CIArb News

RIDW24: Construction Arbitration Trends and Key Takeaways

12 Apr 2024

The Chartered Institute of Arbitrators (Ciarb) was proud to support Riyadh International Disputes Week 2024 (RIDW24), 3-7 March 2024, where we launched a new Branch in the Kingdom of Saudi Arabia (KSA).[1] Ciarb’s CEO, Catherine Dixon, Ciarb President, Jonathan Wood, and many Ciarb members were on the ground in Riyadh for the event. The RIDW24 program calendar was extensive, and Ciarb organised and participated in two construction arbitration events during the week.

The first event, “Updates and Trends in Construction Disputes and Arbitration”, was organised by Resolve International in association with Lexis Nexis and Ciarb and brought together more than 200 people from various jurisdictions.[2] This event was moderated by Saad Hegazy FCIArb (Partner at Resolve International and Vice Chair of Ciarb Qatar Branch) and panellists included Professor Dr. Mohamed Abdel Wahab C.Arb FCIArb (Founding Partner at Zulficar & Partners), Amel Al Aseeri FCIArb (Partner at Zeenat Al Mansoori), Justice Michael Black KC C.Arb FCIArb (DIFC Court), and Catherine Dixon MCIArb (CEO at Ciarb).

The second Ciarb construction event was co-organised by Advantage RSK, titled ‘Tactical Advantage? The Use of Technical Expert Witnesses in Arbitration’.[3] This sought after event included opening remarks from Sameer Shinh FCIArb (Associate Director at Advantage RSK and Chair of Ciarb West Midlands Branch) and Catherine Dixon MCIArb (CEO at Ciarb), a presentation from Rajdeep Choudhury (Barrister 4-5 Grays Inn Square), and a panel discussion with Jonathan Wood FCIArb (President of Ciarb), Fatima Balfaqeeh C.Arb FCIArb (Managing Partner at Balfaqeeh Advocates & Legal Consultants), Reshma Oogorah FCIArb (International Arbitrator & Legal Counsel at Niyom Legal), Sean Kennelly FCIArb (Managing Director at Advantage RSK), and Ahmed Abdelbakey (Partner at Resolve International).   

Both events included a diverse cross-section of stakeholders from across the construction industry and disputes ecosystem, and speakers covered a range of construction arbitration topics including global and regional MENA trends, the new Saudi Civil Transactions Law, the role of expert witnesses and institutions, Ciarb instruments, and alternative dispute resolution (ADR) methods beyond arbitration. Here are a few key takeaways from the discussions at these two events.

Regional MENA Construction Dispute Trends and Developments

Over the past twenty years, the Middle East and North Africa (MENA) region has seen rapid growth of the construction industry and inbound and intra-regional foreign direct investment (FDI). RIDW24 speakers pointed out that this trend is expected to continue with many notable construction development projects across the region and KSA’s Vision 2030 outlining more than 40 development projects valued between 650 billion and 1.2 trillion USD.[4]

As infrastructure development projects in MENA continue to grow, disputes will inevitably arise. Many jurisdictions in the region have similar legal frameworks based on Islamic Shariah principles and often modelled after the Egyptian and French Civil Codes.[5] One highly discussed legal development is the new KSA Civil Transactions Law (the KSA Civil Code) which came into force in December 2023.[6] The KSA Civil Code represents one of the most extensive legislative enactments in KSA’s history and a significant shift closer to international best practice.[7] Speakers emphasized that the KSA Civil Code will help reduce uncertainty and increase transparency around risk allocation in business transactions and contracts in the country. However, this paradigm shift in the legal landscape is significant and the business and legal community will need to assess how the Code is implemented over time in order to truly understand its impact. Nonetheless, the KSA Civil Code reflects a growing trend towards adopting a modern and codified legal framework in MENA. This harmonisation of legal approaches is expected to facilitate cross-border transactions and investments, promoting economic growth and regional cooperation.

Another development that featured in discussions was the adoption of technology and big data by the construction industry both globally and in the region. This digital transformation is important to improve productivity and sustainability of projects and will ultimately spur the need for a new generation of construction experts who are tech savvy and understand the impact of AI, cybersecurity, and data privacy on projects and disputes.

Expert Witnesses

Experts play a key role in construction disputes by providing input on various technical and factual issues including delay, quantum, defects, and forensic accounting. As such, discussions about the role, use, and challenges with using experts were heavily discussed at both events. The speakers examined the diverging common law, civil law, and international arbitration approaches on several issues, including appointing experts (party appointed vs. court/tribunal appointed) and cross examination of witnesses. Many jurisdictions and institutions provide guidance on how to manage experts; however, difficulties arise when proceedings lack a clear framework. The speakers pointed out the existing instruments available that can guide parties and the Tribunal to work effectively with experts. The International Bar Association (IBA) Rules on the Taking of Evidence in International Arbitration and provide a useful framework and procedural regime for many aspects of expert evidence, including what tests or analyses are required, independence, and the of expert opinion reports.[8]

Speakers at both events also highlighted practical tips for how to best deploy experts, including proactive case management, instructions that clearly outline the scope, and witness conferencing. Speakers emphasised the potential opportunity to provide practical training for experts and arbitrations to raise awareness of the Ciarb Protocol and support the adoption of good practices.

Exploring the Use of Other ADR Mechanisms

Although arbitration remains a preferred dispute resolution process for complex construction disputes in MENA, the discussions at Riyadh highlighted the growing importance of other ADR mechanisms, such as dispute boards, expert determination, and mediation. [9] In particular, dispute boards featured heavily in discussions as a common dispute avoidance and dispute management tool for construction projects in the region. They are an attractive option because they can provide contemporaneous determinations or recommendations at any stage of the project and are viewed as an impartial and commercially viable way to resolve disputes efficiently. Speakers acknowledged that, while a menu of ADR options available for clients is helpful, multi-tiered dispute resolution clauses can create complexity and uncertainty, and more training and guidance on drafting and lessons from practice will be useful.   

Conclusion

A few key takeaways emerge from these two construction events at RIDW24. First, as infrastructure development projects and disputes arise, it seems likely that counsel and parties in the region will be exploring the use of additional ADR options beyond arbitration to resolve construction disputes. Second, the enactment of the new KSA Civil Code marks a transition towards legal harmonisation across the region that should increase certainty and transparency for contracts, transactions, and all forms of dispute resolution. Finally, with legal modernisation and the digital transformation of the construction sector, there is an appetite for additional training opportunities for counsel, neutrals, and experts to better equip them to resolve disputes in this new environment.

Want More? Check Out These Upcoming Ciarb Construction Events

 

Read our series of perspectives on ADR in MENA

 

[1] https://www.ciarb.org/news/ciarb-launches-branch-in-saudi-arabia/?dm_i=76JV,N91C,37GR2H,320K4,1

[2] https://ridw.org/event/updates-and-trends-in-construction-disputes-and-arbitrations

[3] https://ridw.org/event/tactical-advantage-the-use-of-technical-expert-witnesses-in-arbitration

[4] For example, NEOM, King Salman Energy Park, Rabigh Desalination Plant, and Jeddah Central Project, https://www.vision2030.gov.sa/en/projects/. https://hrme.economictimes.indiatimes.com/news/industry/vision-2030-top-5-mega-projects-transforming-saudi-arabias-bright-future/94671633. https://www.mepmiddleeast.com/projects/in-number-saudi-vision-2030-projects.

[5] Mohamed S. Abdel Wahab C.Arb FCIArb, The State of Play of Arbitration in the MENA Region, https://www.ciarb.org/news/the-state-of-play-of-arbitration-in-the-mena-region/; Mohamed S Adbdel Wahab, ‘Construction Arbitration in the MENA Region’ 12 October 2023, https://globalarbitrationreview.com/guide/the-guide-construction-arbitration/fifth-edition/article/construction-arbitration-in-the-mena-region 

[6] Ibid.

[7] Ibid.

[8] Chartered Institute of Arbitrators (CIArb), Protocol for the Use of Party-Appointed Expert Witnesses in International Arbitration (2007 edition) (CIArb Protocol), https://www.ciarb.org/media/6824/partyappointedexpertsinternationalarbitration.pdf ; International Bar Association (IBA), Rules on the Taking of Evidence in International Arbitration (2020 edition) (IBA Rules) https://www.ibanet.org/MediaHandler?id=def0807b-9fec-43ef-b624-f2cb2af7cf7b.

[9] Mohamed S. Abdel Wahab C.Arb FCIArb, The State of Play of Arbitration in the MENA Region, https://www.ciarb.org/news/the-state-of-play-of-arbitration-in-the-mena-region/; Mohamed S Adbdel Wahab, ‘Construction Arbitration in the MENA Region’ 12 October 2023, https://globalarbitrationreview.com/guide/the-guide-construction-arbitration/fifth-edition/article/construction-arbitration-in-the-mena-region

 

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