RESOLVING CONSTRUCTION DISPUTES IN ASIA
CD: How would you describe the construction dispute landscape in Asia? To what extent are these types of disputes becoming more prevalent in the region?
MacLaughlin: I would describe the construction dispute landscape as changing. We are seeing an increasing number of Singapore International Arbitration Centre (SIAC) arbitrations, particularly those arising from investment by Asian parties in resource and infrastructure projects in Australia. We expect to see disputes referred to adjudication increase over the next few years, as well as NEC3 arbitrations as that form of contract becomes prevalent in the region.
Munaaim: Yes, I agree. The construction dispute landscape in Asia is changing rapidly. We are seeing bigger, more expensive and complex disputes arising, which take much longer to resolve. I believe the reason for this change is simple – construction projects in Asia are growing, due to the continent’s sustained advancement and infrastructure initiatives, and, as a consequence, these kinds of disputes are being generated. Some developing Asian countries like Malaysia and Indonesia are spending huge sums of money on ambitious infrastructure projects that contain huge contractual and delivery risks. The scale and complexity of these projects pose significant engineering challenges which push the boundaries of our technical capabilities; this often means that more risks are being passed to contractors who usually lack the ability to deal with them effectively and efficiently. This breakdown results in delays and cost overruns, which, in turn, if not properly addressed, can escalate into multi-million dollar mega disputes.
Jul-Sep 2016 issue
Hill International (UK) Ltd.