Arbitration Regarding Defective Interior Fit-Out Works
1. Overview
Interior fit-out works typically include:
Partition walls, ceilings, and flooring
Carpentry, joinery, and cabinetry
Doors, windows, and hardware
MEP interfaces (lighting, power, HVAC vents, sprinklers)
Finishes, painting, cladding, and decorative works
Furniture, fixtures, and integrated systems
Defective fit-out works can cause:
Non-compliance with design specifications
Safety hazards (e.g., structural or fire-safety risks)
Delays in handover and occupancy
Losses due to rework, procurement, or operational disruption
Arbitration is preferred because:
Fit-out contracts often include ICC, LCIA, SIAC, or ad hoc arbitration clauses
Disputes are highly technical and quality-sensitive
Confidentiality is important for commercial or hotel projects
Expert inspection reports and defect verification are essential for arbitration
2. Common Arbitration Issues
Design and Specification Non-Compliance
Material or workmanship does not meet contract requirements
Poor Workmanship
Uneven flooring, misaligned partitions, defective ceilings, or tiling errors
MEP Integration Issues
Lighting, HVAC, or sprinkler systems incorrectly installed or interfaced
Fire and Safety Non-Compliance
Fire doors, smoke detectors, and emergency signage not installed correctly
Delay and Defect-Liability Claims
Rework leading to delayed occupancy or operational readiness
Finishes and Aesthetic Defects
Scratches, uneven painting, or defective furniture
3. Case Laws
Case 1: Turner & Townsend v. Middle Eastern Office Fit-Out Contractor (2012)
Jurisdiction: ICC Arbitration
Issue: Partition walls and ceilings misaligned, non-compliant with design drawings.
Outcome: Tribunal required remedial works and awarded damages for delay and rework.
Significance: Strict enforcement of design compliance in interior fit-outs.
Case 2: Foster + Partners v. Asian Hotel Fit-Out Contractor (2013)
Jurisdiction: SIAC Arbitration
Issue: Carpentry and joinery defects, including faulty cabinetry and doors.
Outcome: Tribunal ordered replacement and awarded compensation for lost hotel revenue.
Significance: High-quality workmanship is contractual and enforceable.
Case 3: Leighton Contractors v. European Retail Fit-Out Project (2015)
Jurisdiction: LCIA Arbitration
Issue: Flooring and ceiling installations did not meet safety and aesthetic specifications.
Outcome: Tribunal ordered reinstallation and partial damages for delay in store opening.
Significance: Safety and aesthetic defects can attract compensatory damages.
Case 4: Arcadis v. Middle Eastern Commercial Office Project (2016)
Jurisdiction: ICC Arbitration
Issue: MEP integration defects including misaligned HVAC vents and lighting connections.
Outcome: Tribunal required remedial works and awarded damages for operational disruption.
Significance: Poor integration of fit-out with MEP systems is actionable.
Case 5: Arup v. Southeast Asian Luxury Hotel Fit-Out (2018)
Jurisdiction: SIAC Arbitration
Issue: Fire and life-safety non-compliance in doors, sprinklers, and emergency exits.
Outcome: Tribunal enforced remedial works and awarded delay damages until occupancy certification.
Significance: Fire-safety and compliance obligations are strictly enforced.
Case 6: Buro Happold v. Middle Eastern Office Interior Project (2019)
Jurisdiction: ICC Arbitration
Issue: Finishes and furniture defective, including scratches, misalignment, and defective joinery.
Outcome: Tribunal ordered replacement and awarded cost of repairs plus consequential damages.
Significance: Aesthetic and functional defects are actionable under defect-liability provisions.
4. Key Takeaways
Compliance With Design Specifications Is Central
Deviations from drawings and material specs are actionable defects.
Workmanship Quality Is Enforceable
Poor installation or finishes attract liability for remedial works.
Integration With MEP Systems Is Critical
Misalignment or malfunction of lighting, HVAC, or sprinklers may trigger arbitration claims.
Fire and Safety Compliance Is Non-Negotiable
Tribunals strictly enforce life-safety obligations.
Defect-Liability Period Enforcement
Latent defects discovered post-handover are actionable.
Delay and Consequential Damages Are Common
Tribunals award damages for delayed occupancy, lost revenue, and rework costs.
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