Global Perspectives: Construction And Infrastructure Disputes 2025

We are pleased to present this year's Global Perspectives: Construction & Infrastructure Disputes, featuring key insights and legal developments of 2025 from around the world, with significant implications for construction and infrastructure disputes.

A common theme across jurisdictions is the ongoing impact of external pressures on project timelines and cost, including inflation and market volatility, policy changes and constraints of existing infrastructure. In some jurisdictions, subdued domestic markets have led developers and contractors to step up overseas expansion. As many countries advance ambitious transnational energy and infrastructure projects, these factors are driving a renewed focus on robust risk allocation, flexible contracting, and proactive dispute avoidance strategies.

Several jurisdictions have introduced major legal and regulatory reforms, targeting broader sustainability and energy transition goals, alongside amendments to construction sector-specific legislation such as security of payment. The practical application of recent reforms, such as those in relation to building safety, continues to be tested in the local courts, which in turn remain critical in shaping key aspects of construction law and disputes, such as the law on penalties, payment and motions to amend in construction disputes.

Meanwhile, the global AI boom has accelerated demand for critical infrastructure such as data centres and critical minerals. Given the significant financial stakes and inherent risks involved in constructing such assets, complex and high value construction disputes are anticipated.

Across jurisdictions, the emphasis on dispute prevention and avoidance remains strong, with local courts demonstrating a readiness to uphold contractually agreed alternative dispute resolution processes. Whilst congested court lists continue to challenge some systems, others have taken positive steps, for example, by seeking to better align domestic arbitration laws with international standards through the release of a draft new arbitration law.

These recurring themes underscore that, despite the increasingly global nature of challenges in the construction sector, effective management and mitigation of construction and infrastructure disputes require an understanding of local legal nuances, as well as the ability to anticipate emerging risks at both regional and global levels.

Asia

China

China's outbound construction drive: trends, risks and disputes

Chinese developers and contractors have stepped up their overseas expansion over the past year. With the domestic market subdued, many are pursuing growth through geographic and sectoral diversification. This push coincides with a tougher macroeconomic landscape: slowing global growth, tighter sanction regimes, and heightened geopolitical tension are reshaping project economics and risk profiles.

Persistent supply chain disruption remains a key challenge. Sanctions and export controls are delaying delivery, inflating costs and, in some cases, rendering performance unlawful. Meanwhile, local content rules, unfamiliar labour requirements and sudden regulatory changes provide fertile ground for claims and disputes. The ability to identify and price these risks at tender stage is more critical than ever.

While activity in Southeast Asia and the Middle East continues apace, Chinese contractors are showing renewed interest for projects in South America and Central Asia. These regions offer significant opportunities – particularly in energy transition, critical minerals and associated infrastructure – but they also present evolving regulatory frameworks and greater political volatility.

Liquidity pressures, project delays and performance issues have led to a rise in disputes under guarantees and bonds. Chinese parties are now advancing contractual claims earlier and are increasingly prepared to pursue investment-treaty arbitration where host-state measures – such as unilateral termination or discriminatory regulation – impede or frustrate performance.

Overall, these trends reflect a more sophisticated and proactive approach by Chinese developers and contractors to managing and resolving cross-border construction disputes.

Japan

Offshore wind ambitions blown off course by market and regulatory headwinds

In last year's update, we reported on Japan's ambitious offshore wind plan and the impending release of the winners of the third round of bidding for projects.

The successful third round bids were announced as planned in December 2024, awarding projects off Aomori and Yamagata Prefectures with operations slated to start in 2030. However, since then Japan's ambitious plan – central to its 2050 net-zero goal – has encountered significant headwinds. The government's target of 5.7 GW by 2030 looked achievable when competitive auctions began in 2021, but recent developments suggest a more complex path ahead.

Indeed, the fourth auction round, expected in late 2025, has been postponed as authorities review auction rules amid rising costs and global supply chain pressures. This follows Mitsubishi Corporation's withdrawal in August 2025 from the first three projects awarded in Round 1, citing cost inflation and yen depreciation that has led to significant project impairments. While the government has vowed to re-auction these three projects as soon as possible, the difficult business conditions facing offshore wind in Japan calls into question whether the 2030 capacity target can be reached.

At the same time, regulatory changes have added both opportunity and complexity. In January 2025, auction guidelines were revised to allow partial cost pass-through and increase delay-related deposits, aimed at curbing unrealistic bids and increasing focus on project feasibility. In June 2025, a landmark law was introduced permitting offshore wind development in Japan's Exclusive Economic Zone, expanding potential sites but introducing new permitting requirements. Labour law reforms, including strict overtime caps, continue to strain construction timelines, heightening contractual risk for developers.

For investors and developers, these shifts underscore the need for robust risk management. Success will depend on aligning bids with evolving rules, embedding flexibility in contracts, and planning for dispute resolution. Increased government support for the industry to offset prevailing market conditions is also likely to be key. As Japan recalibrates its offshore wind strategy, opportunities remain but navigating regulatory and market challenges will be fundamental to delivering projects on time and on budget.

Singapore

Powering the future: Singapore's expansion of the ASEAN power grid

This year saw Singapore accelerate the expansion of the ASEAN Power Grid, a major project to enable cross-border power trading between the member countries of the Association of Southeast Asian Nations.

Given limited domestic renewable resources, Singapore is turning to regional interconnectors to import low-carbon electricity from neighbouring countries to achieve its decarbonisation targets. As of Q4 2025, Singapore has issued conditional approvals for over 8GW of low-carbon electricity imports from Cambodia (solar and pumped storage hydroelectricity), Indonesia (solar), Malaysia (hydroelectricity), Vietnam (solar) and Australia (solar).

Of these, three landmark projects with Indonesia and Malaysia were awarded in 2025 that may reshape the Southeast Asian energy market:

• Singapore-Indonesia subsea interconnector – The Singapore government engaged a TotalEnergies-Royal Golden Eagle joint venture to develop a subsea electricity interconnector from Indonesia to Singapore, aimed at enabling Singapore to tap into Indonesia's abundant solar resources while supporting Indonesia's energy export ambitions. This project is expected to enter commercial operation in 2029.  
• Singapore-Malaysia hydropower import – Singapore has also granted conditional approval for Sembcorp Utilities and Sarawak Energy Berhad to import 1GW of hydropower from East Malaysia, entailing the installation of over 700km of subsea interconnector cables between both countries. This is set to be Singapore's first large-scale 24/7 renewable baseload import project, anticipated to commence operations in 2035.  
• Second Singapore-Malaysia interconnector – Singapore and Malaysia have agreed to conduct feasibility studies into a potential second electricity interconnector, which could support the mutual trade of 2GW of electricity alongside the development of supporting infrastructure. To complement these projects, Singapore is exploring a cross-border ASEAN renewable energy certificates framework to support regional electricity trading and carbon accounting.

Building on the existing Singapore-Laos-Thailand-Malaysia interconnector, Singapore's latest interconnector projects with Indonesia and Malaysia represent a significant leap towards energy integration within Southeast Asia.

However, such cross-border projects can present complex engineering and project delivery challenges. The interconnectors will require laying subsea cables in one of the busiest international sea lanes, potentially giving rise to the risk of damage by maritime activity, and will need close management of national regulatory frameworks. Careful consideration of the contractual risk allocation of such matters, including the insurance strategy, will be critical for the successful delivery of these projects.

South Korea

South Korea's renewable ambitions meet infrastructure constraints

South Korea is pursuing one of Asia's most ambitious energy transitions, aiming for renewables to supply over 20% of its electricity by 2030 and quadrupling total capacity by 2038. However, the rapid expansion has exposed critical weaknesses in transmission infrastructure. Grid bottlenecks are now a defining challenge, with over half of Korea Electric Power Corporation's (KEPCO) transmission projects delayed.

To address this, the government introduced the Special Act on the Expansion of the National Power Grid in March 2025, aiming to fast-track approvals for transmission and substation projects. However, the Act's expedited procedures apply only to KEPCO-led projects, leaving private developers and contractors grappling with the same bottlenecks as before.

For privately developed projects that rely on KEPCO for grid connection, "government action or inaction" clauses are likely to be a key battleground for disputes. These provisions, commonly found in construction and commissioning contracts, allow contractors to claim extensions of time and additional costs if delays result from the acts or omissions of a government or regulatory body. Depending on the drafting, grid connection delays could fall within scope, given KEPCO is a government-owned entity solely responsible for constructing and operating South Korea's transmission network.

In the absence of such clauses, contractors may be forced to rely on force majeure provisions. However, whilst force majeure events generally permit time relief for unforeseen events, they rarely allow recovery of costs. This may mean that contractors remain exposed to significant financial risk from prolonged grid bottlenecks, including overheads as well as mobilisation and demobilisation costs until the asset becomes ready to be connected.

Until transmission infrastructure catches up, these contractual challenges will remain a key source of disputes in South Korea's renewable energy sector.

Thailand

Delay penalties under Thai law: Judicial discretion and practical considerations

Under Thai law, claims for penalties arising from delays in contractual performance present inherent uncertainty. This stems from the statutory authority vested in the courts to reduce the agreed penalty amount, notwithstanding its prior acceptance by the contracting parties. Such discretion is exercised pursuant to the Civil and Commercial Code, which governs contractual obligations and remedies.

In the context of construction contracts, it is common to encounter provisions granting employers the right to impose penalties for delays. Regardless of the terminology employed, Thai courts generally interpret these provisions as constituting pre-agreed penalties, which are subject to the discretion of the courts under the Code. Consequently, the courts retain the prerogative to enforce the contractual stipulation or to diminish the penalty where circumstances warrant, such as when the claimant has not incurred substantial loss or has failed to mitigate damages.

A critical prerequisite for enforcing delay penalties is the employer's express reservation of rights at the time the delay occurs. Where the employer permits continued performance without unequivocally reserving the right to claim penalties, the court may infer that timely completion was not an essential term of the contract. In such cases, the contractor's delay cannot be deemed actionable, thereby precluding recovery of penalties by the employer.

To mitigate judicial uncertainty, the employer must discharge the burden of proving actual loss directly attributable to the delay or contractual breach. Thai courts consistently favour penalty claims substantiated by clear, credible evidence of genuine and quantifiable damage.

Recent Supreme Court decisions illustrate this approach, enforcing contractual delay penalties up to the maximum threshold of ten per cent as stipulated in the agreement. The decisive factor in these rulings was the employer's ability to demonstrate, with sufficient documentation, the real financial impact caused by the delay.

In practice, employers should adopt a proactive approach by issuing timely reservations of rights and maintaining comprehensive records of losses incurred. These measures not only reinforce the contractual position but also enhance the likelihood of full recovery under Thai law. Ultimately, while contractual provisions for delay penalties remain enforceable, their efficacy is contingent upon strict compliance with procedural safeguards and evidentiary standards.

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