COMMENT: Qatar & Dubai risk construction disputes
Laura Warren is a construction & projects partner at Clyde & Co, Doha
The upcoming 2022 FIFA World Cup in Qatar and Expo 2020 in Dubai, UAE, will see an unparalleled number of visitors to the GCC region.
A number of sizeable infrastructure projects and associated developments have been earmarked to showcase the region and provide for this influx. Large-scale projects, coupled with short timeframes for completion, understandably carry with them the risk of construction disputes.
Against this backdrop, it is key to examine the regional outlook for disputes in Qatar and Dubai leading up to these events, and focus on those ways to manage the risk of disputes.
The award of the 2022 FIFA World Cup has fuelled an enormous amount of investment and construction in Qatar.
Additionally, large infrastructure projects like the Inner Doha Re-sewerage Implementation Strategy (IDRIS), Doha Metro, the orbital expressways, and New Doha Port are taking shape, in line with the requirements of Qatar National Vision 2030.
With some projects nearing completion and others approaching their deadlines, we expect a steady increase in construction disputes.
Resolution through the local courts will remain popular, but we see an increasing trend towards resolution through arbitration.
World Expos have a legacy of transformative developments and iconic architectural achievements.A number of the UAE’s infrastructure developments will coincide with Expo 2020, including Trade Centre Jebel Ali, Al Maktoum International Airport expansion, and the Dubai Creek expansion project.
Care will need to be taken to actively plan and manage project delivery. Without it, we would expect the following types of dispute to arise:
- Scope variations – particularly in respect to design obligations, where important decisions are deferred and responsibility for obtaining approvals impacts project delivery;
- Acceleration – given the ‘hard’ deadlines likely to be associated with projects, we see acceleration of works being a point of contention;
- Defects – ‘hard’ deadlines for large projects may stretch resources, causing increased risk of defective or non-compliant work; and,
- Cash flow – mobilisation of sufficient resources will require adequate cash flow at all project levels. If not managed properly, this could lead to difficulties in terms of payment disputes.
Edging closer to 2020 and 2022, the effects of ‘hard’ deadlines will be felt, and the potential for construction disputes will increase as the timeframes for completion of various planned projects become tighter.
To avoid these disputes, parties will need to carefully define project scope and specific obligations at the outset, and ensure there is clarity as to where those obligations sit between the various project participants.
Proactive and rigorous contract administration on all sides will also be key to ensuring any disputes are avoided, or otherwise addressed, as they arise.
We expect arbitration to remain the preferred mechanism for formal dispute resolution in the construction projects leading up to the Expo 2020 and the 2022 FIFA World Cup.
Arbitration has several advantages compared to litigation within the local courts, including the ability of parties to appoint suitably experienced experts to act as arbitrators.
Given the increased scrutiny on project delivery – both national and international – the confidential nature of the process will also appeal to construction parties.