhereisthetimeimpactanalysis.This
involvesanassessment,asofthestartoftheimpactofeachevent
whichdelaystheprogressofthe
page"224" works,ofthe
consequencesofthedelaycausedbythatevent.Thekeyfactor
whichdistinguishesthisapproachfromtheothersisthatthe
analysisstartsfromanaccurateasbuiltpositiondeterminedfrom
contemporaneousrecords,takingaccountofalldelaystothe
projectandchangesinprogrammelogicandcriticalpathactivities
whichhavetakenplacepriortothatdate.Fromthatsolid
foundation,theanalysisproceedsbyapplyingthethencurrentas
plannedprogrammefortheincompletepartoftheworkstothe
startingpositiontodeterminethedurationofthatpartoftheworks
stilltobecompleted.Importantly,theanalysisidentifiesthe
consequencesofeventsfallingwithinboththeemployer'sandthe
contractor'sresponsibility,providingacompleteanalysisofwhat
happenedinthecourseoftheproject.Theprocessisrepeatedas
oftenasisnecessarytodealwithalldelayevents.Oncethe
consequencesoftheeventshavebeenproperlyanalysed,the
parties'relativeresponsibilitiescanthenbedetermined.
Theprincipalproblemwithtimeimpactanalysisisthatifthereare
multiplecausesofdelayeachofwhichneedstobeanalysed
independently,theprocesscanbecomeextremelycomplex.
Despitethis,ifasplannedprogrammesaremaintainedona
frequentbasisandtakeaccountnotonlyofmajorchangestothe
project(suchasvariations)butalsothestateofprogressatregular
intervals,theprocessoftimeimpactanalysiscanbeless
complicatedthanitmightotherwiseappear.
[F].ChoosinganAppropriateMethodofAnalysis
Ascanbeseenfromtheverybriefdescriptionssetoutabove,there
areradicallydifferentapproachestotheanalyseswhichmaybe

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taken.Ofcourse,notallofthemwillbeappropriateforanygiven
project,thoughtechnicallyallcouldprobablybeapplied,given
enoughtime,effortandingenuityonthepartoftheexpert.Given
this,therearethreefactorswhicharerelevantindeterminingwhich
methodshouldbechosen.
Thefirstoftheseiswhethertheexercisethatisbeingundertakenis
anexpostfactodeterminationofwhattheentitlementsshouldhave
beenorarealtimedeterminationofwhattheentitlementsshould
be.Inpractice,inmostarbitrationstheexercisebeingundertaken
willbetheformer,sinceonlyrarelywillapplicationsforanextension
oftimebebroughtbeforeanarbitraltribunalbeforethecompletion
oftheprojectrenderstheexerciseahistoricone.However,ifthe
arbitrationisoneofthoserareoneswherethedeterminationistobe
prospective,itislikelythattheasplannedv.asbuiltandasbuilt,
butformethodsofanalysiswillnotbeappropriate.Eitherofthetwo
remainingmethodsisclearlybettersuitedforaprospective
analysis.Thecorollaryisthatwherearetrospectivedelayanalysis
isrequired,itismorelikelythattheasbuilt,butforandthetime
impactmethodsofanalysiswillprovetobeappropriateand
acceptable.Ofthetwo,timeimpactanalysiswasidentified(2)asthe
preferredmeansofanalysingdelayandcompensationforthatdelay
bytheauthorsoftheUKSocietyofConstructionLaw'sDelayand
DisruptionProtocol(3)(theProtocol).Caremustbetaken,
page
"225" however,whenrelyingontheProtocolinanarbitration
becausethereisnoguaranteethatitwillbefollowedorapprovedof
bythetribunal(and,infact,asnotedbytheEnglishCourtin2011,
ithasnotbeenapprovedinanyreportedcase).(4)
Thesecondfactorrelevanttothedecisionistheavailabilityof
recordstosupporttheanalysis.Inextremecasestheavailabilityof
recordsmoreaccuratelythelackofavailablerecordsvirtually
dictatesthemethodofanalysis.Thus,forexample,wheretherehas
beennocontemporaneousattemptbythecontractortoproducea
networkedoranyotherformofprogramme,theonlyformof
analysiswhichcansensiblybeconductedistheasbuilt,butfor,
sincethisreliesonlyonanasbuiltprogrammeandsuchofthe
project'srecordsasareinfactavailabletoidentifywhatevents
wereimpactingontheprogressoftheworksduringtheperiodto
completion.Thatsaid,onecanonlyspeculateaboutthequalityand
reliabilityoftherecordsthatwouldinfactbeavailableinaproject
conductedwithoutanetworkedorotherprogramme.
Attheotherendofthespectrumiftherewasnoasbuiltprogramme
(anditwasfeltunnecessarilyexpensivetorecreateonefromthe
availablerecords)thepartiesandthetribunalwouldprobably
concludethattheonlyappropriatemethodofproceedingwouldbe
bywayofanasplanned,impactedprocedure.Wheremore
informationisavailable,thechoiceiswider,withbothasplanned
vs.asbuiltandtimeimpactanalysisbeingcapableofuse,provided
bothplannedprogrammes(networkedinthecaseofatimeimpact
analysis)andasbuiltrecordsareavailable.Asindicatedabove,a
timeimpactanalysisisthepreferredmethodofthetwoinvirtually
allcaseswheretherelevantinformationisavailable,savewherethe
costoftheexercisewouldbedisproportionatetothesumsinvolved.
Thethirdandfinalmattertobetakenintoaccountinreachinga
conclusionontheappropriatemethodofanalysisisthecostofthe
exercise.Notonlymustthecostbereasonablebutalso
proportionatetothesumsinissue.Theresultofthisisthattheuse
ofatimeimpactanalysis,thoughgenerallyrecognisedasproducing
themostreliableresultswhenappliedproperly,willbealess
obviouscandidate(becauseofitscost)thanothersinsmall
projects.Forthisreason,althoughcriticisedonothergrounds,as
plannedvs.asbuiltandasplanned,impactedaremorelikelytobe
regardedasappropriatemethodsforanalysisofdelayinsmall
projects.Asbuilt,butforfallssomewhereinbetweenthetwo
extremes,sincealthoughrelativelysimpletooperate,theemphasis
onthefactualinvestigationintothelogicoftheasbuiltprogramme
willaddtothecostsinallbutthesimplestofcases.
Theconclusionthathastobedrawnfromthewiderangeof
methodsofanalysis(thesummaryaboveisonlyofthemost
commontypes)isthatitwouldassistboththepartiesandthe
tribunalfortheretobeasingleagreedapproachtothemethodology
ofdelayanalysis.Onceagreed,thepartiescouldthenadduce
appropriateevidencetoestablishonecommonsetoffactsrequired
bytheagreedmethodology,leavingtheexpertstodebatethe
applicationoftheagreedmethodologytotheonesetoffacts.
Wherethishappensthepossibilityofthetribunalbeingpresented
notonlywithachoiceofmethodologiesbutalsoanunnecessarily
extendedsetoffactsonwhichto
page"226" ruleiseliminated.
Infact,theProtocol(5)recommendstheagreementofasingle
methodologyandgoesontoconcludethatatthesametimethe
partiesshouldagreeononeexperttoconducttheagreedmethodof
analysis.Giventhatintherealworldtherearelikelytobesome
significantdisagreementsnotonlyaboutthepropermethodologyto
beadoptedbutalsotheidentityoftheexperttocarryoutthe
analysis,theProtocol'ssuggestionthatthepartieswillbe
encouragedtofollowthiscoursebytheimpositionofanappropriate
costssanctionforfailuretodosoisunlikelytoprovesufficientin
practice.
10.04.ConcurrentDelay
Oneissuewhichislikelytoarisenomatterwhichformofanalysis
isusedisthequestionofconcurrentdelay.Thetermiscommonly

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(thoughimprecisely)usedtocoverafairlywidevarietyofsituations.
AsnotedinChapter2,thetermiscommonlyusedtodescribe
circumstanceswheretwoevents,onewithintheresponsibilityofthe
employerandonewithintheresponsibilityofthecontractor,might
beregardedascausingorcontributingtodelaytotheproject.As
willbeappreciated,theresolutionofwhicheventhasinfactcaused
thedelaytotheprojectiscrucial.Ifthematteriswithinthe
responsibilityoftheemployerthenthecontractorwillbeentitledto
anextensionoftimeandpossiblyalsotothecostsassociatedwith
thedelay,dependingonthetermsofthecontract.If,however,the
matteriswithintheresponsibilityofthecontractor,thenno
extensionoftimewillbegrantedandthecontractorwillnotonly
havetobeartheadditionalcostsassociatedwiththedelayitself,
butwillalsoprobablyberequiredtopaytheemployerliquidated
damagesfordelay.Ashasbeennotedearlier,thedifference
betweenthesetwosituationsinanysignificantprojectcouldeasily
amounttotensorevenhundredsofmillionsofdollars,making
resolutionofthisquestion,whenitarises,averyhotlycontested
debate.
Toputthematterincontextitmayhelptoconsideranexampleof
howthepointmayarise.Intheconstructionofapowerstation,for
example,theemployeriscommonlyresponsiblefortheconnection
ofthepowerstationtothenationalgridofthecountryconcerned.
Thisisnecessarytoexportthepowerproducedbytheplant
(essentiallyamatterfortheemployer)butalso,andcritically,
requiredtoallowthecontractortocarryouttheperformancetests
onwhichitsperformanceguaranteesare,andinsomecases
completionoftheplantis,dependent.Assume,then,that
completionoftheplantisdependentonsatisfactorycompletionof
theperformancetestsandthatatthetimespecifiedforcompletion
oftheplant(thetimefromwhichliquidateddamagesfordelay
commence):
thecontractorhasonlycompleted80%oftheplantforreasons
entirelywithinitsownresponsibilityand
theemployerhasfailedtosecureaconnectiontothenational
gridwithsufficientcapacitytoallowthecarryingoutofthe
performancetests.
page"227"
Inthesecircumstancestheemployerwillnodoubtclaimthatthe
projectisdelayedforreasonsattributabletothecontractor(the
contractorisinculpabledelay)andthattheemployerisentitledto
liquidateddamages.Afterall,theplantisonlyfourfifthscompleted
forreasonsentirelyunconnectedwithanythingforwhichthe
employerisresponsible.
Naturally,thecontractorseesthingsalittledifferently.Fromits
perspectiveitmattersnotonejotwhethertheplantis80%
complete,practicallycompleteorhasbeencompletelyfinished
andallsnagssortedbecause,itwillsay,itstillcouldnothave
achievedcompletionandrelieveditselfoftheobligationtopay
liquidateddamages.This,itwillsay,isbecausehoweverhardithad
trieditwouldhavebeenunabletocarryouttheperformancetests
forreasonswhichwerebothoutsideitscontrolandwithinthe
employer'srisk.Onthisbasis,thecontractorwillsaythatitisunfair
forittobepenalisedwhere,evenhaditbeenontime,it:
wouldnothavebeenabletocompletetheplantforreasons
attributabletotheemployer
wouldnothavebeenexposedtoliquidateddamagesand
mighthavebeenabletorecoverthecostsofanydelaybeforethe
gridconnectionwasestablishedandtheperformancetests
carriedout.
Failingthat,thecontractorwouldcommonlyarguethatsinceboth
theemployeranditareinbreach,theresponsibilityforthedelay
shouldbeapportionedorsharedinsomeway.Onecommonversion
ofthisisthatthecontractorshouldnotgetadditionalpaymentfor
thedelayperiod(afterall,itislatewiththeconstruction),but
equallytheemployershouldnotbeentitledtoclaimliquidated
damagesbecauseitisunabletoruntheplantbecauseofthe
inabilitytocompletethenecessarytestsand,forthatmatter,an
inabilitytoexportpowerincommercialquantitiestothegrid.This
latterpointmayinfacthavesomesignificanceinjurisdictions
whererecoveryofliquidateddamagesmaybelimitedbyreference
tothelossactuallysufferedatthetimeofbreach.
Thefirstthingtoobserveaboutthissituationisthatalthoughitis
verycommonforargumentstoberaisedaboutconcurrentdelay,
thereareveryfewcontractswhichattempttodealwiththeposition.
Noraretheremanyjurisdictionswithauthoritiesdealingwiththe
issuesquarely.Forthisreasonthequestiontendstobeaddressed
fromfirstprinciplesasamatterofcausation,whichatleast
providesamechanismforthedeterminationofananswerevenifit
doesnotaddresstheinequitythatonepartysuffersasaresultof
thegoodfortuneoftheother.Ofcourse,ifthematterwerefelttobe
sufficientlyiniquitousorimportantthequestioncouldbeaddressed
atthecontractdraftingstage.Thefact,asnotedabove,thatthis
rarelyhappensindicatesthatwhilethepointgeneratesmuchheat
whenprojectsaredelayed,theissuemaybeseenmoreasa
meansofavoidingaliabilitythanagenuinelyseriousissue.
Wherethematterisdealtwithasoneofcausation,thequestion
boilsdowntowhathascausedthedelay.Thisisafactual

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question.Wherethereisonlyoneeventwhichimpactstheregular
progressofthework,therecanbeonlyoneoftwoanswers.Either
theworkwasgoingtobelateinanyevent(andthispossibility,
thoughawkwardforcontractors,mustneverbeforgotten)orthe
projecthasbeendelayedbytheevent
page"228" inquestion.
Evenwherethereismorethanoneeventaffectingtheprogressof
theproject,thereisnorealissueofcausationiftheconsequences
oftheeventsallfalltobetreatedinthesameway.Inotherwords,
nodifficultquestionsofcausationariseifalltheeventsfallwithin
oneclassofevents,eachofwhich,asamatterofcontractual
allocationofresponsibility,producesthesameconsequences.This
is,inessence,thebasisoftheglobalclaimdiscussedinChapter9
andwherethisoccursitbecomesunnecessarytoseparateoutand
trackthroughcauseandeffect.
Theproblemonlyarises,asintheexampledescribedabove,where
theeventsinquestionproducedifferentconsequences(e.g.,
differentperiodsofprojectoverrun)andeachofthose
consequencesaretheresponsibilityofadifferentparty.So,
returningtothatexample,isitpossibletodetermineina
satisfactorymannerwhicheventhascausedthedelay?Doesit,for
instance,dependontheorderinwhichtheeventsarose?Soifit
wasapparentfromtheverystartoftheprojectthattheemployer
wouldormighthavedifficultyinprocuringthecompletionofthegrid
connectionintime,doesthis(ifinfactthegridconnectionis
delayed)effectivelyrelievethecontractorofallresponsibilityforany
delaystoconstructionwhichfallwithinitsresponsibilityanddeprive
theemployerofanyremedyforthecontractor'sfailings,nomatter
howseriousandprolonged?
Whilethesequenceofeventsmayhavesomesignificancein
factuallyascertainingthetruecauseofthedelaytocompletion,
thereiscertainlynohardandfastrulewhichrequiresthatthefirst
eventtoariseshouldbetreatedasthecauseofthedelay.Ina
mostunsatisfactorymannertheansweristhatitalldependsand
thatcausationisnotasimplematterofchronology.Inpractice,
judgesandarbitratorshaveareasonablykeensenseofwhat
causedanevent,rejectingunlikelyhypotheseswhichdonotfitin
withthecommercialrealitiesofthesituation.Thusitisnevergoing
tobeananswer,whenthereisanobviousfailurebyonepartyto
performwhatmightberegardedasoneofitsprimaryobligations,for
thatpartytotrytorelyontheother'sfailuretoexcusethe
consequencesofitsownfailings.
Thus,intheexamplegiven,itislikely(butputnohigher)thata
tribunalwouldregardthecauseofthedelayasbeingthefactthat
theplantwas,atthecontractualcompletiondate,only80%
completeandwouldrejecttheargumentthatthedelayto
completionwastheresponsibilityoftheemployerfornothaving
procuredsomethingwhichthecontractordidnot,atthatpoint,
require.Obviouslytheanalysischangeswhentheplanthasbeen
completedtothepointwhereitissafeandreadytoundertakethe
completionandperformancetests.Atthatpointifthegrid
connectionisnotinplace,alternativesolutionscannotbefoundor
therelevantpartofthetestsarenotwaived,itseemsclearthatthe
employerwouldthenberesponsibleforallensuingdelays.
Whatinfacthashappened,isthatthissituationofsuperficial
concurrencyhasbeencapableofanalysisintoseparateevents
withseparateconsequences.Thereis,therefore,notrue
concurrencyandnodifficultquestionsarise.Anditisthisanalysis
whichleadstotheconclusionthattherewillinfactbefewinstances
wherethereisgenuineconcurrency.Inotherwordswhilethereis
considerablediscussionabouttheneedtoresolvetheproblemsof
concurrentdelays',thisturnsouttobealargelyacademicand
theoreticaldiscussionsincetribunals,applyingadegreeofcommon
page"229" sensederivedfromexperienceoftheconstruction
industry,inpracticedonotfindittoodifficulttoseparateoutthe
effectsofdifferingevents,therebyallowinganallocationof
responsibilitytobemadeontraditionalprinciplesofproofofcause
andeffect.Inthistheyaresupportedbydoctrinessuchasthe
dominantoreffectivecause,whichpermitafindingofcauseand
effectevenifthereisasmallcontribution,orapossibilityofasmall
contribution,totheconsequencefromanothermatter.
Yetdespitethis,therewillbeasmallnumberofcaseswhereitis
impossibletoseparateouttheconsequencesoftwoormore
effectivecausesofthesameperiodofprojectoverrun,whichareof
approximatelyequalcausativepotency,whereoneiswithinthe
employer'sresponsibilityandtheotherwithinthecontractor's.In
thesecasesitisgenerallyacceptedthatthereisatrueconcurrent
delayandthatthesolutionisthatthecontractorisentitledtoclaim
afullextensionoftimeforthecombined(butinextricablylinked)
consequencesofthetwoevents.(6)Interestinglythisapproachruns
counter(albeitatthetiebreakerlevel)tothegeneralsolutiontothe
presentationofglobalclaimswhich(absentproofofeach
entitlement)onlypermitsrecoverywherealltheeventsnot
separatelyidentifiedresultinthesameconsequences.
10.05.OwnershipofFloat
Anothergeneralissuethatpartiestoconstructionarbitrationsand
tribunalswillhavetodealwithistheissueofwhoownsfloatina
programme.Bythisitismeantthoseperiodsinaprogrammewhere
activitydurationsareinfactshorterthanthetimeavailabletocarry
outtheworkwithoutdelayingtheoverallcompletion.Thismightbe
regarded,inprogrammingterms,asthepresenceofatime

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contingencyequivalenttoanunallocatedamountofmoneyinthe
contractpricetocovertheunexpected,overandabovethecostof
alltheforeseenworkcontent.Therationaleofitsinclusionisoften
thesame,namelytoprovidesomeprotectionforthecontractor
againstthepossibilityofnoteverythinggoingassmoothlyas
possible,therebyminimisingitspotentialexposuretoliquidated
damages.Arguably,iftheprogrammecontainedlessfloatthen
therewouldhavetobealargermonetarycontingencytoguard
againstthispossibility,atleastifthecontractorweretobeleftwith
thesamelevelofrisk.Floatmaybeconcealedwithinanactivity's
duration(i.e.,onewhichissimplylongerthanitperhapsneedsto
be)orshownasfreetimebetweentheendofoneactivityandthe
nextfollowingactivity.
Theissueofownershipofthisextratimearisesbecausethe
conceptofentitlements,particularlythecontractor'sentitlementto
extensionsoftime,islinkedtotheconceptofdelaytospecified
events.Traditionalprovisionsprovidingforextensionsoftime,for
instance,donotproviderelieftothecontractorforincreasedriskto
itincompletionoftheproject.Thuswherethereisidentifiabledelay
toactivitiesonthecriticalpathofaproject,theprovisionswill
operateand,iftheirconditionsare
page"230" satisfied,the
contractorwillbecomeentitledtoanextensionoftimeto
compensateitforthedelaycausedtoit.Thecontractormayalso
becomeentitledtotheadditionalcostsassociatedwiththatdelay,
aswellasrelieffromtheimpositionofliquidateddamages.
However,wheretheactivitydelayedisnotonthecriticalpathto
completionbecauseoftheexistenceoffloatinthatactivity,delay
tothatactivitywillnotatfirstshowupasdelaytocompletionbut
merelyasareductionoftheamountoffloat.Oncethefloathas
beencompletelyconsumed(butonlythen),theactivitywilllieon
thecriticalpathtocompletionsoanyfurtherdelaywillbereflected
inadelaytocompletion.Inthefirstphaseofthisprocess,while
floatisbeingconsumed,thereisnodelaytotheprojectsotypical
extensionoftimeprovisionswillnotrespond,thoughtherisktothe
contractorisbecominggreaterbecauseitisnowincreasingly
exposedtotheconsequencesofitsownfailuretocompleteintime
theactivitythatwasinfloat.Onlywhentheprocessentersthe
secondphasewhenallthefloathasbeenconsumedandthe
activityisonthecriticalpathdostandardclausesofferthe
contractoranyrelief.Inotherwords,wherefloatexists,and
particularlywhereithasbeendeliberatelyintroducedtocovera
contractorrisk,theemployerstandstobenefitfromthatprovision
whereitcausesdelaytotheactivityinfloat.
Notunnaturallythispointisamatterofconsiderablecontention
since,asobservedabove,itmaybethatfloathasbeendeliberately
introducedasameansofriskmanagementandasameansof
avoidingtheinclusionofamonetarycontingencytocovertherisk
oflatedeliverybythecontractorofthatelementoftheworks.Asa
result,itisoftenarguedthattheexistenceoffloatasameansof
protectingthecontractorfromtherisksinherentintheexecutionof
theworksshouldberecognisedindelayanalysisandpreservedin
thedeterminationofextensionsoftime.Thepurposeofthisisnot
onlytoprotectthecontractoragainstdelaytotheprojectcausedby
mattersfallingwithintheemployer'scontrolandresponsibility,but
alsotoleavethecontractorwiththesamelevelofriskincarrying
outthework.
Theproblemswiththisargumentariseintwoseparateareas.The
firstisinthefactthattypicalstandardformextensionoftime
provisionsarephrasedintermsthatrequireactualor,ifinthe
future,anticipateddelaystocompletionofthewholeoraspecified
partoftheworks.Asamatterofpuresemantics,theseclausesdo
notprotectthecontractoragainstincreaseinriskbutonlyagainst
delaytocriticalpathactivities.Forthisreason,manyattemptsat
arguingthatthecontractorshouldbegiventhebenefitoffloatfail,
becauseforsolongasfloatexiststhen,whateverthemeritsofthe
case,therewillbenodelaytocompletionandasaresulttherewill
benoentitlementtoanextensionoftime.Thesecondreasonwhy
theproblemarisesisthatfloatcanariseforanumberofreasons.
Forinstance,asamatterofconstructionlogicitwillnormallybethe
casethatwhilethereareactivitieswhichinevitablylieonthecritical
pathtocompletionoftheproject,therewillbeothers,probably
manyothers,whosetimelycompletionisnotcriticaltoproject
completion.Notbecausetheyareespeciallysensitiveoperations
butonlybecausetheyarematterswhichcanbecarriedoutwithin
thedurationofoneofseveralactivitiesonthecriticalpathwithout
affectingtheexecutionofcriticalpathactivitiesorimpactingonthe
completiondatefortheproject.Theseactivitiesarejustasmuchin
floatasanyotherbutitisbynomeans
page
"231" unreasonabletodenyacontractoranyreliefwhichconsumes
floatrelativetotheseactivitiesasthereisnodelaytotheoverall
completiondateandtheincreaseinrisk,ifany,is(atleastatthe
outset)marginal.
Theanswer,probably,liesinspecificdraftingtoprotectfloatwhich
doesnotarisebyaccidentofprogrammelogicbutwhosedeliberate
insertionintheprogrammeisforthepurposeofriskmanagement.
Thisneedstobecoupledwithspecificidentificationofthis
protectedfloatinaprogrammeproducedatthetimeofcontract
execution.Untilthen,theparties,theiradvisersandtribunalswill
havetocontinuegrapplingwiththeconceptofownershipoffloat,
withdetailedforensicandsemanticanalysisofcontractprovisions
providinganunsatisfactoryansweronacasebycasebasis.

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CriticalPathMethod.
TheProtocol(infra),para.4.8.
3
TheDelayandDisruptionProtocolpublishedbytheSocietyof
ConstructionLaw,October2002,reprintedOctober2004.Atthe
timeofwritingtheSocietyofConstructionLawCouncilhaspassed
aresolutiontoreviewtheProtocoltodecideifitshouldbeupdated.
4
AdyardAbuDhabiv.SDMarineServices[2011]EWHC848,
paras289290.
5
TheProtocol,para.4.17and4.18.
6
AdyardAbuDhabiv.SDMarineServices[2011]EWHC848
(Comm)paras277288.AlsoseetheProtocol.Adifferentoutcome,
however,mightensurewherethereisnoextensionoftimeprovision
inthecontractandthecontractorisseekingtosettimeatlarge
JerramFalkusConstructionLtdv.FeniceInvestmentsInc[2011]
EWHC1935(TCC)atparas4752.

Chapter11:ProceduralIssues
11.01.Introduction
Thischapterlooksatproceduralissues.Inessence,arbitration
procedureisthesetofrulesthatgovernsthecontestbetweenthe
parties.Theybearontheentirearbitrationprocessfrombeginning
toend.Forexample,proceduralrulesgovernthemannerinwhich
thearbitrationiscommenced,theappointmentofthearbitrator(s),
theroleofwrittensubmissions(ifany),theproductionof
documents,theroleofwitnesses(ifany),hearings(ifany)andthe
processbywhichthearbitrator'sawardistobedelivered.
11.02.ObjectiveofProceduralRules

Source
Chapter11:Procedural
IssuesinJaneJenkins,
International
ConstructionArbitration
Law(SecondEdition),
ArbitrationinContext
Series,Volume3
(JaneJenkinsKluwer
LawInternational2013)
pp.233252

Proceduralrulesserveanumberofpurposes.Keyamongstthem
areforeseeabilityandequalityoftreatment.
Whatevertheirderivation,proceduralrulesaregenerallysetoutin
advanceofadispute.(1)Ideally,thearbitrationagreementwill
identifytheprocessbywhichtherulesaretobedeterminedeven
ifthisisnomorethangrantingthearbitrator(s)thediscretionto
maketherulessothatspecificrulescanthenbesetattheoutset
ofthedispute.Thisenablespartiestoknowaheadofcommencing
thesubstantivearbitrationprocesstherulesbywhichthearbitration
willbeconductedandtherulesbywhichtheyandotherpartieswill
beexpectedtoconductthemselvesinthearbitrationprocess.
Wherethearbitrationagreementdoesnotspecifytheprocedural
rules,thepartiesmayagreethisasbetweenthemselvesatthe
outsetofthearbitration.Amongstotherbenefits,foreseeability
affordsalevelofawarenessregardingtheapproximatecostand
lengthofthearbitrationprocess,thenumberandidentityofthe
personnel
page"233" whomayberequiredtobeinvolvedand
thearrangementsthatneedtobemadeforthevariousstagesinthe
arbitrationprocess,includinganyhearings.
Proceduralrulesshouldalsoprovideforequalityoftreatmentand
dueprocessbetweentheparties.Theremaybeanexpress
protectionofsuchprinciplesinarbitrationrules.(2)
11.03.DerivationofProceduralRules
Arbitrationisbyitsnatureaconsensualprocessanditistherefore
unsurprisingthatpartiesaregenerallyfreetoagreetheprocedural
rulestobefollowedinthearbitrationofanydisputebetweenthem
subjecttoanyapplicablemandatoryrequirements.(3)Partiesmay
agreesomerulesupfrontinthearbitrationagreementwithothers
(oftenthemoredetailedrules)agreedbetweenthematthe
commencementofanindividualarbitrationprocessoncethenature,
complexityandquantumofthedisputeareknown.
Inpractice,proceduralrulesderivefromacombinationofsources.
First,insomejurisdictionstherearemandatoryprocedural
requirementsthatapplytoallarbitrationsseatedinthatjurisdiction.
Forexample,theprovisionssetoutinSchedule1totheEnglish
ArbitrationAct1996applytoanyarbitrationwheretheseatofthe
arbitrationisEngland,WalesorNorthernIrelandandhaveeffect
notwithstandinganyagreementtothecontrary.Theprovisionsdeal
withmatterssuchasstayofanylegalproceedingsregardingthe
samedispute,thepowerofthecourttoremoveanarbitrator,
determinationofthepreliminarypointofjurisdiction,securingthe
attendanceofwitnesses,enforcementofarbitralawardsand
challengetoarbitralawards.
Second,proceduralrulesmaybestipulatedandsetoutinfulldetail
intheparties'arbitrationagreement.Thisismostcommoninthe
caseofadhocarbitrationswherethearbitrationprocessistobe
runwithouttheaidofaninstitutionsuchastheICCorLCIA.

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Third,andmostcommonly,partiesmayagreeintheirarbitration
agreementtoadoptanestablishedsetofrulessuchastheICC
Rules,UNCITRALArbitrationRulesorLCIARulesamongstothers.
Partiesmayeitheragreetoadopttheestablishedsetofrulesin
theirunamendedentiretyortosetoutagreedamendmentstothe
chosenrulesintheirarbitrationagreement(seeChapter3).(4)
page"234"
Fourth,partiesmayagreecertainproceduralrulesatthetimea
disputehasarisen.Thisisnormallythecaseregardingdetailed
proceduralrulessuchastheallimportanttimetableforexchangeof
submissionsandwitnessstatements,hearingsandotherprocedural
steps.Arrangementsforcommunicatingdocumentexchanges(e.g.,
byelectronictransmission)andtranslationofdocuments,if
necessary,areotherpracticalissuestypicallyaddressedatthis
stage.Thevalueofasitevisitmightalsobeconsideredatthis
stage.InICCarbitrations,suchruleswillnormallybesetoutatthe
timeofagreeingtheTermsofReference.
Lastly,proceduralrulesmaybelaiddownbythearbitrator(s)with
orwithoutconsultationwithoragreementoftheparties.(5)Arbitration
rulesmayexpresslyreservepowertothearbitrator(s)todetermine
anyproceduralrulesthathavenotbeenagreedbytheparties.(6)
Consultationwiththepartiesattherequestofthepartiesor,where
thearbitrator(s)deemappropriate,typicallytakesplacepriorto
and/orduringapreliminaryconferenceattendedbythearbitrator(s)
andpartiesdevotedsolelytodeterminationofproceduralmatters.
Ausefulreferenceforbothpartiesandarbitrator(s)inagreeingor
otherwisedeterminingproceduralmattersisfoundintheUNCITRAL
NotesonOrganizingArbitralProceedings.Aspreviouslynoted,the
UNCITRALNotesonOrganizingArbitralProceedingsarenot
arbitrationrulesbutaimtoprovideachecklistofmatterswhich
arbitratorsandpartiesmayfindusefultoconsideranddecideupon
wheninvolvedinaninternationalarbitration.Somemattersaddress
significantproceduralissuessuchaswhetherhearingswillbeheld,
butmostareeminentlypracticalmatterssuchasarrangementsfor
exchangeofinformation(electronicorotherwise)andmanagement
ofdepositsinrespectofcosts.TheUNCITRALNoteson
OrganizingArbitralProceedingsserveasausefulindicationofthe
rangeofpossibleproceduraloptionsforeachmatter.Moredetail
regardingspecificaspectsoftheUNCITRALNotesonOrganizing
ArbitralProceedingsisgivenbelowundertheheading
AdministrativeIssues'.
Asthemajorityofarbitrationrulescovermechanismsfortaking
evidenceverybroadly,anotherusefulreferenceistheIBARules
referredtoinChapter8above.Partiesfrequentlychoosetoadopt
thoserulesinparttosupplementtheirchosenarbitrationrules
(institutionaloradhoc).Alternatively,theserulesmaybeusedby
partiesand/orarbitratorsasahelpfulchecklistofissuesthatneed
tobeassessed,andasthebasisfordevelopingtheirown
proceduralrulesontheseissues.(7)
page"235"
11.04.ContrastingCivilandCommonLawProcedural
Approaches
[A].Introduction
Anessentialfeatureofinternationalarbitrationtouchedonin
Chapter8aboveisthemeetingofpartiesfromdifferentlegal
backgroundswithdifferentphilosophiesandexperiencesregarding
theproceduralrulesthatshouldgovernadisputeresolution
process.Becausearbitrationisaflexibleforumfordispute
resolutionandcapableofbeingmouldedbythoseinvolved,an
individualarbitrationmaybearcharacteristicsofthelegaltradition
associatedwiththenationaloriginsofanyoftheparties,their
counsel,thearbitrator(s)and/ortheseatofarbitration.Forexample,
whereeachoftheparties(or,oftenmorecrucially,theirlegal
counsel)andthearbitrator(s)isfromacommonlawtradition,the
arbitralproceduremaybearmorehallmarksofcommonlawlitigation
thanwouldasimilardisputefeaturingcivillawparties(orlegal
counsel)andarbitrator(s).Amixoflegalbackgroundsmaycreate
tensions,oratleastdifferingexpectationsbetweenpartiesofhow
anarbitrationwillbeconducted.
Proceduralrulesdifferinanumberofrespectsbetweencommon
lawandcivillawtraditions.Thedifferencescanbeencapsulatedby
thedifferingphilosophiesunderlyinganadversarialprocess
(typicallyfoundincommonlawjurisdictions)asopposedtoan
inquisitorialprocess(typicallyfoundincivillawjurisdictions).In
commonlawjurisdictions(suchastheUnitedKingdom,
CommonwealthcountriesandtheUnitedStates),litigationis
characterisedbytwoadversariespittedagainsteachotherwiththe
taskofpresentingtheirrespectivecasestothejudgewhohasthe
taskofdecidingbetweenthem.Incivillawjurisdictions,judgesplay
amoreactiveroleininvestigatingthecasebeforethem,withthe
roleoftheparties'counselbeingtoaidthedecisionmakerinthis
process.Thisbasicpointofdistinctionbetweencommonlawand
civillawlitigationgoesaconsiderablewaytoexplainingthekey
areasofproceduraldifferencebetweenthetwo.
[B].ExtentofDisclosure

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Akeypointofdifferencebetweenthecommonlawandcivillaw
traditionsistheroleofdisclosureordiscoveryofdocuments.In
commonlawlitigation,partiesaregenerallyrequiredtodiscloseto
eachotheralldocumentsintheircontrolorpossessionthatare
relevanttotheissuesindisputebetweenthem,including
documentsthatmaybedamagingtotheircases.(8)Thisrequirement
isforeignoftenunfathomabletocounselfromcivillaw
jurisdictions,whoareusedtoproducingtotheotherparty(andthe
decisionmakingtribunal)onlythosedocumentsonwhichtheir
clientsneedtorelytosupporttheircases.Mostcivillawtribunals
dohavevaryingdegreesofpowertocompelpartiestoproduce
documentsbuttheseextendonlytospecificallyidentified
page
"236" documentsorpossiblyanarrowlydescribedcategoryof
documentsalongwayshortofthecommonlawnotionoffull
discovery.
Theextenttowhichaparty'sdocumentsmayberequiredtobe
disclosedtootherpartiesininternationalarbitrationisalsosubject
torulesandnormsregardinglegalprivilegeand,insome
jurisdictions,withoutprejudicecommunications.Conceptsoflegal
privilegeorprofessionalsecrecy,whichpreventdocumentsand
othercommunicationsfromdisclosureinproceedings,arewidely
recognised.However,theextentandscopeofsuchconceptsvary
betweenjurisdictions.Inmostcommonlawjurisdictions,privilegeis
aruleofevidenceandisthereforeaproceduralissuetobe
determinedbythelawoftheseatofthearbitration.Themost
relevantprivilegeforarbitrationpurposesislitigationprivilege
which,generallyspeaking,protectsdocumentscreatedforthe
purpose(9)ofproceedings(existingorcontemplated)frombeing
disclosedinthesubjectproceedings.Theotherprimaryheadof
privilegeislegaladviceprivilegewhichappliestocommunications
betweenlawyersandclientsforthepurposeofrequestingor
providinglegaladviceaboutwhatshouldprudentlyandsensiblybe
doneintherelevantlegalcontext.(10)Insomecivillawjurisdictions,
however,thenotionthatcertaindocumentsareprotectedfrom
disclosurearisesfromtheethicalobligationsofpractitionersrather
thanproceduralrules.Forexample,inGermany,alawyerisobliged
tokeepconfidentialeverythingrelatingtoknowledgegainedinthe
exerciseofhisprofession.(11)InFrance,correspondencebetween
anavocatandhisclientorbetweenanavocatandtheotherparty's
avocatisprivilegedandcannotbedisclosed.(12)
Incommonlawjurisdictions,theconceptofwithoutprejudice
communicationsmayalsolimitparties'disclosureobligations.It
operatestokeepconfidentialandprotectfromdisclosurein
proceedings,settlementcommunications.Theconceptisnotwidely
recognisedinotherjurisdictions.Forexample,inAustria,itis
permissibletoshowsettlementofferstoatribunalpriorto
determinationofthesubstantivedispute,andthisiscommonly
donetoindicateattemptsmadeatsettlement.Whilstitispossible,
inprinciple,toagreethatsettlementcommunicationsoughtto
remainconfidential,thisisnotautomatic,andmustbespecifically
agreedbetweentheparties.Similarly,thereisnoequivalenttothe
commonlawwithoutprejudicecommunicationconceptinmany
othercivillawjurisdictionsaroundtheglobe,andcounselwill
page"237" regularlyputcorrespondenceanddraftsettlements
beforethetribunalinawaywhichwouldbeananathematomany
commonlawpractitioners.
[C].WrittenSubmissions
Incontrasttothecommonlawlitigationfocusonoralargumentor
presentationofwitnessevidence,civillawcourtproceedingsare
characterisedbywrittensubmissions.Althoughtheremaybeshort
oralarguments,theprincipalmethodbywhichcivillawcasesare
presentedincourtisexchangeofdetailedwrittensubmissions
aheadofwitnessevidence(ifany).Thesetellthewholestoryfrom
theperspectiveofeachpartyincludingallegationsandfacts.In
addition,writtensubmissionstypicallyattachcopiesofall
documentsonwhichthepartiesrely.SeefurtherChapter12.
[D].PreparationofEvidence
Incontrasttothecivillawemphasisonwrittensubmissions,the
commonlawemphasisincourtproceedingsisuponwitness
evidence.Witnessevidenceisacrucialmechanismbywhichthe
partiespresenttheirversionofthefactstothedecisionmakerand
bywhichtheyseektodisprovethecasepresentedbytheopposing
party/ies.Witnessesthereforeplaymuchmoreofacentralrolein
commonlawlitigationthantheydoincivillawproceedings.
Consequently,therulesgoverningwitnessesandtheirevidence
differinanumberofrespects.
Craig,ParkandPaulssonhaveneatlysummarisedthecontrast
betweencommonlawandcivillawsystemsofintroducingevidence
intoproceedingsasfollows:
Thecontinentalcivillawsystemofproofisdominated
bytheexchangeofdocumentsbetweentheparties.
Hearingsserveprincipallyasanoccasionfor
argumentsbasedonfactsrevealedinwritten
evidencealreadysubmitted.Thecommonlaw
system,ontheotherhand,useshearingstodevelop
factsandtointroducedocumentsintoevidence.(13)

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Inthecommonlawthereisnobaronwhomaybecalledasa
witness.Theonlyrequirementsarethatthepersoniscompetent
andthathisevidenceisrelevanttoissuesintheproceedings.
However,civillawproceduretypicallylimitsthecategoryofpersons
whocanbecalledaswitnessestothirdparties.Aparty'sown
officersandemployeesmaynotbepermittedtogiveevidencein
courtproceedingsonthepresumptionthattheywouldbepartisan.
Thecommonlaw'sresponsetothisriskistoallowextensivecross
examinationofwitnesses(addressedfurtherbelow)bytheopposing
partywiththeaimoftestingwitnesses'credibility,amongstother
things.Thecommonlawtribunalisthereuponcalledtoassessa
witness'credibilityandtheweighttobegiventohisevidence.
Preparationofwitnessespriortotheirgivingevidenceatahearing
isanotherareaoftensionbetweenthecommonlawandcivillaw
traditions.Incivillawjurisdictions,
page"238" suchasthe
FrenchspeakingBrusselsbar,ethicalrulesprohibitcontact
betweencounselandpotentialwitnessesonthebasisthatitwould
beimproperandbecauseitisforthejudgetoquestionthewitness.
However,witnesspreparationisthenormincommonlaw
proceedings.Indeed,itwouldbenegligentforcommonlawcounsel
nottoinvestigatewitnesses'responsestoissuesinthecasebefore
ahearing,althoughwitnessesmaynotbecoachedinthesenseof
beingprovidedwithanswers,andcontactwithawitnessmust
usuallyceaseoncehisevidencehasbegun.Thisapproachreflects
therigourandscopeofcommonlawcrossexamination,which
shouldbecapableofuncoveringanyimproperpreparation.
Questioningincivilproceedingsismorelimited,giventhegreater
emphasisondocumentaryevidence,andthefactthatthereisno
crossexaminationinthecivillawtradition.
Inthecontextofinternationalarbitration,preparationofwitnessesis
generallyacceptable,andwidelypracticed.(14)
SeeChapter12formoreinformationonwitnesses.
11.05.TypicalProceduralDirectionsaFusionbetween
CommonandCivilLaw
Whilstarbitralprocedurevariesgreatly,therehasgraduallyevolved
abodyofinternationalproceduralnormsthathavecometobe
adoptedbypartiestointernationalarbitrationswithreasonable
regularity.Asaresultthereisnowalargelysettledbodyoftypical
proceduraldirectionsthatrepresentsacompromisebetween
commonandcivillawprocedure.(15)Fromcivillaw,international
arbitrationpracticehasadoptedtherelianceuponwritten
submissionsproducedtogetherwithallthedocumentsreliedupon
byeachpartyandrelativelybrieforalsubmissionsandsubstantive
hearings.Fromcommonlaw,ithasadoptedpracticesonproduction
ofdocumentsandwitnessevidence.
[A].ExchangeofWrittenstatementsofcase
Thesubstantivephaseofinternationalarbitrationstypically
commenceswiththepartiesexchangingwrittenstatementsofcase.
Theseareusuallyinnarrativeformratherthanincommonlaw
pleadingstyle,andareprovidedinsuccession,withtheclaimant
beingrequiredtoprovideitsStatementofCasefirstandthe
respondenttofollow.Thisistheprocessadopted,forexample,
undertheUNCITRALArbitrationRules,wheretheclaimant(withina
periodoftimedeterminedbythearbitraltribunal)isrequiredto
provideitsstatementofclaimincludingparticularsoftheparties,a
statementofthefactssupportingtheclaim,thepointsatissue,the
relieforremedysought,thelegalgroundsorargumentssupporting
theclaimandannexingacopyoftherelevantcontractorotherlegal
instrumentgivingrisetothedisputeandthe
page
"239" arbitrationagreement(Article20).Thestatementofclaim
shouldalso,asfaraspossible,beaccompaniedbyalldocuments
andotherevidencerelieduponbytheclaimant,orcontain
referencestothem(Article20).(16)Therespondentisrequiredto
respondwithastatementofdefencereplyingtotheparticularsset
outinthestatementofclaim,andagainshouldannexorreference
documentsthatarerelevanttotheclaim(Article21).Article15of
theLCIARulesissimilar.Itisincreasinglycommonforarbitrators
torequirethepartiestosubmitanyfactualwitnessstatementsand
expertreportstogetherwiththestatementsofclaimanddefence.
TheauthorsoftheICCConstructionArbitrationReportgivea
salutaryreminderofthewisdominarbitrator(s)requiringfromparties
indisputesregardingclaimsfordelayanddisruption,achronology
ofeventsintheseinitialarbitrationstages.(17)
TheICCRulesprovideforasimilarrosterofwrittensubmissionsin
Articles4and5.However,theyprovideforanextrastep.The
arbitraltribunalisrequiredtodrawupadocumentdefiningitsTerms
ofReference,tobesignedbythetribunalandthepartiesand
submittedtotheICCCourtforapproval(Article23).Theapproved
documentthendefinestheparametersofthearbitration.Adherence
tothisprocedureisnecessarytoensurethatthearbitralawardis
eventuallyenforceable.ItisalsoanimportantmilestoneinanICC
arbitration,withthepartiesneedingpermissionfromtheTribunalto
includeadditionalclaimsorcounterclaimsinthearbitrationafterthis
date.AsampleoutlineTermsofReferenceappearsatAnnex7.
[B].DisclosureofDocuments

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Thetypicalprocedureforinternationalarbitrationsregarding
disclosureisatrueblendbetweenthecommonlawandcivillaw
systems.Thestandardpositionistorequiresomelevelof
disclosureofdocuments,butnotanywherenearthescaleknownto
commonlaw.Disclosuretendstoberestrictedtospecifically
identifieddocumentsorlimitedcategoriesofdocumentsthatare
relevanttotheissuesinthecase.Thissaid,disclosureisoneof
theareaswheretheoriginofpartiesandtheircounselisparticularly
determinativealthoughfullblowncommonlawstylediscoveryis
extremelyrareininternationalarbitrations.TheauthorsoftheICC
ConstructionArbitrationReportcautionoftheneedtoprevent
arbitrationproceedingsfrombeingswampedbythemassof
documentsthatareinevitablygeneratedbyaconstructionproject.
(18)
However,thenatureofconstructiondisputesisthattheyare
veryfactanddocumentintensiveandso,generally,somescopefor
discoverywillbeimportant.TheIBARulesaccordwithgeneral
practiceinnotexcludinginternalpartydocumentsfrompotential
disclosure.(19)
page"240"
Theprocessbywhichdisclosureoccursoriginatesinthepower
usuallygrantedtoarbitratorstocompelproductionofdocumentsin
aparty'spossessionorcontrol.Theordertoproducedocuments
maybemadeofthearbitrator(s)ownvolitionbutismoreusually
madeupontherequestofanotherparty.Thisistheprocess
adoptedinArticle3oftheIBARules,whichisbecomingthenorm
onthisaspectofprocedure.Article3requireseachpartytosubmit
tothearbitrator(s)andtheotherpartiesalldocumentsavailabletoit
onwhichitrelies,exceptthosesubmittedbyanotherparty(Article
3(1)).Thisisintendedtoavoidtrialbyambush,sothattheopposing
partyisawareasearlyaspossibleofthedocumentsonwhichthe
otherpartywillrelytosupportitscase.Inaddition,anypartymay
submitarequesttoproducedocumentsincludingadescriptionof
therequesteddocumentsorofanarrowandspecificrequested
categoryofdocumentsthatarereasonablybelievedtoexistand,
asasafeguard,adescriptionofthedocuments'relevancetothe
case(Article3(2)(3)).Theopposingpartymayeitherproducethe
requesteddocumentsorobjecttotherequestinwriting.Inthelatter
case,thearbitrator(s),inconsultationwiththeparties,must
considertheissueandmayorderproductionofthedocumentsif
theyarerelevanttothecase,noneofthequalifyingreasonsfor
objectionsappliesandtherequesttoproducecomplieswithall
formatrequirements(Article3(7)).
Inpractice,theprocessisusuallyprogressedbywayofexchange
ofasocalledRedfernScheduleaftertheeminentpractitionerand
arbitratorAlanRedfern.TheSchedulesetsoutincolumns,the
descriptionofthedocumentorclassofdocumentrequested,the
justificationfortherequest,theopponent'sresponseandwhere
productionisresistedthereasonforopposingproductionandfinally
acolumnfortheTribunal'sdetermination.AnexampleofaRedfern
schedulewithtypicalrequestsandgroundstoresistdisclosure
appearsatAnnex8.
Sanctionsfornonproductionofdocumentsisadifficultareain
arbitrationlaw.Asapracticalmatter,anarbitrator(s)maychooseto
drawadverseinferencesifapartyrefusestoprovidethedocument.
Article9(5)oftheIBARulesexpresslyentitlesarbitrator(s)insuch
circumstancestoinferthatsuchdocumentwouldbeadversetothe
interestsofthatParty,althoughinpracticeitmaybedifficultto
knowwhatinferencetodraw.Additionally,manyjurisdictionshavea
supportiveregimebywhichtheirnationalcourtsareempoweredto
supportordersofarbitrators.Forexample,pursuanttosection42of
theEnglishArbitrationAct1996,acourtmaymakeanorder
requiringapartytocomplywithanordermadebythetribunal
section26oftheSwedishArbitrationAct1999providesthatacourt
applicationmaybemadetoorderapartyorpersontoproducea
documentasevidenceorwhereapartywishesawitnessoran
experttotestifyunderoathand1050oftheGermanCodeofCivil
Procedurealsoprovidesthatthecourtmayassistarbitratorsby
makingsuchorders.
Theextenttowhichconceptsofprivilege(seeabove)affect
disclosureobligationsvaries.Thisisanareawherethemain
institutionalrules(ICC,UNCITRALandLCIA)providenoguidance,
whichcontributestothelackofauniformapproachtoprivilegein
internationalarbitration.Theapproachtakenbymanyarbitratorsis
toanalysetheprivilegeissueonacasebycasebasis,takinginto
accountthecircumstancesofthecasebeforedecidingwhetherto
requiredisclosureofadocumentoverwhichprivilegehasbeen
asserted.Article19(2)oftheUNCITRALModelLawstates
page
"241" thatintheabsenceofagreementbytheparties:[The]
tribunalmay,subjecttotheprovisionsofthisLaw,conductthe
arbitrationinsuchmannerasitconsidersappropriate.Thepower
conferreduponthearbitraltribunalincludesthepowertodetermine
theadmissibility,relevance,materialityandweightofanyevidence.
TheIBARulesaddressprivilegebyrequiringarbitrators,upon
requestofapartyoroftheirownvolition,toexcludefromevidence
orproductionanydocumentorstatementwhichisthesubjectofa
claimforprivilegeorotherlegalimpedimentunderthelegalor
ethicalrulesdeterminedbythearbitratorstobeapplicable(Article
9(2)).TherulesoftheAmericanArbitrationAssociationareanother
setofrulesthataddressprivilege,providingthatarbitratorsareto
takeintoaccounttheapplicablerulesoflegalprivilege(e.g.,
confidentialityofcommunicationsbetweenalawyerandclient).(20)
[C].ExchangeofWitnessStatements

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Typicalinternationalarbitrationprocedureregardingwitnessesof
factagainrepresentsacompromisebetweenthecommonlawand
civillaw.However,themostcommonlyadoptedprocedureinthis
areaismorecloselyalignedtocommonlawexpectationsthan
thoseofthecivillaw.
Asindicatedearlierinthischapter,thereexistsatensionbetween
thecommonlawandcivillawtraditionsregardingwhomaybe
calledaswitnessesoffact.Althoughcivillawprinciplesonthis
pointareoccasionallyapplied,thegeneralapproachininternational
arbitrationisthatanypersonmaybeawitness,includingthe
parties'ownofficersandemployees.Forexample,Article4(2)ofthe
IBARulesstates:
Anypersonmaypresentevidenceasawitness,
includingaPartyoraParty'sofficer,employeeor
otherrepresentative.
Article20.7oftheLCIARulesistothesameeffect.NeithertheICC
rulesnortheUNCITRALArbitrationRulesspecificallyaddressthe
issue,butintheabsenceofanyprohibition,inpracticethereisno
restrictiononwhomaybecalledasawitness.Article4oftheIBA
RulesontheTakingofEvidenceprovideguidanceontheuseof
factualwitnessevidenceinaninternationalarbitration.Article4(2)
statesthat:anypersonmaypresentevidenceasawitness,
includingaPartyoraParty'sofficer,employeeorother
representative.Wherepartiesarepermittedtocallpotentially
partisanwitnesses,theopposingpartywillhavetherighttocross
examinewitnessesonmattersofcredibility.
Asanalternative,partiesmaydevelopandadoptamorehybrid
approachtowitnesses,suchaswasusedintheIranUSClaims
Tribunal.There,interestedparties,describedaspartywitnesses',
wereentitledtosubmitwitnessstatementsandgiveinformationto
thetribunalsubjecttocrossexamination,butwerenotstrictly
treatedaswitnessesgivingevidenceandtheirevidencewas
affordedlessweight.
page"242"
Itisalsonowcommonforcounseltointerviewpotentialwitnesses
aboutfactsrelevanttoproceedings,andforthepartiestoexchange
witnessstatementssometimebeforethehearing(seeChapter12).
[D].ExchangeofExpertReports
Separatelyfromtheevidencegivenbywitnessesoffact,arbitration
proceedingsfrequentlyinvolveopinionevidencegivenbyexperts.
Expertwitnessesdonothavefirsthandexperienceofthefactsor
issuesinthecase,butprovidetheirexpertopinionsonissuesinthe
casebasedonthefacts.Againthereisadivergenceinpracticeand
expectationsregardingexpertsbetweencommonlawandcivillaw.
Incommonlawjurisdictions,partiesappointtheirownexperts.In
civillawjurisdictions,expertsareappointedbythecourtorother
tribunal.
Theroleofexpertsininternationalarbitrationvaries.Most
establishedarbitrationrulesprovideforexpertstobeutilisedin
accordancewitheitherorbothtraditions.Forexample,Article25(3)
oftheICCRulespermitsthetribunaltohearexpertsappointedby
thepartiesandArticle25(4)permitsthetribunalitselftoappointone
ormoreexperts,definetheirtermsofreferenceandreceivetheir
reports.Similarly,Article5oftheIBARulescontemplatesparty
appointedexpertsandArticle6,tribunalappointedexperts.Article
21oftheLCIARulesspecificallypermitsarbitratorappointed
experts.PartyappointedexpertsarenotprohibitedbytheLCIA
RulestheyarecontemplatedbyArticle20(7),andarefrequently
usedinpracticeinLCIAarbitrations.
Insomearbitrations,theremaybeastageofexpertconclaves,
wheretheexpertsappointedbythepartiesand/orthetribunalmeet
togetherwiththeaimofagreeingtechnicalissuessoastolimit
remainingissuesindispute.Article5(4)oftheIBARulesexpressly
providesforsuchaprocess:
Itisdesirablethatindependentexpertsshould
discusstheirviewswitheachotherbeforepreparing
theirreports,astheyshouldeventuallyagreeabout
mostthingsiftheyaretrulyindependent.The
tribunalmustensurethatitisclearwhetherornot
agreementsbetweenexpertsbindtheparties.(21)
Whereexpertsareappointedbytheparties,theirexpertreportsare
normallyfiledalongwiththerelevantparty'switnessstatementsand
theyaresubjecttocrossexamination.Theiraimistolend
credibilitytotheparties'casebythesupportofindependentexpert
opinions.Article5(2)oftheIBARulesprovidesguidanceonthe
contentsofanexpertreport.
SeeChapter12forfurtherinformationontheuseofexperts.
page"243"
[E].ExchangeofSubmissions

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Followingthecivillawtradition,theprincipalformofsubmissionsby
partiesinaninternationalarbitrationiswrittensubmissions(also
calledstatements,memorialsorbriefs).Ifahearingisheld,oral
submissionsandargumentsarekepttoaminimum,replaced
insteadbywrittensubmissions.Typically,narrativestylewritten
submissionsaredeliveredtothearbitrator(s)andtheopponentparty
atleastaweekbeforethehearing,sometimeslonger.Theremaybe
morethanoneroundofsubmissions.Serviceisnormallysequential
ratherthaninparallel.Thepracticeofexchangingwritten
submissions,whichcanbereadbythepartiesandthetribunalin
advanceoftheoralhearing,supportsshorteroralopenings,which,
asapracticalmatter,reducesthelengthandcostofthe
proceedings,andthereforethedisruptiontotheparties'and
arbitrators'othercommitments.
[F].Hearings
Arbitralrulesallowfordisputestobedecidedondocumentsalone.
Generally,however,partiesaregiventherighttoinsistupona
hearing,andinternationalarbitrationproceedingsinvariablyinvolve
oneormorehearings.(22)Themannerofconductingahearing,like
anyotheraspectofarbitrationprocedure,isamatterfortheparties
and/orthearbitrator(s).Hearingsmaybesplit,forexample,between
quantumandliability.Thisisrelativelycommoninconstruction
disputes,wheredeterminingquantumisalargeandcostlyexercise,
particularlyifquantificationonanumberofalternatecasesis
requiredbeforeliabilityisknown.(23)Thegoverningfactorin
determiningthenumber,lengthandcontentofhearingsinan
arbitrationtendstobeefficiencytheaimbeingtoorganisethe
requiredhearingstopromoteefficiencyforallthepeopleconcerned,
aswellastheprocessitself.(24)Thismaymean,forexample,
organisinghearingsonthebasisofissuessoasmostefficientlyto
utilisetheavailabilityandinvolvementofwitnessesandexperts
concernedwithonlysomeoftheissuesindispute.Tribunalswill
sometimesordersplithearings,withcertainwitnessesorissues
beingheardatonetimeandotherwitnessesorissuesbeingheard
subsequently.Forexample,oneweekofhearingsmightbe
conductedinFebruary(oncontractformationandnegotiation)and
anotherinMay(oncontractperformanceand/ordamages).This
approachsometimesmakessensefromacasemanagement
perspective(e.g.,hearingexpertwitnessesafterhearingfact
witnessesmaybeverysensible).Nonetheless,itmoreoftenentails
adegreeofinefficiencyandaddedcost(becausetheentire
page"244" infrastructureforthehearingmustbereconstructed)
andtribunalsarethereforeoftenreluctanttoordersplithearings.
Theremay,however,becircumstanceswherethecalendarsofthe
arbitrators,counselandwitnessesallownoalternative.(25)
SeeChapter12formoredetailontheconductofhearingsin
arbitrationproceedings.
[G].ClosingSubmissions
Closingsubmissionsaretypicallyorderedtobeservedafterthe
closeofthehearingwithinatimeframeagreedbetweentheparties
orsetbythearbitrator(s).Thetimeframevariesfromafewdaysup
to,moretypically,afewweeks.Closingsubmissionsarenot
intendedtoraisenewarguments,buttosummarisethearguments
putinprevioussubmissionsandatthehearing.
11.06.AdditionalIssues
[A].PreliminaryIssues
Consistentwiththeirendeavourstoachieveefficiencyin
internationalconstructionarbitration,partiesmaywishtoconsider
whetherthereareanyissuesindisputebetweenthepartieswhich
maybesuitablefortreatmentaspreliminaryissues,tobe
determinedaheadofotherissuesinthecase.Normally,anissue
willbesuitableforpreliminarydeterminationonlyifitsresolutionhas
thepotentialtodisposeofsomeorallofthecase.Otherwise,
unlessstrategicallybeneficial,thefracturingofacaseinthiswayis
generallyinadvisableasitwillcausedelayandadditionalcost.
Thetypesofissueswhichtypicallylendthemselvestopreliminary
determinationincludewhetherthepartiesareboundbythe
arbitrationagreement,whetherthetribunalhasjurisdictiontohear
thedispute,whatistheapplicablelawofacontractoradispute,
whetheranactionhasbeenbroughtwithinapplicabletime
limitationsor,whetheraconditionprecedenthasbeensatisfied.
However,eventhesequestionsarenotalwaysappropriatefor
preliminarydetermination.Forexample,sometimesitismore
efficienttohearquestionsofjurisdictionatthesametimeas
substantivematterswhereadetailedunderstandingofthe
substantivemattersisrequiredinordertobeabletodetermine
whetherthearbitrator(s)havetherelevantjurisdiction,orasis
oftenthecaseinconstructionarbitrationswherethetribunal's
jurisdictionischallengedinrelationtosome,butnotall,ofthe
claimsreferredtoarbitration.
page"245"
[B].SecurityforCosts

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Anorderforsecurityforcostsaffordsasuccessfulrespondent
protectionagainstthecircumstancesofbeingawardedthecosts
incurredinrunningitsdefence,wheretheclaimantdoesnothave
thefinancestopaysuchcosts.Theorderrequirestheclaimantto
providesecurityfortherespondent'santicipatedcosts.Wherea
claimantfailstoobservesuchanorder,itsclaimswillusuallybe
stayed.
Securityforcostsordersarehistoricallyviewedascommonlaw
(outsideoftheUnitedStates)creatures,particularlyduetothe
acceptancebycontinentalEuropeoftheHagueConventionson
CivilProcedure1905and1954,whichprohibitsecurityforcosts
beingorderedinrelationtonationalsofsignatorystates.
Thearbitralinstitutionshavedifferingattitudestowardsordering
securityforcosts,rangingfromexpressprovisionofsuchapower
toapurposiveinterpretationoftherules.ForexampletheLCIA
Rulesspecificallyprovidethatthearbitraltribunalshallhavethe
powertoorderapartytoprovidesecurityforcosts.(26)Pursuantto
theICCRules,thearbitraltribunalhasabroadpowertoorderany
interimorconservatorymeasure.(27)Besidestheseprovisions,
thereisnofurtherguidanceon,forexample,theprocedurebywhich
atribunalshouldenforceanorderforsecurityforcosts.
Wherearbitraltribunalshavelimitedjurisdictiontoordersecurityfor
costs,partiesseekingsuchanordermayberequiredtoapplyto
nationalcourts.
However,therehasbeenashiftintheattitudestakenbythecourts
withregardtointerveningininternationalarbitrations.IntheEnglish
caseofBankMellat,(28)GoffLJheldthatwherepartiesmerely
choosetoarbitrateinEnglandasamatterofconvenience,and
thereisnomoresignificantconnectiontoEngland,itwouldnotbe
appropriatefortheEnglishcourttoorderaforeignclaimantin
arbitrationproceedingstoprovidesecurityforcosts,eventhoughit
hadpowertodoso.
ThispositionwasrevisedbythecaseofKenRen,(29)inwhichthe
HouseofLordsheldthattheEnglishcourtcouldorderaforeign
claimantinarbitrationproceedingstoprovidesecurityforcosts,
evenwherethearbitrationhasnoconnectionwithEnglandexcept
forthefactthatitisthechosenseat.ItwasheldthatanEnglish
courtcouldsupportanICCarbitrationinEnglandthroughitsability
tograntanorderforsecurityforcosts,althoughsuchanorder
shouldbemadeonlyinexceptionalcircumstances.
KenRenmetwithwidespreaddisapprovalinthearbitration
community,largelybecauseofthedamageitwasperceivedtohave
donetoLondonasaseatforinternationalcommercialarbitration.In
response,whentheEnglishArbitrationAct1996wasenactedthe
followingyear,itexpresslyestablishedthatitisthearbitraltribunal,
notthecourts,thathaspowertoordersecurityforcostsinan
internationalarbitration,unlessthepartiesagreeotherwise.(30)This
remainsthepositioninEngland.Section44oftheEnglish
ArbitrationAct1996givesthecourtthepowertograntan
page
"246" interiminjunctionbutnoprovisionismadeforanorderfor
securityforcosts).However,ifapartytoanarbitrationwishesto
challengethearbitratorsoranawardbyanapplicationorappealto
thecourt,thenthecourtmayrequirethatpartytoprovidesecurity
forthecostsoftheapplicationorappeal.(31)
[C].InterimMeasures
Interimmeasures(alsoknownaspreservationordersor
conservationorders)aremadeinordertoprotectparties'rights
pendingthefinalsettlementofthedispute.Theyareinterim
measurestopreventapartyfromincurringanydisadvantageduring
theperiodfromthestartofthearbitralproceedingstothe
implementationoftheaward.Theseordersprotecttheparties'
interestsuntiltheawardisrecognisedorenforced.Itshould,
however,benotedthat(unlikemostcourtordersofthisnature)the
jurisdictionofthearbitraltribunalextendsonlytothepartiestothe
agreementthetribunalhasnopowertobindthirdpartiesorto
compelthem,directlyorindirectly,tocomplywithanydirection,
awardororderitmaymake.
Uponarequestforsuchmeasures,thetribunalwillinitiallyassess
whetherithasjurisdictiontograntthereliefbyexaminingthe
parties'agreement.Thepowermaybeexpresslyconferredinthe
parties'agreementtoarbitrateormaybecontainedininstitutional
rulesincorporatedintothatagreement.Forinstance,thepowerto
grantinterimorconservatorymeasuresisgiventotribunalsbythe
ICCRules,(32)theLCIARules (33)andtheUNCITRALArbitration
Rules,(34)unlessthepartieshaveagreedotherwise.
However,thearbitrators'powertograntinterimreliefisalways
subjecttothemandatorylawsofthecountryinwhichthearbitration
istakingplace.Inaddition,ageneralpowercontainedininstitutional
rulesmayberestrictedbylimitationscontainedintheparties'
agreement.Asaresult,atribunalfacedwithanapplicationfor
interimreliefwillhavetolookattherelevantarbitrationrulesandthe
applicablelaw,aswellastotheagreementtoarbitrate,inorderto
determinewhetherinfactithasthenecessaryjurisdictiontogrant
theorderrequested.
Unfortunatelythereisalackofuniformguidanceastothetypeof
reliefavailableinrelationtothesemeasures.Underinternational

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arbitrationrulesthereislittleornospecificdirection.Accordingly,
arbitratorscaneitherusetherulesavailableunderthelaw
applicabletothearbitration,orsettletheissuewithoutmakingany
referencetotheapplicablelaw.(35)Thelatteristhemorecommon
approach,inwhichthearbitratorsevaluatethefactsdirectlyto
maketheirdecisiononwhetherornottogranttherelief
page
"247" sought.Urgencyisaprerequisitefortheorderingof
conservatorymeasures,inthatsuchmeasureswillnotbegranted
wherenoirreparabledamagewillbecausedtothepropertyorthe
rightsofthepartiesbywaitingforthefinalresolutionofthedispute.
Theenforcementofsuchordersisthroughtheissuingofreminders
bythetribunalwhereadecisionisdisobeyed.Ifsuchdisobedience
persists,thetribunalisgenerallyempoweredtotakeafailureto
obeyanorderforinterimmeasuresintoaccountinitsfinaldecision,
particularlyinanyassessmentofdamages'.(36)Despitethis,itis
generallyconsideredthatatribunalunlikeacourtdoesnothave
powertomakeadverseordersindefaultofcompliance,thoughin
practicefailuretocomplyisunlikelytoendearthepartyindefaultto
thetribunal,ortoresultinanyfavoursbeinggrantedtoit.
Inadditiontothepowersconferredontribunals,nationalcourts
generallyretainresidualauthority,bothbeforeandafterthetribunal
isconstituted,andintheirsupportingrole.However,itismorelikely
thatthearbitraltribunalwillexerciseitspowerinsuch
circumstanceswhereexpresslyprovidedforintheinternational
arbitrationrules.Nevertheless,thearbitralprocessisoften
consideredillsuitedtodealingwithconservatoryreliefbecause,for
example,itmaytakeweeksormonthstoappointatribunal,or
wherethereisaneedtomakeanorderbindingonathirdparty
(e.g.,banksinthecontextofafreezingorder)asthetribunalhasno
jurisdictiontobindanyoneotherthanthepartiestothearbitration
agreement.
Infact,thewholeareaoftheavailabilityofinterimreliefin
arbitrationshasbeenunderintensiveandoftenheatedreviewby
WorkingGroupII(Arbitration),agroupestablishedbyUNCITRAL
toconsidertheworkingoftheModelLawinthisareaandtomake
recommendationsforchangestoit.Theresultisagreatlyexpanded
ArticleoftheUNCITRALModelLaw(Article17)dealingwithinterim
measures,whichconfirmsandsetsoutinmoredetailatribunal's
powerstomakesuchorderspossiblyevenincludingthepowerto
makeantisuitorders.Unlikethepreviousversion,thecurrent
Article17spellsouttheelementsthatapartymustdemonstrateto
thetribunal'ssatisfactionbeforeobtaininganorderforinterimrelief.
Thisincludessatisfyingthetribunalthattherequestingpartyhasa
reasonablechanceofsucceedingonthemerits,thatdamages
wouldnotbeanadequateremedyandthatanyharmcausedtothe
subjectpartybymakingtheorderwouldbesubstantiallyoutweighed
bytheharmcausedtotherequestingpartyiftheorderwasnot
made.AllofthisisveryfamiliarfromanEnglishperspective,astoo
aretherequirementsthattherequestingpartynotifythetribunalof
anychangeincircumstancesonwhichitsapplicationwasmade,
andthattherequestingpartyberesponsibleforanyharmcausedto
thesubjectpartyifthetribunalsubsequentlyfindsthattheorder
shouldnothavebeenmade.Allofthiswas(relatively)
uncontroversial.
Bywayofcontrast,amostheatedissuewastheavailabilityofex
parteinterimrelief.Inmostcountries,someformofurgentreliefis
availablefromthecourtsontheapplicationofonepartyinthe
absenceoftheother.InEngland,forinstance,injunctionsto
preventspecifiedactionsareroutinelyavailablefromajudgeonthe
page"248" applicationofonepartywithoutnoticetotheother
party.Theadvantageofthisprocessisthatnoticeneedbegivento
theotherpartyonlyafterobtainingtheorderbywhichtimeitis(in
theory)toolateforthatpartytodotheactprohibitedbythecourt.
Attheveryleast,anyattempttodosowillnormallyattract
potentiallyseveresanctionsfromthecourtforbreachofitsorder.
Thereareanumberofissuesaboutextendingthisprocedureinto
regularcommercialarbitrations.Strippedoftherhetoric,thesecan
bereducedintotwodistinctclassesofobjections.Thefirstispurely
philosophical,thesecondpractical.
Theprincipalphilosophicalobjectionisthatarbitrationisa
consensualprocessanditisfundamentallywronginprinciplefor
onepartytohaveaccesstothearbitratoronaprivatebasis.
Indeed,ifthisweretotakeplaceinothercircumstancesitwouldin
allprobabilityamounttomisconduct,whichwouldformthebasis
eitherforachallengetothevalidityoftheprocessorawardinthe
courtsoftheplaceofthearbitration,orasabasisforresisting
enforcementofanawardatasubsequentstage.
Thepracticalobjectionsareperhapsmorecompelling.Tostartwith,
themostcommonpurposeforapplyingtoacourtforaninjunction
particularlyanexparteinjunctionisthattherespondentcannotbe
trustedandneedstoberestrainedfromsubvertingthedispute
resolutionprocess.However,whileitishelpfulifthecourtmaking
theorderhaspersonaljurisdictionovertherespondentandcan
thereforefineorimprisonit(oritsofficers,ifacompany)iftheorder
isbreached,therealbenefitofaninjunctionisthatthirdpartieswill
alsorecognisetheeffectoftheinjunctionandcomplywithits
terms.Thus,acourtorderpreventingthedispositionofthe
respondent'sfundsshouldberespectedbytherespondentbutwill
berespectedbyanybankorotherfinancialinstitutionwithinthe
court'sjurisdictiongivennoticeoftheorder.Similarly,anorder
preventingtheremovalofanaircraftorshipfromthejurisdictionwill

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berespectedbythoseauthoritiesresponsibleforprovidingairtraffic
controlorpilots,andaircraftandportservices.Inotherwords,the
realbenefitofaninjunctionliesnotinitsdirecteffectontheperson
whoisthesubjectoftheorder,butinitsindirecteffectviathird
partieswhocontrolthemovementoftheitemwhichitissoughtto
restrain.Noarbitrationordercanpossiblyhavethiseffectwithout
enforcementbyacourtinwhichcase,apartywouldbebetter
servedbystartingincourt.
Anotherpowerfulconcernisinreproducinginthecontextofan
arbitrationthechecksandbalancesontheprocessofobtainingex
parteawardswhichhavebeenbuiltintotheproceduresforobtaining
them.TakingtheEnglishprocessasanexampleagain,anexparte
injunctioncanbeobtainedonlyifsupportedbysworntestimonyin
respectofalltherelevantfacts,includingnotonlythefactsthat
supporttheapplication,butallthefactsrelevanttowhetherthe
applicationshouldbemade.Failurebytheapplicanttogivefulland
frankdisclosureoftherelevantcircumstancesisagroundfor
immediateliftingoftheinjunction,andpossiblyforsanctionsonthe
applicant.
Theseriousnessoftheprocessisalsosupportedbythe
requirementthattheapplicantmustinallcircumstancesgivean
undertakingtothecourttomakegoodanydamagestherespondent
(orothers)sufferasaresultoftheapplicantobtaininganinjunction
incircumstanceswhereitwasnotentitledto.Thisundertakingmay,
incertaincases,havetobebackedupbytheprovisionoftangible
security.Moreover,notonlyisaninjunctiononlyeverobtainedfora
relativelyshortperiodbeforefurther
page"249" reviewbya
judge(hearingboththeapplicantandtherespondent),butitis
alwaysopentotherespondenttogobacktothejudgewhomade
theorder(oranotherjudge)beforethattimetoexplainwhythe
injunctionshouldimmediatelybelifted.
Thepracticalobjectionstoarbitratorsexercisingthesamepowers
tograntinjunctionsasjudgescanthereforebesummarisedas
follows.First,thepowersareinprincipleineffectivebecausean
award(evenifitcanbeobtainedquickly,bearinginmindtheneed
toestablishthetribunal)hasnocoerciveeffectonthethirdparties,
onwhoseassistanceitisinpracticenormallysodependent,(37)
absentenforcementbyacourt.Second,grantingsuchpowers
(eveniflargelyineffective)toarbitrators,withoutthecomprehensive
arrayofchecksandbalancesbuiltupoveryearsbynationalcourts,
isextremelyunsatisfactory,evenmoresowhenitisconsidered
thatanygeneralextensionofarbitrators'powerswillbecapableof
beingexercisednotonlybyretiredjudgesandotherexperienced
internationalarbitratorsbutbyanyarbitrator,nomatterhow
(in)experienced.Finally,theremustbelegitimatedoubtsover
arbitrators'ability(orevenwillingness)tobeavailableatveryshort
noticetohearargumentsfromtherespondentastowhyanyorder
madeshouldbelifted.
Despitethesepowerfulobjections,theUNCITRALModelLawwas
amendedtoallowarbitratorstoissuesomeformofexparteorders.
TheModelLawincorporatedmanyofthesuggestionsmadebythe
WorkingGroupatits43rdsessioninOctober2005.Someofthe
keyelementsfromtheModelLaw(asamendedin2006)areas
follows:
Unlessotherwiseagreedbytheparties,apartymay,without
noticetoanyotherparty,makearequestforaninterimmeasure
togetherwithanapplicationforapreliminaryorderdirectinga
partynottofrustratethepurposeoftheinterimmeasure
requested.(38)
Thearbitraltribunalmaygrantapreliminaryorderprovidedit
considersthatpriordisclosureoftherequestfortheinterim
measuretothepartyagainstwhomitisdirectedrisksfrustrating
thepurposeofthemeasure.
Immediatelyafterthearbitraltribunalhasmadeadeterminationin
respectofanapplicationforapreliminaryorder,thearbitral
tribunalshallgivenoticetoallpartiesoftherequestforthe
interimmeasure,theapplicationforthepreliminaryorder,the
preliminaryorder,ifany,andallothercommunications,including
byindicatingthecontentofanyoralcommunication,betweenany
partyandthearbitraltribunal.(39)
Thefollowingprovisionhasbeenretained:atthesametime,the
arbitraltribunalshallgiveanopportunityforthepartyagainst
whichanypreliminaryorderisdirectedtopresentitscaseatthe
earliestpracticabletime.ThisisbecausetheWorkingGroup
acceptedthattherewasadistinctionbetweentheobligationof
thearbitraltribunaltodecideonthepreliminaryorderas
page
"250" promptlyasrequiredunderthecircumstancesandthe
obligationofthepartyagainstwhomthepreliminaryorderwas
directedtopresentitscaseattheearliestpracticabletime.
Apreliminaryorderwillexpireaftertwentydays,butthearbitral
tribunalmayissueaninterimmeasureadoptingormodifyingthe
preliminaryorderafterthepartyagainstwhomthepreliminary
orderisdirectedhasbeengivennoticeandanopportunityto
presentitscase.
Thearbitraltribunalshallrequiretheapplyingpartytoprovide
securityinconnectionwithsuchpreliminaryorderunlessthe
arbitraltribunalconsidersitinappropriateorunnecessarytodo
so.
Theapplicantshallhaveacontinuingobligation(untiltheparty
againstwhichtheapplicationhasbeenmadehaspresentedits
case)todisclosetothetribunalallcircumstancesrelevanttothe

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grantofapreliminaryorder.
Apreliminaryordershallbebindingontheparties,butshallnot
besubjecttoenforcementbyacourt(unlikeanorderforinterim
measureswhichistoberecognisedandenforcedbynational
courtsirrespectiveofthecountryinwhichitwasissued,and
subjecttotheprovisionsofArticle17(I)(40)unlessotherwise
providedforbythearbitraltribunal(41)).
OverallthechangesmadeintherevisedUNCITRALModelLaware
inmanywaysradicalandofferclaimantsnewopportunitiesto
advancetheircases.However,thechangesareunlikelygreatlyto
affecttheconstructionindustry,eitherimmediatelyoratall.Itis
envisagedthatinthosecountrieswherethelegislativeprocessis
lengthy,itisunlikelythatachangeofthisrelativelyminor(butat
thesametimecontroversial)naturewillattractmuchparliamentary
time.Infact,therehadbeennocaselawreportedonsection2of
ChapterIVAoftheUNCITRALModelLawwhichdealswiththe
applicationfor,andconditionsforthegrantingof,preliminaryorders
asatthetimeofthe2012DigestofCaseLawontheModelLawon
InternationalCommercialArbitration.(42)
Perhapsasimportantly,therealityisthatitisunusualfor
applicationsforinjunctionstobemadeinconstructioncases,and
thosethataremadearenormallybesthandledbythecourts,asin
theChannelTunnelcase,(43)whereEurotunnelsoughtaninjunction
preventingitscontractorfromstoppingworkonanelementofthe
tunnelworkswhichwascriticalforthetimelycompletionofthe
project.Thiscaseprovidesagoodexampleofthedifficulties
inherentinthesesortsofapplications.Inadditiontothebasicissue
ofwhethertheEnglishcourtshadjurisdictionunderthethencurrent
legislationtomakeanysuchorder(nowresolved),therewere
seriousquestionsaboutwhetheritwasappropriatetomakeanorder
effectivelycompellingthecontractorto
page"251" continueits
work.Thejudgeatfirstinstanceindicatedhewaspreparedtomake
suchanorder(inresponsetowhichthecontractoragreedtocarry
onworking),buttheSupremeCourt(followingHouseofLords)the
ultimateCourtofAppealfinallydeterminedthatitwas
inappropriatetomakesuchanorderonatemporarybasis.Thiswas
because,asaresultofthetimetakentogofirsttoadispute
resolutionboardandthentoarbitration,makingsuchanorderwould
havetheeffectoffinallydeterminingthequestion,whichthecourt
feltitshouldnotbedoinginthelightoftheparties'agreementto
arbitrate.
[D].SiteVisits
Constructionarbitrationslendthemselvesparticularlywelltosite
visits,whichcanbeaneffectivewayofengagingthetribunalwith
thesubjectmatterofaparticulardispute.TheIBARulesexplicitly
authorisethisprocedure:
SubjecttotheprovisionsofArticle9.2,theArbitral
Tribunalmay,attherequestofaPartyoronitsown
motion,inspectorrequiretheinspectionbyaTribunal
AppointedExpertoraPartyAppointedExpertofany
site,property,machineryoranyothergoods,
samples,systems,processesorDocuments,asit
deemsappropriate.TheArbitralTribunalshall,in
consultationwiththeParties,determinethetimingand
arrangementfortheinspection.ThePartiesandtheir
representativesshallhavetherighttoattendanysuch
inspection.(44)
TheLCIARulesalsoexplicitlycontemplatesitevisits:
Unlessthepartiesatanytimeagreeotherwisein
writing,theArbitralTribunalshallhavethepower,on
theapplicationofanypartyorofitsownmotion,butin
eithercaseonlyaftergivingthepartiesareasonable
opportunitytostatetheirviews:toorderanyparty
tomakeanyproperty,siteorthingunderitscontrol
andrelatingtothesubjectmatterofthearbitration
availableforinspectionbytheArbitralTribunal,any
otherparty,itsexpertoranyexperttotheArbitral
Tribunal.(45)
Giventhebroaddiscretiongiventhepartiesandthetribunalin
organisingthearbitrationprocess,suchaprocedureshouldalsobe
permissibleevenunderarbitrationrulesthatdonotexplicitlyreferto
sitevisits.
11.07.AdministrativeIssues
Therearealsoanumberofpracticaloradministrativeissuesthat
mustbegivenconsideration,includingtheappropriatevenueforthe
hearing,provisionoftranscriptionandtranslationservices.These
areaddressedinmoredetailinChapter12.

Although,onoccasions,partiesmayagreetoamendcertain
proceduralrulesduringthecourseofadispute.
2
Forexample,Art.22(4)ICCRules(2012)states:Inallcases,the

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arbitraltribunalshallactfairlyandimpartiallyandensurethateach
partyhasareasonableopportunitytopresentitscase.
3
Asdiscussedbelow,theparties'choiceofarbitrationseat(for
example,EnglandandWalesorParis)willalmostalwaysattract
somemandatoryproceduralrequirementsthatapplyasmatterof
lawtoanyarbitrationsseatedinthatjurisdiction.
4
Acommonamendmentistoprovidethepartieswithadditional
scopetochoosethearbitrators,withtheinstitutionappointingonly
wheretheparties(oroneofthem)havefailedtodosowithinthe
agreedperiodoftime.Asanoteofwarning,amendingcertain
fundamentalfeaturesofinstitutionalrulesmaynotbepermittedby
theinstitutionwhocouldrefusetoadministeranyresulting
arbitration.ForexampletheICCwilltypicallyrefusetoadminister
anyarbitrationundertheICCRuleswhichdoesnotinclude
productionofaTermsofReferencedocumentand/orallowforthe
reviewoftheawardbytheICCCourt.TheInternationalCommercial
ArbitrationCourtattheRussianChamberofCommerceand
Industry(ICAC)doesnotallowfortheseatofarbitrationnottobe
Moscow,althoughitispermissibleforhearingstotakeplace
elsewhere.Materialamendmentswillunderminethevalueofusing
institutionalrules,whichliesinpartintheconfidencethatsuchtried
andtestedruleswillassistenforcementoftheultimateaward.
5
Section34oftheArbitrationAct1996(UK)providesforavery
widestatutorydiscretiontobevestedinthearbitratorinrelationto
proceduralandevidentialmattersforarbitrationsseatedinEngland,
WalesorNorthernIreland.
6
ForexampleArt.19ICCRules(2012)states:Theproceedings
beforethearbitraltribunalshallbegovernedbytheRules,and
wheretheRulesaresilent,byanyruleswhichthepartiesor,failing
them,thearbitraltribunalmaysettleon,whetherornotreferenceis
therebymadetotherulesofprocedureofanationallawtobe
appliedtothearbitration.Art.1(5)IBARulesisofsimilareffect
regardingproceduregoverningthetakingofevidence.
7
AnothersourcethatisreferredtoonoccasionistheFinalReport
onConstructionIndustryArbitrationsproducedbytheICC,[2001]
ICLR644.
8
Subjecttolegalprivilegessuchaslawyerclient,legaladviceor
litigationprivilegewhichprotectthedocumentsagainstdisclosure.
9
Eitherthesolepurposeorthedominantpurpose,dependingon
thejurisdiction.
10
ThreeRiversDistrictCouncilandOrsv.BankofEngland[2004]
UKHL48.
11
InGermany,arbitratorsareprohibitedfromorderingdisclosure
andthepartiesmustseekassistancefromthenationalcourts.The
courtmayordertheproductionofdocumentsinthepossessionof
theadversaryorevenathirdparty,ifoneofthepartieshasreferred
tosuchdocumentsinitspleadings.
12
ThisdoesnotapplyinthecaseofinhouselawyersinFrance,
hencecommunicationsbetweenacompany'slawyerandother
membersofthecompanyarenotprivileged.Thesameistrueinthe
Netherlands.InAkzoNobelChemicalsLtdandAkcrosChemicals
Ltdv.Commission(CaseC550/07P)[2010]theECJconfirmed
thatinhouselawyersdonothaveaclaimtolegalprofessional
privilegeincompetitioninvestigations.TheECJreachedthis
conclusiononthebasisthatinhouselawyersarenotsufficiently
independent,beingtoocloselytiedeconomicallytotheiremployers,
andcannotignoretheiremployers'commercialstrategies.
Accordingly,theECJmaintainedthatinhouselawyersarelessable
thanexternallawyerstodealwithconflictsbetweentheir
professionalobligationsandtheaimsoftheirclient.
13
Paulssonetal.,InternationalChamberofCommerceArbitration,
427429.
14
See,e.g.,Art.4(3)IBARulesandArt.20(6)LCIARules.
15
SeeLucyReed&JonathanSutcliffe,TheAmericanizationof
InternationalArbitration,16Mealey'sIntl.Arb.Rept.37(April2001).
16
ItissuggestedthattheStatementofCaseandsupporting
evidenceshouldbepreparedatleastindraftwellinadvanceofa
claimantcommencingarbitration.Thisispracticallysensible
becauseitalleviatesthepressureontheclaimanttoperformtoa
timetablethatisnotofitsownchoosing(InternationalCommercial
Arbitration:Coulddobetter,RichardFernyhoughQC,paperno.
D139publishedbytheSocietyofConstructionLaw,September
2012).
17
ICCConstructionArbitrationReport,para.21.
18
Ibid.,para.52.
19
IBARulesontheTakingofEvidence,29May2010.
20
TheAAARulesdonotrequirecompliancewithlegalrulesof
evidence,exceptthattheydirectthearbitrator(s)toconsiderany
applicableprinciplesoflegalprivilege(R31,AAARules).
21
Ibid.,para.61.
22
Forexample,Art.25(6)ICCRulesprovidesthatthearbitral
tribunalmaydecidethecaseofdocumentsalone,unlessanyparty
requestsahearing.Art.19LCIARulesalsocontemplates
documentsonlyarbitrations.TheUNCITRALModelLawprovides
that,unlessthepartieshaveagreedotherwise,thetribunalcan
decidewhethertoholdahearingortoconductadocumentsonly
arbitration(Art.24(1)).
23
ICCConstructionArbitrationReport,para.49providesguidance
onwhethercasesshouldbesplitinthisway.
24
Section1(a)ArbitrationAct1996statesthattheobjectof
arbitrationistoobtainthefairresolutionofdisputesbyanimpartial
tribunalwithoutunnecessarydelayorexpense.
25
ProceduresinInternationalArbitrationF.ProceduralConduct
ofInternationalArbitralProceedingsinGaryB.Born,International

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CommercialArbitration17821873(KluwerL.Intl.2009).
26
Article25.2LCIARules.
27
Article28ICCRules.
28
BankMellatv.HellenikiTechnikiSA[1984]QB291.
29
SACoppeLavalinNVv.KenRenChemicalsandFertilizersLtd
[1995]1AC38.
30
Section38(3)EnglishArbitrationAct1996:Thetribunalmay
orderaclaimanttoprovidesecurityforthecostsofthearbitration,
aslongastheorderisnotbasedontheclaimant'sresidence
outsidetheUK.Thisissubjecttos.38(2),whichprovidesthatthe
tribunal'spowercanberemovedbyagreementoftheparties.
31
Section70(6)EnglishArbitrationAct1996andseeGaterAssets
Ltdv.NakNaftogazUkrainiy[2008]1AllER(Comm)209paras39
45.
32
Article28ICCRules.
33
Article25LCIARules.
34
Article26UNCITRALRules.
35
JulianLew,CommentaryonInterimandConservatoryMeasures
inICCArbitrationCases,11ICCIntl.CourtArb.Bull.para.21
(2000).
36
SeeFinalaward(1998)incase9593(availableinExtractsfrom
ICCAwardsreferringtoInterimandConservatoryMeasures,11ICC
Intl.CourtArb.Bull.107(2000).
37
Thisisinadditiontothegeneralconcernthatanytemporary
orderofthissortmaynotbetreatedasanawardandtherefore
maynotbeenforceableinternationallypursuanttothetermsofthe
NewYorkConvention.SeeCh.8above.
38
Article17B(a)oftheUNCITRALModelLaw.
39
Article17CoftheUNCITRALModelLaw.
40
Article17(I)oftheUNCITRALModelLawsetsoutthegrounds
forrefusingrecognitionofenforcement.
41
Article17H(1)UNCITRALModelLaw.
42
2012DigestofCaseLawontheModelLawonInternational
CommercialArbitrationfoundat
http://www.uncitral.org/pdf/english/clout/MALdigest2012e.pdf
(accessed10Sep.2013).
43
ChannelTunnelGroupLtdandanotherv.BalfourBeatty
ConstructionLtdandothers[1993]AC334.
44
Article7IBARules.
45
Article22.1(d)LCIARules.

Chapter12:TheConductoftheHearing
12.01.INTRODUCTION
Arbitrationisaconsensualprocess,sowiththeagreementofthe
partiesandofcoursetheacquiescenceofthetribunalthehearing
cantakeessentiallyanyform,providedthatitallowsanopportunity
forthefairconsiderationoftheparties'respectivecontentions.
Considerthefollowingprovisionsofmajorsetsofarbitrationrules:(1)
UNCITRALArbitrationRules:Subjecttothese
Rules,thearbitraltribunalmayconductthearbitration
insuchmannerasitconsidersappropriate,provided
thatthepartiesaretreatedwithequalityandthatatan
appropriatestageoftheproceedingseachpartyis
givenareasonableopportunityofpresentingits
case.(2)

Source
Chapter12:The
ConductoftheHearing
inJaneJenkins,
International
ConstructionArbitration
Law(SecondEdition),
ArbitrationinContext
Series,Volume3
(JaneJenkinsKluwer
LawInternational2013)
pp.253272

ICCRules:Theproceedingsbeforethearbitral
tribunalshallbegovernedbytheRulesand,wherethe
Rulesaresilent,byanyruleswhichthepartiesor,
failingthem,thearbitraltribunalmaysettleon,
whetherornotreferenceistherebymadetotherules
ofprocedureofanationallawtobeappliedtothe
arbitration.(3)
Inallcases,thearbitraltribunalshallactfairlyand
impartiallyandensurethateachpartyhasa
reasonableopportunitytopresentitscase.(4)
LCIARules:Thepartiesmayagreeontheconductof
theirarbitralproceedingsandtheyareencouragedto
doso,consistentwiththeArbitralTribunal'sgeneral
dutiesatalltimes:(i)toactfairlyandimpartiallyas
betweenallparties,givingeachareasonable
opp