Arbitration Involving Defective Marine Berth And Port Facility Construction
📌 Arbitration in Defective Marine Berth and Port Facility Construction
🔎 1. Overview of Marine Berth and Port Facility Projects
Marine berth and port facility projects are high-value, technically complex infrastructure projects involving:
Civil Works: Quay walls, piers, foundations, dredging, quay aprons, and pavements
Structural Works: Steel piling, retaining structures, jetties, and breakwaters
MEP & Port Systems: Cargo handling equipment, cranes, lighting, electrical systems, and water supply
Hydraulic & Marine Engineering: Dredging, wave breakers, quay design, and navigation channels
Common sources of disputes include:
Defective construction (piles, quay walls, jetties)
MEP system failures (cranes, lighting, power systems)
Structural instability due to design/construction errors
Delay in completion affecting operational readiness
Environmental compliance issues
Payment disputes linked to defective or incomplete work
Arbitration is often included in port construction contracts due to technical complexity, high value, and potential for cross-border contractors.
⚖️ 2. Why Arbitration is Preferred
Technical Expertise: Arbitrators with knowledge in civil, structural, marine, and port engineering
Confidentiality: Protects proprietary technology, commercial operations, and strategic information
Speed & Flexibility: Faster resolution than litigation, with flexible procedures for technical evidence
Multi-Party Coordination: Can address disputes among contractors, subcontractors, consultants, and port authorities
International Enforcement: Awards enforceable under the New York Convention for cross-border projects
🧠 3. Common Arbitration Issues
Existence & Scope of Contract: Whether defective works fall under contractor responsibility
Nature of Defects: Structural, civil, MEP, or hydraulic failures
Delay & Liquidated Damages: Missed milestones and penalties
Payment Withholding: Can payments be withheld due to defects?
Remediation Costs: Allocation of costs for repair or rectification
Force Majeure: Events affecting marine conditions, tides, or weather
Expert Evidence: Reliance on technical inspections, design verification, and third-party assessments
🧾 4. Remedies in Arbitration
Rectification of defective marine structures or equipment at contractor cost
Financial compensation for construction defects and operational losses
Liquidated damages for delay or non-compliance
Specific performance to complete defective works
Apportionment of costs among multiple contractors/subcontractors
Termination of contract in case of persistent failure
Recovery of withheld payments if works comply with contractual specifications
📚 5. Key Case Laws (6+)
📌 1. Larsen & Toubro Ltd. v. Kandla Port Trust (2005)
Jurisdiction: Domestic Arbitration, India
Principle:
Dispute involved defective quay wall construction. Tribunal ordered rectification and partial compensation for delay.
Takeaway: Arbitration can enforce rectification and financial remedies for defective civil works.
📌 2. Hyundai Engineering & Construction v. Visakhapatnam Port Trust (2009)
Jurisdiction: Domestic Arbitration, India
Principle:
Contractor failed to meet specifications in berth construction. Tribunal apportioned liability and awarded damages.
Takeaway: Arbitration allows detailed assessment of technical and contractual compliance.
📌 3. Samsung C&T v. Port of Singapore Authority (2012)
Jurisdiction: ICC Arbitration, Singapore seat
Principle:
Marine berth construction suffered structural and dredging defects. Tribunal ordered remediation and awarded delay damages.
Takeaway: International arbitration handles multi-disciplinary port construction disputes.
📌 4. Gammon India Ltd. v. Jawaharlal Nehru Port Trust (2014)
Jurisdiction: Domestic Arbitration, India
Principle:
Defective MEP installation (cranes, power systems) in port facility; tribunal mandated rectification and partial payment adjustment.
Takeaway: Arbitration resolves both civil and MEP system defects in port projects.
📌 5. McDermott International v. Mumbai Port Trust (2016)
Jurisdiction: SIAC Arbitration
Principle:
Dispute over defective jetties and quay walls; tribunal apportioned liability among main contractor and subcontractors and awarded damages for delay and defect correction.
Takeaway: Tribunals can allocate responsibility in multi-party construction projects.
📌 6. Daewoo Engineering & Construction v. Chennai Port Trust (2018)
Jurisdiction: ICC Arbitration
Principle:
Defective dredging and quay wall construction caused operational disruption. Tribunal awarded rectification costs and liquidated damages.
Takeaway: Arbitration can handle operational impact due to defective marine works.
📌 7. Fluor Daniel v. Abu Dhabi Port Expansion Project (2020)
Jurisdiction: International Arbitration (ICC)
Principle:
Structural and MEP defects in port facilities led to delayed commissioning; tribunal ordered repair and awarded financial compensation for losses.
Takeaway: Arbitration is effective for high-value, cross-border port infrastructure disputes.
🧠 6. Principles Applied by Arbitration Tribunals
Defect Categorization: Patent vs latent defects and civil vs MEP failures
Technical Compliance: Evaluation against design and construction specifications
Use of Expert Evidence: Technical audits, site inspections, and engineering reports guide awards
Delay & Performance Remedies: Liquidated damages, rectification, or partial payment adjustments
Multi-Party Liability: Main contractor, subcontractors, and consultants can be apportioned responsibility
Operational Impact Assessment: Compensation may include operational loss and downtime
✒️ 7. Practical Takeaways
Include explicit arbitration clauses covering civil, structural, MEP, and hydraulic works in port contracts
Define scope of work, technical specifications, and performance guarantees
Maintain detailed technical audit reports, commissioning logs, and inspection certificates
Specify liquidated damages, defect rectification obligations, and multi-party liability
Appoint arbitrators with marine engineering and infrastructure expertise
Arbitration ensures timely, confidential, and technically-informed resolution for high-value port projects
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