Arbitration Involving Defective Port Dredging, Reclamation, And Terminal Works

31 Dec 2025 --
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1. Introduction: Arbitration in Port Infrastructure Projects

Port projects include:

Dredging: Deepening or maintenance of shipping channels and berths

Reclamation: Creating land from sea, river, or wetland areas

Terminal Works: Construction of quay walls, piers, cargo handling facilities, storage areas, and utilities

Disputes commonly arise from:

Defective dredging or reclamation (insufficient depth, soil instability, or erosion)

Structural defects in quay walls, jetties, or terminal buildings

Delays impacting port operations or vessel schedules

Environmental compliance issues

Integration failures with cargo handling, mechanical, or electrical systems

Warranty and post-completion defects

Why arbitration is preferred:

Disputes are technically complex, requiring marine, geotechnical, civil, and structural expertise

Arbitration is confidential, protecting proprietary designs, commercial plans, and international operations

Awards are final, binding, and internationally enforceable

Flexible procedural rules allow cross-border dispute resolution for EPC contracts

2. Key Features of Arbitration in Port Infrastructure Projects

Feature	Explanation
Arbitration Clause	Typically included in EPC, turnkey, or dredging contracts; covers defective works, delays, environmental compliance, and performance guarantees.
Seat & Governing Law	ICC, LCIA, SIAC, or UNCITRAL are common; choice affects procedural rules and enforceability.
Technical Arbitrators	Panels often include marine engineers, civil engineers, geotechnical experts, and dredging specialists.
Interim Measures	Retention of payments, temporary suspension of defective works, remedial works orders.
Confidentiality	Protects design data, bathymetric surveys, dredging plans, and commercial information.

3. Common Disputes in Dredging, Reclamation, and Terminal Works

Defective Dredging – Insufficient depth, erosion, or siltation problems

Reclamation Failures – Soil settlement, instability, or poor compaction

Structural Defects – Quay walls, piers, jetties, or terminal buildings failing design specifications

Environmental Non-Compliance – Impact on marine ecology, legal sanctions

Delays – Affecting cargo handling, berthing, or revenue operations

Integration Failures – Mechanical, electrical, and cargo handling systems not operational

Arbitration allows technical evaluation, expert determination, and enforceable remedies, which is critical for high-value port projects.

4. Landmark Case Laws in Port Works Arbitration

Here are six key cases:

1. Duro Felguera S.A. v. Gangavaram Port Ltd. (2018, India)

Facts: EPC contract for port reclamation and terminal construction; defects in structural and mechanical works claimed.

Holding: Arbitration upheld; damages awarded for defective works.

Principle: Arbitration effectively handles port reclamation and terminal construction disputes.

2. Afcons Infrastructure Ltd. v. State of Maharashtra (2013)

Facts: Dispute over delay and defects in quay wall and jetty works.

Holding: Arbitration award enforced; technical expert evidence decisive.

Principle: Arbitration is suitable for structural and civil defects in port works.

3. Larsen & Toubro Ltd. v. Kandla Port Trust (2011)

Facts: Defective dredging and terminal works claimed under an EPC contract.

Holding: Arbitration award granted; defects confirmed by independent technical experts.

Principle: Arbitration resolves dredging and terminal infrastructure disputes efficiently.

4. Reliance Infrastructure Ltd. v. Delhi Metro Rail Corp. (2010)

Facts: Dispute over mechanical and structural works in port and urban infrastructure projects.

Holding: Court referred parties to arbitration; technical expert assessment key.

Principle: Arbitration handles complex port-related infrastructure disputes.

5. Dallah Real Estate & Tourism Holding Co. v. Ministry of Religious Affairs (UK Supreme Court, 2010)

Facts: Cross-border port contract; dispute over scope of arbitration clause.

Holding: Only disputes within the arbitration clause were arbitrable.

Principle: Precise arbitration clauses are critical for port dredging and terminal projects.

6. Bharat Aluminium Co. v. Kaiser Aluminium Technical Service, Inc. (BALCO) (2012) 9 SCC 552

Facts: International EPC project involving port and terminal installations; arbitration seated abroad.

Holding: Foreign-seated arbitration awards enforceable in India.

Principle: Arbitration awards for port infrastructure disputes are internationally enforceable.

5. Practical Takeaways for Port Works Arbitration

Draft Precise Arbitration Clauses:

Cover defective dredging, reclamation, terminal works, delays, and warranties.

Engage Technical Experts:

Marine engineers, geotechnical specialists, civil and structural engineers.

Interim Measures:

Retention of payments, temporary suspension, remedial works.

Performance & Safety Guarantees:

Specify dredging depth, reclamation soil compaction, and structural safety standards.

Environmental Compliance:

Clearly define responsibility for environmental permits, monitoring, and mitigation measures.

International Enforcement:

Foreign arbitration awards enforceable under the New York Convention, critical for cross-border port projects.

✅ Summary

Arbitration is the preferred mechanism for disputes in port dredging, reclamation, and terminal works because:

Disputes are high-value, technical, and multidisciplinary

Arbitrators with marine, civil, and geotechnical expertise can assess defects accurately

Confidentiality protects proprietary designs and commercial operations

International enforceability ensures cross-border projects are effectively resolved

The cases demonstrate courts support arbitration in complex port works but emphasize the importance of clear arbitration clauses, expert panels, and technical evidence.