Litigating To Win The Complex Construction Dispute
Authors: Cohen Lisa C. , Cohen Schindler 
Published: October 2008

Introduction

Disputes involving off-shore projects are always complex. This is due in part to the nature of the projects themselves, which often involve the newest forms of complex technology and construction that may take years to complete. During the construction, thousands of decisions are made and sometimes changed as technology evolves. Each such decision could be examined in the course of a litigation or arbitration, depending upon the issues in dispute.

The number of parties involved also contributes to a dispute's complexity. The project's owner, the general contractor, dozens of subcontractors and suppliers, the surety company, and the banks that loaned money for the project's completion all may play a role. Each party may have a different view of the disputed issues and, of course, each is entitled to an attorney. And, because the project could involve perhaps hundreds of people, the number of witnesses who may be interviewed, deposed, and even called to testify in any court or arbitration hearing can be quite large.

The amount of potential damages in offshore construction disputes compounds the complexity. Damages are a part of nearly every dispute, of course, but the magnitude of potential damages in off-shore construction disputes tends to make every litigation issue more important: the result of each issue could mean a multi-million dollar difference in any damages award.

For example, the issue of who is responsible for a delay in the project's completion " a dispute that frequently arises in off-shore construction projects " may result in millions of dollars in damages if potential revenue is lost when a project is non-operational for many months. Disputed facts may concern critical path scheduling, detailed (or not so detailed) change orders, acceleration and impact costs, design defects, and others. Witnesses could include, among others, those responsible for planning the project, making changes to the project, designing the equipment, bidding for the equipment, ordering of the equipment, and the scheduling of the construction. These witnesses may be employed by the owner, by the contractor, or by any number of subcontractors, all of whom might be parties to the litigation or arbitration. The owner obviously wants to be reimbursed for all lost revenues. The contractor and the subcontractors, on the other hand, want to blame the owner for any delay or, alternatively, blame each other. The surety company that guaranteed the completion of the project wants to either blame the owner or, if it can, collect any damages from the contractor. Finally, the banks want to make sure that their loans are repaid. The lines are thus drawn for a rather complex and high-stakes battle.

The practical realities of the parties' relative positions also must be considered in analyzing the dispute. The contractor, who often operates on narrow margins, may lack the money to pay for any damage assessment. This may play a role in litigating the dispute and in attempting to reach any pre-trial settlement. After all, it would do an owner no good if, after a hearing on the dispute, it were awarded hundreds of millions of dollars against a contractor that had no ability to pay.