CONSTRUCTION DISPUTE RESOLUTION

Transcription

1 CONSTRUCTION DISPUTE RESOLUTION MITIGATING LEGAL RISKS 18 AUGUST 2015, BANGKOK Vanina Sucharitkul, Senior Associate,

2 TOPICS FOR TODAY Structure of Construction & Engineering Projects General Issues & Common Claims Dispute Resolution Choices Drafting Dispute Resolution Clauses Practical Issues 2

3 STRUCTURE OF CONSTRUCTION & ENGINEERING PROJECTS 3

4 THE STRUCTURE OF CONSTRUCTION & ENGINEERING PROJECTS BANKS (Project Finance) PROJECT OWNER (Project and Cost Management) PROJECT MANAGER (Direct Agreement) (Early Works for Basic Engineering Package/ EPC Contract) (Performance Bond) EPC CONTRACTOR (Security) BANK (Subcontracts) DESIGN AND ENGINEERING EQUIPMENT SUPPLY CONSTRUCTION CONTRACTS (Supply Chain) LOWER TIER CONTRACTS 4

5 CONSTRUCTION RISKS Construction projects are inherently risky technically demanding dangerous activities long operational period high value, difficult to price weather, ground conditions, etc credit risk financial risks (inflation, tax, etc) availability and price of labour/materials LEGAL RISKS! 5

6 IMPORTANCE OF EFFECTIVE DISPUTE RESOLUTION Contracts allocate these risks between the parties But contracts are just pieces of paper: judges/arbitrators have final say on who owes what to whom Legal risk: judge/arbitrator may allocate risk differently from intent of contract Effective dispute resolution to mitigate legal risk protects carefully negotiated balance of risk gives accurate expression to commercial bargain 6

7 PRACTICAL ISSUES 7

8 CLAIMS MANAGEMENT Contract/claims management teams sufficient, competent, knowledgeable, controlled meetings, early warnings, prompt action/remediation Managing the documents claims are won and lost on contemporary records programmes, reports, minutes, site records, correspondence, s, texts, etc. Complying with contract time limits for notification of claims, supply of details requirements for service of notices 8

9 BEFORE A DISPUTE ARISES Establish sound, dedicated policies and procedures for correspondence, other documentation and claims handling Keep supporting documents and contemporaneous evidence well, diaries, photographs, maps, drawings (preferably electronically) Maintain a set of programs which are regularly updated throughout the course of the project so that the delay experts will be able to prepare their report in the event of a delay claim MAKE SURE YOU COMPLY with notice requirements in the contract 9

10 WHEN A DISPUTE ARISES Sometimes disputes cannot be avoided Keep a close eye on notice provisions and other conditions precedent to claims in your contract, and time limitations for bringing claims and defenses Gather facts and seek legal and expert advice early Take care in what you write and don t write to opposing party (do protest, don t make unintended concessions) Evaluate chances of success early, and act upon that evaluation Carefully explore all settlement options, especially ADR (e.g. mediation) Look at exposure of performance bond 10

11 DURING ARBITRATION OR LITIGATION Set up dedicated internal team to maximize efficiency and minimize disruption to project Work with specialist external lawyers, arbitrators and experts Work together with your external team, don t just let them get on with it Prepare and monitor realistic litigation budgets Get management commitment to ensure cooperation of project participants Always keep settlement and ADR possibilities in mind 11

12 CHOOSE A TRUE EXPERT The Board of Trustees of National Museums and Galleries on Merseyside v AEW Architects and Designers Limited [2013] the architect expert called by AEW was, although honest, almost wholly unimpressive, possibly partly because he had never given expert evidence before it was clear that he had given little or no coherent thought to the issues in the case. [He] was wholly unconvincing about all aspects of liability. He made a concession under cross-examination which one would simply never expect a competent expert who was aware of his duties to the court to make; he accepted that he was seeking to defend the indefensible for the benefit of AEW He was faltering in his evidence and often did not seem to understand the questions (which were never unclear or over-sophisticated). I can place no weight on any of his evidence 12

13 TAKE AWAY: THE WISE APPROACH TO DISPUTES RISKS Be prudent. Prevention is better than a cure: the best way to deal with disputes is to avoid them. - Take every reasonable step to avoid the risk of major disputes Careful and clear contract drafting Proactive and expert contract/project management - But also plan for the worst by making clear, appropriate dispute resolution choices in advance, then managing disputes proactively/effectively when they happen Well-drafted dispute resolution clauses in contract Informed choices of options Critical role for in-house team in managing disputes and external counsel 13

14 THANK YOU ANY QUESTIONS? Herbert Smith Freehills LLP 14

15 CONTACT: VANINA SUCHARITKUL Vanina specializes in international commercial arbitration and has experience advising local and international clients on a diverse range of litigation and cross-border disputes involving commercial contracts, investigations and anti-corruption, joint ventures, construction and infrastructure projects, environmental contamination and employment issues in Paris and Bangkok. Vanina has experience acting as counsel and advocate in arbitrations across multiple jurisdictions under the auspices of institutions including, amongst others, ICC, SIAC, AAA, and TAI. Credentials highlights a major Japanese insurance company in arbitration against six reinsurance companies under the Thai Arbitration Institute (TAI) for indemnity over the floods in 2011 a UK university in claims arising out of its proposed joint venture for the establishment of branch campus in Thailand Vanina Sucharitkul Senior Associate, Bangkok Vanina.sucharitkul@hsf.com T: a mining company in a potential investment dispute over mining rights granted by an African government European clients involved in investigations by the Assets Scrutiny Committee an international electricity company in a potential gas price review dispute with an Algerian public enterprise a US fund that is a major creditor in a financial restructuring leading to business rehabilitation proceedings in the bankruptcy court the world's largest aircraft landing gear manufacturer in a potential arbitration arising out of an agreement to perform repair, maintenance and overhaul services of major aircrafts an international construction company in a successful arbitration arising out of water treatment systems construction in Thailand a German construction company in an ICC arbitration seated in Singapore arising out of the lease of a construction equipment to build a motorway in Munich a major oilfield service company in a SIAC arbitration against a government arising out of an agreement to acquire seismic data 15

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