James Bremen, partner in Quinn Emanuel's London office and Chair of the Construction and Engineering Practice, joins John to discuss complexities of construction litigation and arbitration, including litigating alleged breaches, project schedule impacts, termination decisions, multiple parties and jurisdictions, selection of professionals, and importance of record keeping and expert witnesses.
Construction disputes involve thousands of separate issues related to contractual and extra-contractual claims, making the evaluation and analysis by experts crucial.
Coordination and strategic appointment of arbitrators and experts are crucial in presenting a strong case in construction disputes, given the complexity and costs involved.
Deep dives
Complexity of Construction Disputes
Construction disputes are different from other commercial disputes due to their multifaceted nature. Commercial cases often involve a single issue, while construction disputes involve thousands of separate issues related to contractual and extra-contractual claims. Unlike other cases, construction projects span many years and involve numerous breaches of contract, breaches of clauses, and valuation of changes. The complexities arise from variations in the work, defects, and time-related issues, all of which require expert analysis and evaluation.
Common Claims in Construction Disputes
In major construction projects, such as airports or hospitals, various types of claims may arise. Changes to the work, or variations, are often contested as contractors and owners have different interpretations of specifications. Defects in construction contracts refer to non-compliance with specifications, not necessarily physical damage. Time-related claims include delays, disruption, and acceleration issues, which impact critical project schedules. These claims require experts in various fields, such as geotechnical experts, structural engineers, forensic programmers, and legal experts familiar with local laws and contract interpretation.
Termination of Contracts and Arbitration Process
Termination of construction contracts often occurs when disputes become insurmountable before project completion. Either party may terminate the contract due to non-payment, non-performance, or other issues. Termination entitles the owner to recover costs, complete work, and address defects through a new contractor. Arbitration hearings in construction disputes involve addressing numerous threshold issues, including contract interpretation, termination validity, and liability. To manage the vast number of claims, sampling methods may be used for smaller issues, while larger claims are thoroughly examined. A lengthy and comprehensive arbitration process is required due to the magnitude of evidence, including factual witnesses, expert witnesses from various disciplines, and disclosure of internal communications and documents.
Coordination and Challenges in Construction Disputes
Construction disputes involve coordination among various proceedings, such as subsidiary contracts, parent company guarantees, bonds, subcontractor claims, and insolvency proceedings. Parallel proceedings in different jurisdictions may require expertise in local laws and procedures. Coordination and strategic appointment of arbitrators and experts play a crucial role in presenting a strong case. In the realm of dispute resolution, mediation and expert determination are alternative methods to resolve specific issues. However, due to the immense complexity and costs involved, parties often resort to arbitration, where specialized knowledge and a procedural backbone are essential for fair and efficient resolution.
John is joined by James Bremen, Partner in Quinn Emanuel’s London office and Chair of the firm’s Construction and Engineering Practice. They discuss the complexities of construction litigation and arbitration, including the difficulty of litigating hundreds, if not thousands, of alleged breaches or deviations from the original contract, the ripple effect one change can have on a project’s schedule, and the issues a party must consider when deciding whether to terminate a contract. They also discuss the multiple parties and jurisdictions that may be involved in a dispute, the wide variety of experts who often testify, and the importance of selecting attorneys, mediators, arbitrators, and, when possible, judges who are familiar with this practice area, including the language and the specialized contracts involved.