International Construction Arbitration 2026 Edition

Foreword

Construction projects sit at the crossroads of law, engineering, finance, and project management. Their scale, technical complexity, and commercial importance mean that disputes are often unavoidable and, when they arise, are frequently resolved through arbitration.

This handbook brings together a selection of brief, practical notes on construction arbitration drawn from our experience and published by Aceris Law in 2025. It reflects issues we regularly encounter in international construction disputes and the questions most often raised by clients and tribunals in practice.

The handbook is intended as a practical guide for contractors, employers, counsel, in-house legal teams, and arbitrators working in an international context. Each note focuses on a specific, recurring issue and offers concise, practice-oriented guidance informed by arbitral experience, comparative law, and recognised industry standards.

The opening chapter, Managing Construction Disputes: Understanding the Causes, examines why disputes arise so frequently in construction projects. It explains the distinctive features of construction disputes, including technical complexity, the involvement of multiple stakeholders, ongoing contractual performance, and cross-border aspects. The chapter also identifies the most common causes of disputes and outlines practical measures for effective contract administration and dispute prevention.

Understanding Risk Allocation in FIDIC Construction Contracts focuses on how risk is distributed under the principal FIDIC standard forms. It compares the Red, Yellow, and Silver Books and explains how each allocates responsibility for design, site conditions, time, and cost. The chapter also analyses the FIDIC Golden Principles and their role in preserving balanced risk allocation, as well as the function of the Engineer and the Dispute Avoidance and Adjudication Board.

Delay Claims in International Arbitration addresses one of the most frequent and complex categories of construction claims. It explains how delay claims arise, how tribunals analyse responsibility for delay, and how the critical path is identified. The chapter also discusses common methodologies used by experts, the treatment of concurrent delay, and the types of costs that may be recoverable.

Liquidated Damages and Penalty Clauses in International Arbitration examines agreed damages clauses from a comparative perspective. It explains how such clauses are treated under common law and civil law systems, how arbitral tribunals approach enforceability and reduction, and how international instruments such as the UNIDROIT Principles influence arbitral reasoning. It also provides practical tips for the effective drafting of agreed damages clauses.

Errors in the Employer's Requirements under FIDIC Contracts: Legal Implications and Lessons Learned explores how errors in the Employer's Requirements are treated under the FIDIC Yellow and Silver Books. Drawing on arbitral practice, the chapter analyses notice requirements, the role of the experienced contractor standard, and the remedies available when errors occur. It highlights the significantly different risk allocation under the Silver Book and offers guidance on drafting and risk management.

Back-to-Back Clauses in Construction Arbitration explains how key obligations and risks are mirrored between head contracts and subcontracts in multi-tier project structures. It highlights the main drafting pitfalls, including the distinction between pay-if-paid and pay-when-paid mechanisms, and considers how these clauses can affect notices, extensions of time, and downstream liability in arbitration.

NEC Contracts: Dispute Resolution Under NEC3 and NEC4 provides an overview of dispute resolution under the NEC suite of contracts. It explains the collaborative philosophy underpinning NEC, the dispute resolution options available, and the differences between NEC3 and NEC4. Particular attention is given to adjudication, senior representative negotiation, and dispute avoidance boards.

Analysing the Site Visit Model Protocol for International Arbitration reviews the International Bar Association Site Visit Model Protocol and its practical implications. The chapter explains how site visits can be structured, who may participate, how evidence is handled, and how costs and confidentiality are addressed. It highlights the Protocol's role in reducing procedural disputes and improving efficiency in technically complex arbitrations.

AI Construction Arbitrator: Revolutionising the Future of International Arbitration? examines the emergence of artificial intelligence-assisted arbitration, focusing on the AAA ICDR AI Construction Arbitrator initiative. The chapter assesses potential efficiency gains alongside concerns relating to transparency, accountability, enforceability, and human oversight. It places these developments within the broader debate on technology and due process in arbitration.

The handbook concludes with Costs of Construction Arbitration, which provides a practical overview of the main cost drivers in construction arbitration. It explains how costs are structured, why construction arbitrations are often expensive, and what parties and tribunals can do to control time and cost through effective procedural management.

Taken together, these contributions reflect Aceris Law's experience in international construction arbitration and its focus on practical, solution-oriented analysis. This handbook is not intended to be exhaustive. Rather, it aims to provide clear guidance on selected issues that arise repeatedly in practice and to assist readers in navigating the legal and procedural challenges of construction arbitration.

William Kirtley, Nina Jankovic, Aceris Law LLC
Geneva, 3 January 2026

Managing Construction Disputes: Understanding the Causes

Construction projects are inherently complex endeavours that involve multiple participants, demand coordination, and carry inherent risks.¹ They bring together a wide range of stakeholders, technical experts, and layers of documentation that can run to hundreds or even thousands of pages. Every project operates under tight deadlines and budget pressures, where even minor delays or disruptions can have significant financial and practical consequences.

For contract and claims managers, understanding why disputes arise and how to prevent them is important for successful project delivery. For employers, understanding how and why disputes occur is just as relevant, as it helps them manage risks more effectively, make sound commercial decisions, and maintain constructive working relationships with contractors.

This note draws on insights from leading commentators and experienced practitioners. It lays down the framework for understanding the nature and complexity of construction disputes and their common causes, while also offering guidance on effective claims management and dispute prevention.

The Nature and Complexity of Construction Disputes

A Distinct Category of Dispute

The first step is to understand the nature and complexity of construction disputes, what makes them unique, and why they differ from ordinary commercial disputes. Construction disputes typically arise in a setting where technical, legal, financial, and operational issues are all closely connected throughout the life of a project.² Unlike a simple contract to supply goods or services, a construction contract governs a project that develops and changes as the work progresses. The design, scope, and methods of performance often develop as work progresses, requiring the parties to coordinate many parallel activities under tight deadlines and changing conditions.

As leading commentators on construction law have observed, several factors make these disputes particularly challenging.³ The most important of these are outlined below:

• Technical Complexity and Case Management: Construction disputes are inherently technical and often involve complex engineering issues, detailed design work, and large volumes of factual evidence.⁴ Each project produces a large amount of documentation, including drawings, schedules, progress reports, and correspondence, among others. All of this information must be carefully reviewed to determine what caused the dispute and who is responsible.
• Multiple Parties and Fragmented Responsibilities: Construction projects almost always involve several layers of participants, including, inter alia, contractors, subcontractors, suppliers, consultants, financiers, and insurers. Even in turnkey projects where a single contractor takes overall responsibility, parts of the work are usually subcontracted to others.⁵ This complex network of contractual relationships can make it difficult to determine responsibility when issues arise. A dispute under one contract may easily extend to others, resulting in overlapping or parallel proceedings. In large and complex projects, it is often necessary to join or consolidate related claims to ensure consistency of decisions and avoid conflicting outcomes.⁶
• The Need for Timely Decisions: Unlike most commercial disputes, construction disputes often arise while work on the project is still ongoing. Both the employer and the contractor have a strong interest in keeping the project on track and minimising disruption and unnecessary delays. Because of this, construction disputes require practical and timely decision-making rather than long, drawn-out arbitrations.⁷ Mechanisms such as Dispute Adjudication Boards (DABs) and interim determinations are designed to deliver quick and workable solutions. These special procedures are intended to allow the project to continue while safeguarding each party's rights and ensuring that more complex issues can still be addressed later, if necessary.
• International and Cross-Cultural Dimensions: Many construction projects bring together parties from different countries, legal systems, and professional backgrounds.⁸ While this diversity brings valuable expertise and perspective, it can also create misunderstandings. Differences in contract interpretation, communication styles, and expectations of fairness and industry standards can easily lead to tension. Claims managers and legal teams working on international projects must therefore remain aware of these legal and cultural differences at every stage of the project.

In addition, what adds further complexity to construction disputes is the legal and regulatory framework within which projects are carried out. Standard forms, the choice of governing law, and national legislation all have a significant impact on how contracts are interpreted and disputes are resolved.

The Role of Standard Forms of Contract

Standard forms of contract, such as FIDIC, NEC, and the ICE Conditions of Contract, are widely used in the construction industry.⁹ They provide structure, promote consistency, and help parties anticipate how risk will be allocated and managed. In reality, though, these standard forms are almost never used as they are. Parties usually modify them to address project specific risks or to comply with the governing law and local regulations in the country where the project takes place. Such changes, however, can later cause serious issues by creating inconsistencies and uncertainty.

As one of the leading commentators on construction contracts, Jane Jenkins observes, further difficulties arise when a form drafted for one legal system, such as FIDIC under English law, is used with a different governing law.¹⁰ In these situations, familiar clauses may be interpreted differently, and even commonly used terms can take on new meanings, often resulting in disagreements about interpretation and the intended allocation of risk. This is a frequent issue in arbitrations involving FIDIC-based contracts, particularly in developing jurisdictions where local teams may have limited experience with such complex standard forms.

Choosing the Right Governing Law

Choosing the governing law for a construction contract is not that simple, especially on international projects. Some contractors and employers tend to use the same governing law across all their projects to maintain consistency and predictability. However, this can create problems when the selected governing law conflicts with mandatory local legislation in the country where the works are carried out, or when the standard terms used are not fully compatible with it.¹¹

Even when a governing law is clearly specified, local rules such as licensing, environmental, and labour regulations will still apply. These mandatory provisions can override parts of the contract and affect how its terms are interpreted or enforced. Understanding how the chosen law works alongside local legal requirements is important for managing risk and avoiding unexpected problems.

Sector-Specific Legislation and Regulatory Frameworks

Construction is strongly influenced by national legislation and regulatory frameworks. In the United Kingdom, for example, the Housing Grants, Construction and Regeneration Act 1996 ("UK Housing Act") establishes statutory adjudication and payment provisions that take precedence over conflicting contractual terms.¹²

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Footnotes

1. N.G. Bunni, The FIDIC Forms of Contract (3^rd edn., 2005), pp. 94-95. J. Jenkins, International Construction Arbitration Law (2^nd edn., Wolters Kluwer, 2014), §1.01, p. 1. A. Nadar, The Contract: the Foundation of Construction Projects, in S. Brekoulakis, D.B. Thomas, The Guide to Construction Arbitration (4^th edn., 2021), p. 10. "

2. J. Jenkins, International Construction Arbitration Law (2nd edn., Wolters Kluwer, 2014), §1.01, pp. 1-4.

3. Ibid.

4. Id., p. 1.

5. A. Nadar, The Contract: the Foundation of Construction Projects, in S. Brekoulakis, D.B. Thomas, The Guide to Construction Arbitration (4^th edn., 2021), p. 10. See also J. Jenkins, International Construction Arbitration Law (2^nd edn., Wolters Kluwer, 2014), §1.01, p. 2.

6. J. Jenkins, International Construction Arbitration Law (2^nd edn., Wolters Kluwer, 2014), §1.01, pp. 1-2.

7. Id., p. 1.

8. Id., pp. 1-2.

9. J. Bailey, Construction Law (2^nd edn., 2016), paras. 3.10-3.12.

10. J. Jenkins, International Construction Arbitration Law (2^nd edn., Wolters Kluwer, 2014), §1.01, pp. 2-3.

11. Id., pp. 2-3.

12. Id., p. 4; UK Housing Act 1996, S.108.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.