Out-Law Analysis 3 min. read

Controlling the costs of construction arbitration

Construction project


While every construction dispute requiring the use of arbitration is different, adopting certain good practices will allow parties to settle disputes as quickly and cost effectively as possible, whilst achieving a fair result.

Experience shows that the following tools and techniques, promoted by the ICC Arbitration Commission, can be effective in controlling the cost of construction arbitration.

At tender stage

Parties should carefully consider the wording of the arbitration clause during negotiation of the contract and ensure that simple, clear words are used to avoid uncertainty and disputes over the precise meaning and effect of the clause. Although parties often attempt to stipulate time limits by which the tribunal has to render a final award, these can often cause more problems than they solve if the limit imposed is unrealistic or not clearly defined.

It is particularly helpful if the arbitration clause allows flexibility over the number of arbitrators to be appointed ("one or more"), to enable a sole arbitrator to be appointed for lower value disputes.

At the start of proceedings

The identity of the arbitrator(s) chosen by the parties will impact on the efficiency of the proceedings.

There is usually an assumption that a panel of three arbitrators will be necessary to handle a complex construction arbitration. However, consideration should be given to agreeing on a single arbitrator, who will be able to act more quickly and will not run into diary clashes when scheduling hearings.

Pamela McDonald

Pamela McDonald

Partner, Head of Office, Doha, Co-head of International Arbitration

Although parties often attempt to stipulate time limits by which the tribunal has to render a final award, these can often cause more problems than they solve if the limit imposed is unrealistic or not clearly defined.

Whether one or three arbitrators are appointed, it is essential that they are familiar with the industry and construction contracts, and have time to devote to the case. Sufficient enquiries should be made at the time of their appointment in that regard.

Parties are entitled to object to the nominated arbitrators. Careful consideration should therefore be given to the nominees to avoid such objections being raised in the first place.

The request for arbitration and answer

The way in which the parties approach their early submissions can make a considerable difference to the effective management of the arbitration.

Institutional arbitration rules do not typically require parties to set out a detailed statement of case at this point. However, the more detailed the particulars of claim are, the more informed the parties and the tribunal will be to make decisions on procedural measures and case management techniques at a very early stage in the proceedings.

Terms of reference, case management conference and procedural timetable

Typically, the framework for the arbitral proceedings is established through the terms of reference agreed between the parties and the tribunal, a case management conference and the procedural timetable.

These steps provide opportunities for the arbitration to be streamlined. For example, in the terms of reference, parties might consider allowing the president of the tribunal (if there is a three-member panel) to decide on certain procedural issues alone.

Ahead of the case management conference, parties should submit joint or separate case management proposals. Active cooperation and exchange of views on the procedures and case management techniques that may be appropriate can be helpful at this stage.

Parties should make every effort to comply with the procedural timetable, with extensions and revisions limited to clearly justifiable circumstances. This requires a realistic approach to any time periods incorporated into the timetable.

Documentary evidence

Construction projects usually involve significant documentary records. Documents produced by a party should be directly relevant to the issues relevant to the dispute, as defined by the tribunal. Agreeing a coherent approach to the documents at the outset can save significant time and costs.

Parties typically produce documents on which they intend to rely. Requests for production of additional documents should be avoided unless they are clearly relevant and material to the outcome of the case.

The way in which the parties approach their early submissions can make a considerable difference to the effective management of the arbitration.

The procedure for requesting and managing document production efficiently should be established at the start of the arbitration, and in a way which avoids duplication and keeps hard copies to a minimum.

Expert evidence

Parties often assume that independent expert evidence is necessary, particularly where the dispute involves matters of delay and quantification of compensation. However, parties should start with the presumption that expert evidence is not required and depart from that only if an expert is needed to inform the tribunal on the issues in dispute.

There should be clear agreement at an early stage over the subject matter and scope of the expert evidence which will be provided, and a limit should be placed on the number of rounds of expert reports which can be submitted. Experts appointed by each party should meet in advance to narrow the issues in dispute and identify the facts and the documents that they believe to be relevant.

At the hearing

Consideration should be given to whether or not a hearing is necessary when agreeing the procedural timetable. It may be possible for the tribunal to decide the case on the documents alone, which would significantly reduce time and cost.

If there is a hearing, parties should minimise the length and provide submissions to the tribunal sufficiently in advance to allow them to be read. A core bundle of documents should be produced, and an agenda and timetable for the hearing agreed with equitable division of time.

The 'hot tubbing' technique, where two experts are cross-examined by the tribunal concurrently, can reduce the expert's time in the witness box and reduce costs. However, it should be used only in circumstances where the tribunal has been given sufficient time to prepare.

Pamela McDonald is a construction disputes expert at Pinsent Masons, the law firm behind Out-Law. A version of this article appeared on LexisNexis Middle East.

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