Partner Cheryl Cairns and Partner Karie Akeelah were invited by Gulf Business to discuss dispute resolution in mega projects in the Middle East.
What is driving the trend of international construction disputes rising - particularly in the Middle East?
Projects in the Middle East tend to involve significant costs, multiple stakeholders and new technologies, with highly compressed timelines. Given the scale and complexity of mega projects in the region, there is an increased risk of misalignment in work scopes, timelines and responsibilities all of which can ultimately give rise to disputes.
We commonly see delay and prolongation costs claims due to improper contract management and / or poor contract drafting where the parties' obligations are unclear or unspecified. There is also a trend for what can be sometimes drastic and expensive changes in scope of work changes post-tender, leading to delays and increased costs.
Early warning systems in contracts, like advance notices of claims for delay and variation, are not strictly followed. Parties often miss opportunities to prepare claims or respond to them comprehensively. Timely consultation with legal advisors can significantly improve such exercises, as they conduct merit analyses to assist with negotiations and ensure records for substantiating or defending claims are preserved if the dispute escalates.
With cross-border infrastructure and mega-projects on the rise across the Gulf, how is this adding complexity to dispute resolution—especially when multiple jurisdictions and stakeholders are involved?
Stakeholders from different jurisdictions can have different dispute resolution preferences and legal backgrounds which add to the complexity of resolving disputes. To ensure neutrality and flexibility, arbitration remains the preferred mode for dispute resolution.
Careful drafting of the arbitration clause is required to ensure that it covers all relevant stakeholders in the project and to avoid time consuming and costly multiple parallel proceedings and / or jurisdiction challenges. Where the arbitration clause is broad, there may be situations where a key party relevant to the dispute cannot be joined to the arbitration or worse, where it is later discovered that a key party did not have capacity to arbitrate. Stakeholder mapping is useful to avoid this scenario.
Joinder and consolidation clauses are helpful tools in multiparty construction contracts. However, careful selection of the seat of the arbitration and arbitral institution is required to ensure that the governing laws and arbitral rules are adequate for multi-party proceedings.
Can you walk us through how the New York Convention supports enforcement of arbitral awards in the region, and how effectively this is applied across GCC jurisdictions?
The New York Convention requires signatories to enforce foreign arbitral awards, with limited grounds to set them aside. All GCC countries are signatories to the New York Convention, with most having legal frameworks that are broadly compatible with the Convention's principles.
However, implementation in the region can be challenging due to localised procedural requirements, legal culture and a broad interpretation of "public policy" in some GCC jurisdictions. Arbitral awards must not conflict with Sharia principles, existing laws or prior judicial decisions.
While there is a trend towards a narrower application of public policy principles, the existing framework leaves room for parties resisting the award to delay the enforcement on public policy grounds. Skilful navigation of enforcement procedures is essential to avoid such delays.
One challenge often raised is enforcing arbitration outcomes when third parties—who aren't signatories to the arbitration agreement—are involved. How can construction firms navigate that risk?
Express and clear contract drafting is key to limiting this risk. Ideally, the arbitration clause should be broad enough to cover all stakeholders, as discussed above.
However, where arbitration clauses are limited, construction firms can consider relying on other legal principles which may bind non-signatories in certain scenarios where:
- a non-signatory principal may be bound to its agent's agreement to arbitrate (agency);
- a party to an arbitration agreement assigns its rights and obligations to a non-signatory (assignment);
- it knowingly and directly benefited from a contract with an arbitration clause (estoppel); or
- it was involved in the negotiation or performance of the contract with an arbitration agreement (chain of contracts).
Although these principles are less developed in civil law systems, similar outcomes may also be achieved by relying on the principles of good faith and the prohibition against contradictory conduct. Naturally, these are fact dependent and should be considered with appropriate legal advice.
The UAE has made major strides in aligning with international arbitration norms. What are some of the key local practices or court attitudes that companies should be aware of when enforcing awards here?
The UAE is unique as it offers two legal frameworks for enforcement: an 'onshore' court system that applies the UAEs' civil law and an 'offshore' court system applicable only in the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) free zones that applies common law.
When enforcing an arbitral award (local or foreign), companies should evaluate the legal frameworks of both onshore and offshore jurisdictions, along with any applicable reciprocal treaties or agreements, to determine how to proceed with enforcement. From a practical point of view, in most cases a party will want to pursue enforcement proceedings before the courts where the assets of the award debtor are located (onshore v offshore).
In terms of attitudes, since signing the New York Convention, the onshore courts have become increasingly pro-enforcement of arbitral awards, particularly with the implementation of the UAE Federal Law No. 6 of 2018 (the Arbitration Law) and various bi-lateral and multi-lateral treaties.
Regardless of applicable legal framework, it is important for companies to be aware of the applicable procedural timelines and available grounds for challenging enforcement of a domestic or foreign arbitral award.
In cross-border disputes, inconsistent laws and timelines between jurisdictions can complicate enforcement. How can companies prepare better at the contract drafting stage to mitigate these risks?
To reduce the potential for complicating enforcement associated with inconsistent laws and timelines in cross-border disputes, companies should consider the following:
Researching the applicable jurisdictions
Investigating the applicable legal jurisdictions before entering contracts can help identify potential enforcement issues. By understanding the legal landscape of relevant jurisdictions, including applicable laws and precedents, parties can assess risks and plan accordingly to choose the most appropriate method of dispute resolution and applicable substantive and procedural laws.
Including a jurisdiction and governing law clause
Companies should evaluate the best way to handle any potential disputes by considering factors such as: (a) the location of the parties to the contract and the project; (b) access to the legal system (litigation v arbitration and civil law v common law); and (c) the language used by the courts (onshore v offshore).
With these factors in mind, drafting a clear and unambiguous jurisdiction and governing law clause is crucial to provide a degree of certainty about where and how a party can sue and be sued, thus reducing the risk of parallel proceedings.
Such clause should specify whether a certain legal system applies to resolve a dispute (litigation v arbitration), if a specific country's courts will have exclusive or non-exclusive jurisdiction over any disputes or a certain type of disputes only; and the applicable governing law to the dispute, and in case of arbitration to the seat.
Incorporating ADR mechanisms into contracts
Incorporating multi-tiered dispute resolution clauses which include initial non-binding methods, like adjudication, mediation or expert determination, can help resolve disputes without resorting to the formal proceedings of litigation or arbitration, thus saving time and costs.
What proactive steps should construction and infrastructure companies take now to prepare for this anticipated spike in disputes and enforcement challenges?
To avoid conflict and facilitate early resolution of potential disputes, companies should focus on embedding conflict avoidance mechanisms into their projects, such as:
- preparing well-drafted contracts that set out clearly the relevant parties' obligations, risks and benefits, with a legally solid dispute resolution clause as explained above. It is also essential to ensure that all contractual documents are in place (e.g. programmes, ancillary agreements, appendices, etc) and have been shared and/or approved by the relevant parties;
- encouraging constant cooperation between all relevant parties and fostering good-working relationships between them (including within the internal teams of a company);
- implementing good project management practices at all levels – e.g. clients / owners, contractor, subcontractors, consultants, etc - through strong planning, clear communications internally and externally, diligent monitoring of KPIs and regular assessments of progress and costs, and having the flexibility to adapt or respond swiftly to any unforeseen circumstances;
- keeping easily accessible records using innovative technology tools that provide accurate and contemporaneous digital evidence; and
- educating the project teams on the importance of dispute avoidance, complying with timely notices under the contracts and knowing when to involve the legal team / escalate a claim.
Consideration should also be given to the useful role of generative AI for data analytics in preparation for disputes, especially with claims preparation. A key advantage of generative AI is the ability to interpret a user's queries by machine-reading a collection of documents and creating meaningful outputs such as summaries, outlines, and even first-draft documents. To learn more about the application of AI to dispute resolution, please see a recent article by Trowers & Hamlins covering this topic
Are you seeing increased interest in ADR mechanisms such as mediation or dispute boards as a way to avoid arbitration or litigation altogether in international construction contracts?
There is an increasing ''pro-mediation'' approach in the UAE, with recent legislative developments and adoption of government initiatives encouraging mediation.
Federal Decree Law No. 40 of 2023 on Mediation and Conciliation in Civil and Commercial Disputes (the Mediation Law 2023) was issued to regulate expedited and efficient mediation in civil and commercial disputes, either through contractual agreement or via court referral subject to the mutual consent of the parties. The Mediation Law 2023 also requires the judiciary to establish mediation centres within the Court of First Instance’s jurisdiction and/or online platforms.
In 2023, the UAE Ministry of Justice launched 'Wasata,' an e-mediation platform with Arabic and English-speaking mediators, aimed at expediting dispute resolution and easing the courts' burden. The Dubai Legal Affairs Department has also made mediation training mandatory for all lawyers under its Continuing Professional Development programme. This pro-mediation trend extends beyond the UAE, with rising demand prompting global institutions like the ICC, ICDR, HKIAC, and Singapore Mediation Centre to expand mediation services.
Dispute boards also remain widely used in construction projects, with a 2024 King's College London study highlighting their global effectiveness, strong party compliance, and growing calls for an international enforcement framework.
Please note the full article was published in Business Week on 8 August 2025 where the original Q&A can be found.
