THE RESOLUTION OF CONSTRUCTION CLAIMS THROUGH INVESTOR-STATE DISPUTE SETTLEMENT: ALTERNATIVE OPPORTUNITIES FOR RELIEF FOR INTERNATIONAL CONTRACTORS
RANDALL WALKER AND JAY RANDHAWA 1
CMS Cameron McKenna Nabarro Olswang LLP
Disputes continue to be an ongoing reality of international construction projects. Traditionally, most international contractors involved in cross-border projects have looked to the relevant construction contract as being the primary, if not only, mechanism by which they may pursue claims for compensation for loss and expense. However, in recent years, there has been a growing appreciation of the potential for traditional construction disputes to be resolved through investor-state dispute settlement, as an alternative to the dispute resolution mechanism under the construction contract. This is particularly true where international contractors are engaged on a particular project by a sovereign state or state-owned entity (as is the case with many significant infrastructure and energy projects).
This article explores the potential for international contractors engaged on a cross-border project to effectively “re-package” a traditional construction claim as a breach of an international investment agreement. To this end, we have focused on the position where the employer is the state or a state-entity. We have also considered whether contractors may commence investor-state dispute settlement in parallel with, or in the alternative to, the applicable dispute resolution procedures set out in the underlying construction contract, or whether doing so will fall foul of legal concepts such as res judicata or lis pendens , or otherwise amount to an abuse of process.
1. WHY INVESTOR-STATE ARBITRATION?
Construction and infrastructure development has spread far beyond the expansion of developed cities, and into the advancement of the developing world. The increasing demand for basic infrastructure in developing
1 Randall Walker is a Partner in the Dubai office of CMS Cameron McKenna Nabarro Olswang LLP. Jay Randhawa is an Associate in the London office of CMS Cameron McKenna Nabarro Olswang LLP. The authors would also like to thank Sofía Díaz de Aguilar Puiggari, Legal Advisor in the London office of CMS Cameron McKenna Nabarro Olswang LLP, for her assistance with this article. The views expressed in this article, as well as any errors or omissions, are the authors’ own.
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