Construction sector prefers arbitration

However, the research identified scope for improvement in efficiency at all stages of the arbitral process. The findings are contained in a report, ‘International Arbitration in Construction published last week by Pinsent Masons in partnership with Queen Mary University of London. Some 646 in-house counsel from around the world (nearly 60% from Europe or the Middle East) took part in a survey and telephone interviews in June and July this year.

Respondents suggested that interim or provisional orders could be used more effectively in arbitration, leading to parties resolving their differences at an earlier stage. There was also appetite within the construction sector to make interim decisions binding so that money changes hands at an earlier stage.

There were a range of opinions about the amount disputed that would make it commercially sensible to pursue through international arbitration. The majority (42%) suggested a minimum between US$1m-10m. However, 43% of in-house counsel set a higher threshold of between US$11m-25m. 

When appointing arbitrators, the vast majority of respondents valued construction experience above all, supporting the survey’s finding that factual and technical complexity is the most defining feature of international arbitration in the construction sector. When asked what characteristics respondents look for in an arbitrator, the top attributes were issuing an award within a reasonable period of time (70%), being willing to make difficult decisions, including on procedural issues (68%), possessing case and counsel management skills (68%) and having technical knowledge of construction disputes (63%).

More than two-thirds of respondents (67%) supported mandatory compliance with pre-arbitral decisions as a pre-condition to arbitration.

Jason Hambury, co-head of Pinsent Masons’ international arbitration practice, said the report ‘provides valuable insight on the concerns of the construction industry and how the arbitration community might respond to them to ensure that the arbitral process is more efficient and economical at all stages, and facilitates the resolution of disputes at an earlier stage. This is particularly the case for lower value disputes (less than US$10m) where more flexibility and speed is required if arbitration is to be more accessible to parties.’