The Role Of International Courts In Construction Disputes

The Role Of International Courts In Construction Disputes Presented by: Mr. Waksman Date: November 2022 Introduction - International construction disputes plainly require specialist tribunals due to their size, complexity and importance - Number of disputes is rising: 75% increase in value of construction disputes worldwide between 2019 and 2020 - There already domestic tribunals satisfying this need e.g. the TCC (originating in the Judicature Act 1873) as well as arbitration - Provided they are given jurisdiction by agreement, they will hear a case wherever it originates - So what is the role of International Courts offer? Much turns on which ICC one is referring to What Are International Courts? - Usually called International Commercial Courts (ICCs) - Three different models: • Purely domestic courts in established jurisdictions but which take international business: Model 1 • Supra-domestic courts in in emerging jurisdictions designed to fortify free economic zones: Model 2 and • Other courts designed to further some international pull MODEL 1 COURTS - Examples: London Commercial Court (1895) (LCC) and TCC, - Commercial Division of the New York Supreme Court (1995), - Features: • Established law: common-law rather then civil law approach • Agreed choice of forum is sufficient to found jurisdiction • English language • Party to Hague Convention 2005 • Strong, specialist and local judiciary MODEL 2 COURTS: MIDDLE EAST GROUP - Established as part of, and to serve, exceptional economic zones; a full jurisdictional as well as economic carve-out - Function is to boost confidence of potential investors - DIFC and QICDRC also permit non-zone disputes if parties confer jurisdiction - DIFC and ADGMC party to regional enforcement agreements plus Memoranda of Guidance/Understanding with LCC (2103 and 2016) - DIFC has dedicated Technology and Construction Division (10 of the 122 cases heard in 2020 were TCD, in 2021, 6 TCD cases) MODEL 2 COURTS: AIFC - Again established as part of, and to serve, it economic zones; a full jurisdictional as well as economic carve-out - Function is to boost confidence of potential investors but also to target across the Eurasian region - Permits non-zone disputes if parties confer jurisdiction - Party to regional enforcement conventions - At present all Judges are from the U MODEL 2 COURTS: SICC - A hybrid case with some Model 1 elements: it is a Division within the Singapore High Court, applying Singapore law - Local commercial cases may be transferred in, international cases may be commenced there with jurisdiction agreement - Flexible procedural rules influenced by arbitration e.g. parties can agree to override open court - Established its Technology, Infrastructure and Construction List in 2021 - Party to Hague Convention, treaty with Hong Kong and Commonwealth - Mixture of local and international judges MODEL 3 COURTS: EUROPE - Post-Brexit, France, Germany and Netherlands established specialist commercial lists within their own court systems - Civil code applied but with some options for parties to choose other law - Will take international commercial cases where jurisdiction agreed - Parties to Hague Convention and Brussels Regulation - Local and international judges MODEL 3 COURTS: CHINA - China International Commercial Court established to service dispute resolution among the Belt and Road Initiative countries - Two courts: • First CICC in Shenzhen for international sea-based disputes • Second CICC in Xi'an for road-based disputes • Both part of the Supreme People's Court • No general acceptance of cases where there is jurisdictions agreement outside BRI disputes - Exclusively local judges but with international experience and England A BETTER-EQUIPPED FORUM FOR "LOCAL" DISPUTES - The previous attributes on Law and Procedure will be especially relevant where the dispute itself is "local" is arising out of activity in the relevant economic zone - In construction cases, the disputes tend to be financial as this is often what makes the dispute international - But in theory, a TCC-style approach with facility to obtain swift interlocutory relief locally will also assist a local construction project where the only alternatives previously would have been to apply to a court outside the project area or to arbitration ICCS AS ALTERNATIVES TO INTERNATIONAL ARBITRATION - Speed: the ICCs tend to portray themselves as enabling speedy justice, whereas some complex arbitrations can take time, even with the advantage of finality and little or no appeal routes - Confidentiality: SICC for example offers option of private hearings but in any event, challenges to arbitral awards often leads to the confidentiality being lost - Third Party Action: ICCs will have the usual advantage over arbitration of being able directly to make some orders which arbitral panels cannot, without recourse to the local court - Judges: in many cases, the ICC judges will also practice as arbitrators and already be familiar to construction dispute litigators - Costs: the fixed and certain fees offered by some ICCs, which also provide the necessary dispute resolution infrastructure i.e. courtrooms, staff, embedded technology and fixed location, may be seen as an advantage - Enforcement: some ICC awards may be seen as more susceptible of enforcement elsewhere than arbitral awards but this very much depends on (a) the ICC concerned and (b) where enforcement is sought - Arbitration clauses in the relevant construction contracts may not be an obstacle if all parties agree to confer ad hoc jurisdiction on the relevant ICC LONG TERM BENEFITS OF ICCS - Increasing the construction law jurisprudence: with more courts applying common-law to resolve construction disputes, the body of the relevant law will develop - important where there is, for example, little case-law on a particular area of construction law - Absorbing the case-load: If the number and scale of international construction disputes continues to increase, ICCs, where available, maybe one significant way to reduce the burden which would otherwise lead to delay in the established courts or in arbitration; this is especially so where the ICC has a "blended" approach incorporating features of arbitration and/or optional or mandatory mediation THE FUTURE - These are still relatively early days for ICCs - the experience of litigators using them will be crucial, going forwards - The real evidence will be seen in the extent to which (a) construction contracts change their arbitration/jurisdiction clauses (b) there are ad hoc references to the ICCS - Any increase in dispute resolution choices for international construction disputes is to be welcomed - Procedural innovations in ICCs should be studied by established