Many factors contribute to construction disputes, especially if the property is based abroad. Most projects take a long time to complete, leading to uncertainties and delays that can result in disagreements. The following factors typically create international construction disputes.
International property ventures usually involve people from many different nationalities with different values and ideas regarding how the project will take form. For example, when building a major pipeline in Kazakhstan, the Kazakhstani investor had Canadian and British partners. The owner’s representatives on the build were Russian, British, French and Canadian. The Greek-Italian contractor employed people from Europe, the Middle East and the Indian Sub-Continent to complete the project. Creating a sense of teamwork and common purpose can be difficult in such circumstances.
Often, property ventures will be delayed and disputes will arise when different parties blame one another for the delay. In international projects, the contractor may have the right to delay the finish date if it overruns, as this is often stipulated in the initial contract. However, owners may feel that this clause detracts from the fact that negligence led to a delay, which can then develop into a legal dispute.
Disputes can occur if certain parties feel that the work was not completed to their standards or specifications. Typically, the specifications at the start of international projects are quite vague. This means that different parties can form conflicting opinions about how the build should appear once it is finalised, which can easily lead to disputes when people are disappointed with the final result.
Resolving Construction Disputes
International construction disputes vary considerably and are therefore handled in many different ways. There are a number of factors to consider when drafting dispute resolution clauses in construction contracts, but it is vital that the parties are aware of the choices available. The following means are used to resolve international construction disputes:
Dispute resolution boards
A dispute resolution board is typically set up when a mid- or long-term contract is signed, and it usually consists of one expert – or a panel of three. The main purpose of the board is to help the parties prevent or deal with any problems or disputes that may arise while the contract is being carried out. Dispute boards are often used in construction cases, but are also used in other areas of law.
Here, the parties involved meet to discuss the dispute and try to resolve it mutually. Negotiation remains one of the most cost-effective, efficient and speedy ways to resolve international disputes – if it is conducted properly. Negotiations should be set up with appropriate approaches, strategies, principles and in some cases the appointment of an independent chairperson can help to improve the process.
During mediation proceedings, a neutral mediator will guide all parties through the resolution process. The mediator does not decide or advise on the merits of the dispute but concentrates on reaching an acceptable resolution.
Mediators are often effective in international construction disputes where cultural differences may be as important as factual and legal differences. Mediation can be a very effective way of engaging the parties in finding a practical solution and the confidentiality of the process allows the parties to retain their business relationships.
Generally mediation is a far quicker and less costly dispute resolution method than litigation or arbitration. However, the success of mediation relies on both parties agreeing to the process and coming to a mutually acceptable solution – and this is not always possible, especially in larger disputes.
This is the process whereby two or more opposing parties enforce or defend a legal right in a court of law. Since the press and public have access to the courts, details of your dispute can be made public. Also, local courts around the world often experience many backlogs, so construction disputes can last many months or years before they are resolved. There may be rights of appeal so first instance decisions may not be final.
Furthermore, some judgements handed down in certain jurisdictions will not