Partners Karie Akeelah and Cheryl Cairns were invited by Gulf Business to discuss dispute resolution in mega projects in the Middle East. In part two of our article, we share our discussion surrounding enforcement challenges and the increased use of mediation and dispute boards.
One challenge often raised is enforcing arbitration outcomes when third parties—who are not 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.
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?
The commercial drive to achieve early resolution of disputes has led to the development of dispute escalation clauses. In principle, these are clauses that usually provide for several methods of resolving a dispute using ADR before requiring litigation or arbitration. For example, the first step may involve negotiation between senior executives of the relevant parties. Mediation may be used as a second step, or as a first step instead of negotiation. More frequently, expert determination is used as a second step before resorting to final dispute resolution methods such as arbitration or litigation.
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. Further, the Dubai Legal Affairs Department has 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.
The article with the original Q&A was published by Gulf Business on 8 August 2025.
