Table Of ContentMulti‐Party and Multi‐Contract Arbitration
in the Construction Industry
Multi‐Party and
Multi‐Contract Arbitration
in the Construction
Industry
Dimitar Kondev
Ph.D., LL.M., Mag. Jur., MCIArb, MIR
This edition first published 2017
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10 9 8 7 6 5 4 3 2 1
Contents
About the Author x
Foreword xi
Preface xiii
Acknowledgements xv
List of Abbreviations xvi
1 Introduction 1
1.1 General background and research problem 1
1.2 Scope of the book, limitations and literature review 4
1.2.1 Scope of the book 4
1.2.2 Limitations 4
1.2.3 Literature review 5
1.3 Sources used 6
1.4 Structure of the book 9
1.5 Aims and contribution of the book 10
2 Multi‐Party Arbitration in General 11
2.1 Terminology notes 11
2.1.1 Definition of multi‐party arbitration 11
2.1.2 Multi‐party and multi‐contract arbitration: divergent or similar
concepts? 12
2.1.3 Group of contracts doctrine 14
2.2 Legal techniques introducing multi‐party arbitration 15
2.2.1 Single request for arbitration 16
2.2.2 Joinder 16
2.2.3 Intervention 16
2.2.4 Consolidation 17
2.3 Advantages of multi‐party arbitration 18
2.3.1 Avoids risk of inconsistent findings 18
2.3.2 Less time and fewer costs 19
2.3.3 Fewer factual errors 20
2.4 Obstacles to multi‐party arbitration 21
2.4.1 Consensual nature of arbitration 21
2.4.2 Arbitration as a two‐party setup 23
2.4.3 Arbitration as a confidential process 24
v
vi Contents
2.4.4 Setting aside proceedings and non‐recognition and / or
non‐enforcement of arbitral awards 26
2.4.5 Practical difficulties 30
3 The Need for Multi‐Party Arbitration in the Construction Sector 31
3.1 Specifics of construction disputes and construction arbitration 31
3.2 Introduction to international standard form construction agreements 33
3.2.1 FIDIC Conditions of Contract 33
3.2.2 NEC contracts 36
3.2.3 ICC contracts 37
3.2.4 ENAA model forms 38
3.2.5 IChemE contracts 39
3.2.6 PPC International and SPC International 39
3.3 Contractual structures in construction projects 40
3.3.1 ‘Build‐only’ projects 40
3.3.2 ‘Design‐build’ or ‘turnkey’ projects 41
3.3.3 Construction management 43
3.3.4 Management contracting 44
3.3.5 ‘Design‐build‐operate’ (‘DBO’) model 45
3.3.6 Partnering and alliancing 46
3.4 Parties’ interests in multi‐party arbitration 46
3.4.1 Employer 46
3.4.2 Contractor 51
3.4.3 Subcontractor 52
3.4.4 Designer 53
3.4.5 Engineer 54
3.4.6 Suppliers 56
3.4.7 Technical consultants 56
3.4.8 Guarantors 56
3.4.9 Concluding remarks 58
4 Multi‐Party Arbitration Solutions under Arbitration Rules 60
4.1 ICC Rules 61
4.1.1 Multi‐contract claims and prima facie assessment 62
4.1.2 Joinder 67
4.1.3 Consolidation 69
4.2 CEPANI Rules 71
4.2.1 Multiple parties and multi‐contract claims 71
4.2.2 Joinder and intervention 73
4.2.3 Consolidation 75
4.3 LCIA Rules 77
4.4 UNCITRAL Rules 80
4.5 Swiss Rules 84
4.5.1 Prima facie test 84
4.5.2 Consolidation 84
4.5.3 Joinder and intervention 88
Contents vii
4.6 Rules adopted by the American Arbitration Association (‘AAA’) 90
4.6.1 Construction Industry Arbitration Rules (‘CIAR’) 90
4.6.2 ICDR Rules 92
4.7 Vienna Rules 94
4.7.1 Joinder 95
4.7.2 Consolidation 98
4.8 DIS Arbitration Rules 99
4.9 SCC Rules 100
4.10 DIA Rules 101
4.11 Arbitration rules in Asia 102
4.11.1 CIETAC Rules 102
4.11.2 SIAC Rules 106
4.11.3 HKIAC Rules 109
4.11.4 JCAA Rules 114
4.12 Concluding remarks regarding arbitration rules 115
5 Multi‐Party Arbitration Solutions under Arbitration Laws 121
5.1 UNCITRAL Model Law 122
5.2 The United Kingdom 124
5.3 The Netherlands 129
5.4 Belgium 131
5.5 New Zealand 132
5.6 Hong Kong 133
5.7 Canada 137
5.8 Australia 138
5.9 Other countries 139
5.10 Multi‐party arbitration in the United States 140
5.10.1 Legal framework 140
5.10.2 United States’ case law on multi‐party arbitration 146
5.11 Should arbitration laws deal with multi‐party arbitration? 158
5.12 Concluding remarks regarding arbitration laws 164
6 Contractual Solutions to Multi‐Party Arbitration 167
6.1 FIDIC Conditions of Contract 169
6.2 Blue Form 175
6.2.1 Clause 18(2) of the 1984 Blue Form 175
6.2.2 Use of the Blue Form in conjunction with
the FIDIC Conditions of Contract 183
6.2.3 Commentary on clause 18(2) 189
6.2.4 Clause 18(8) of the 1991 Blue Form 201
6.2.5 Clause 18(10) of the 1998 Blue Form 205
6.2.6 Clause 18C(4) of the 2008 Blue Form 206
6.3 JCT Contracts 208
6.3.1 JCT 80 approach to multi‐party arbitration 209
6.3.2 Commentary on the JCT 80 approach 219
6.3.3 New JCT approach 222
viii Contents
6.4 ACA standard forms 223
6.5 NEC3 226
6.5.1 Main contract provisions 227
6.5.2 Subcontract provisions 229
6.5.3 Do NEC3 provisions create a self‐contained mechanism
for joint adjudication? 230
6.5.4 Compatibility between the joint adjudication provisions
and the dispute notification requirements 232
6.6 IChemE contracts 234
6.7 ICC contracts 237
6.8 PPC and SPC International 238
6.9 ENAA Model forms 240
6.10 AIA standard forms 242
6.11 ConsensusDocs 247
6.12 AB 92 and ABT 93 250
6.13 Concluding remarks regarding contractual approaches 252
7 Proposed Solutions 255
7.1 Jurisdictional approach 256
7.2 Abstract consensual approach 262
7.3 Proposed contractual solutions 264
7.3.1 IBA guidelines for Drafting International
Arbitration Clauses 267
7.3.2 AAA Guide to Drafting Alternative Dispute Resolution
Clauses for Construction Contracts 271
7.3.3 Drafting Multi‐Party Arbitration Clauses 273
7.3.4 Sample multi‐party arbitration clause 303
7.4 Institutional approach 313
7.4.1 How to create a workable multi‐party arbitration
mechanism under arbitration rules? 315
7.4.2 Compatibility of arbitration agreements 319
7.4.3 Other circumstances 322
8 Conclusion 325
Table 1 Summary of Multi-Party Arbitration Provisions under
the Reviewed Arbitration Rules 328
Table 2 Summary of Multi-Party Arbitration Provisions under
Arbitration Laws 333
Appendix 1 Second Alternative Clause of Clause 20 of the FIDIC
Subcontract 337
Appendix 2 Multi‐Party Arbitration Provisions under the Blue Form 351
Contents ix
Appendix 3 Multi‐Party Arbitration Clauses under the ENAA Model
Form – International Contract for Process Plant
Construction, 2010 and Related Subcontracts 355
Bibliography 358
Index 381
About the Author
Dimitar Kondev, Ph.D., LL.M., Mag. Jur., MCIArb, MIR, is an international lawyer
specializing in construction law and dispute resolution.
Dimitar has dealt with international construction agreements based on the FIDIC
Conditions of Contract and bespoke contracts for over a decade. He is currently working
for White & Case LLP Paris on a research project in construction law. Before joining
White & Case he worked as a senior associate and practising attorney‐at‐law at DGKV,
one of the largest law firms in Bulgaria, where he provided legal advice on all aspects and
stages concerning the realization of large‐scale construction projects. Dimitar has also
worked as of counsel at the family‐owned law firm Law House Kondevi, Bourgas,
Bulgaria.
Besides his professional background as an attorney, Dimitar has dealt with international
construction law on an academic level. He obtained his LL.M. degree in international
business law from the Vrije Universiteit Amsterdam. Dimitar’s doctoral dissertation at
Aarhus University in Denmark, which forms the basis of this book, focuses on construction
law and dispute resolution.
Dimitar has written several articles for international peer‐reviewed construction law
journals such as the International Construction Law Review and Construction Law
International. He has been teaching international construction law at Aarhus University
since 2015. Dimitar is registered as a dispute adjudicator under the Bulgarian list of
FIDIC adjudicators (BACEA National List).
Contact details: [email protected].
x
Foreword
I am delighted to have been invited to write a foreword to this book. A proper discussion
of multi‐party and multi‐contract arbitration issues in the construction sector is long
overdue.
Disputes are inherent in the construction industry. Large construction projects invariably
involve a multitude of contracting parties, who are generally bound by a series of bilateral
contracts. Controversies arising under one of these contracts often have repercussions on
parties not directly bound by that contract. For example, an employer’s claim against the
main contractor based on alleged defects in the subcontractor’s work will often trigger a
recourse claim by the main contractor against the subcontractor.
Parties to international commercial contracts, including construction contracts,
regularly resort to arbitration as a main dispute resolution method because of the
advantages that arbitration offers over litigation. Arbitration proceedings typically
take place only between the (typically two) parties to the contract. Third parties, who
are non‐signatories to that contract, may not participate in the same proceedings. As a
result, related disputes on similar points of law and fact, such as the one mentioned
above, often have to be resolved in parallel arbitrations. This takes time, incurs costs
and may result in inconsistent findings.
Multi‐party arbitration is not a new topic. It has been the focal point of discussion and
debate for several decades. Numerous articles and a number of other contributions have
been written on the topic. In this context, it may seem surprising that very few of these
contributions focus on the construction industry, where multi‐party disputes occur on a
regular basis. The present book is the first book on the market that provides for an
in‐depth analysis of the legal issues associated with multi‐party and multi‐contract
arbitration in the construction industry.
Having the background of a practising lawyer and a scholar, the author has approached
this intrinsically difficult subject and its attendant problems from both a theoretical and
a practical perspective. In Chapters 1 and 2, the book opens with an introduction to the
problem of multi‐party arbitration. In Chapter 3, the author steps into the shoes of each
major participant in construction projects with the purpose of identifying their potential
interests in participating in this type of arbitration. Chapter 4 contains an in‐depth
analysis of the approaches to multi‐party arbitration under arbitration rules commonly
encountered in construction disputes. In this analysis, the author draws upon numerous
articles and commentaries. In Chapter 5, different legislative approaches to the problem
are described and evaluated. In Chapter 6, the book then focuses on the contractual
solutions to multi‐party arbitration in a wide range of popular international and domestic
standard forms together with case law pertaining to them. The author critically analyses
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