Originally from Leading Arbitrators' Guide to International Arbitration - 2nd Edition

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I. WHAT IS CONSTRUCTION?

“Construction” is not a term of art and potentially embraces a vast range of engineering, industrial, building and technical enterprises designed for many different purposes. Such projects are sometimes referred to as “infrastructure”, to include roads, communication and transport systems; but this term is too narrow as it would exclude construction activities such as oil and gas (on-shore and off-shore), process plants and power generation. An exclusive definition is unnecessary but it is perhaps helpful to identify the key distinguishing factors from other commercial activities. One such factor is the element of “real time” which expresses the dynamic nature of construction projects and the fact that the generation and resolution of disputes often runs in parallel with performance of the project itself, unlike other commercial disputes which are essentially of an historical character.

Another key factor is that construction projects are usually governed, in addition to an applicable legal system, by complex and purpose-made contracts which invariably contain machinery not only for the ultimate resolution of disputes by arbitration but also for the management of the project through the interim determination of matters of potential dispute between the parties. Indeed, virtually every matter which is the subject of a formal dispute in arbitration will have been the subject of various interim measures within the scope of the contract, which may include relatively elaborate prearbitral procedures. These preliminary stages are in the main mandatory so that a dispute which reaches arbitration will usually have been the subject of two or more earlier decisions which one of the parties does not accept.

Despite being purpose-made, contracts employed for construction works generally make use of standard forms which are now readily available both in published hardcopy and electronic format. A recent trend is the production of “suites” of contract forms covering different methods of procurement (lump sum, design and build etc.) as well as different levels of relationship (main contract, sub-contract, designer contract etc.). Foremost among the published forms are those produced by the Federation Internationale des Ingenieurs-Conseils (FIDIC) which can be found still current in several different versions and editions.