LegalGELegalGE
...

Construction Arbitration

Can I stop a bank guarantee from being paid out?

Yes, by applying for interim measures in court, you can potentially block a wrongful call on a performance bond pending the arbitration outcome.

Who pays for the technical experts?

The party requesting the expert usually pays upfront, but these costs are typically recoverable from the losing party as part of the final award.

What if the builder goes bankrupt during arbitration?

Insolvency complicates matters. You may need to file your claim with the bankruptcy trustee, and the arbitration might be stayed depending on the circumstances.

Can we use mediation before arbitration?

Yes, many construction contracts (especially FIDIC) require a tiered dispute resolution process, starting with amicable settlement or mediation before arbitration.

Reading Time

3 min

Published

...

Construction Arbitration Disputes and Enforcement

The construction business is fraught with risks that often escalate into lengthy and costly disputes. Construction arbitration is a specialized dispute resolution format focused on the rapid and competent resolution of technical and contractual disagreements. This service is intended for developers, construction companies, architects, and investors who require not general legal services, but industry-specific expertise. Legal.ge offers access to construction law experts who understand both the legal nuances and the technological side of construction processes.

Unlike general arbitration services, this service emphasizes the practical aspects of arbitration and enforcement mechanisms. In construction disputes, not only obtaining a decision but also its actual enforcement is often crucial, which requires a specific strategy. Through our platform, you will find lawyers who will help you realize your legal rights.

What Does This Service Cover?

The service covers the full spectrum of construction dispute management, with a special focus on technical and financial details:

  • Developing Arbitration Strategy: Assessing dispute risks and planning an optimal strategy (cost vs. benefit).
  • Coordination of Engineering-Technical Expertise: Finding experts needed for arbitration, formulating questions, and legally analyzing their conclusions.
  • Disputes over BOQs and Payment Certificates: Managing disputes related to the correctness of work performance acts (e.g., Form 2).
  • Bank Guarantee Disputes: Disputes related to the calling of performance bonds or advance payment guarantees and suspending them (interim measures).
  • Enforcement of Arbitral Awards: Seizing property and forced auction procedures on ongoing or completed construction objects.

Common Real-World Scenarios

Disputes often arise in the following circumstances:

  • Acts of Covered Works: The contractor claims payment for underground works, the volume of which is questioned by the employer.
  • Price Escalation: Increase in construction material prices due to inflation and the contractor's request for price revision.
  • Unfair Calling of Bank Guarantee: The employer groundlessly demanded funds from the bank, to stop which the contractor resorts to arbitration.
  • Lost Profits: The developer failed to deliver the apartment on time, causing the buyer (investor) to lose potential rental income.

Georgian Legal Framework

Construction arbitration often applies provisions of the Civil Code of Georgia (works contract, damages) and the Law on Arbitration. Additionally, parts of the Civil Procedure Code regulating interim measures are significant. For example, before or parallel to arbitration, it is possible to apply to the court to suspend the calling of a bank guarantee, which is critical for a construction company's liquidity.

regarding enforcement, the Law of Georgia on Enforcement Proceedings applies, regulating the rules for enforcing a writ of execution issued based on an arbitral award.

Step-by-Step Process

  1. Risk Analysis: The lawyer assesses the prospects of the dispute and the need for expertise.
  2. Request for Interim Measures: Applying to the court to protect assets or guarantees.
  3. Initiating Arbitration: Filing a claim and appointing an arbitrator.
  4. Technical Hearing: Examining experts and investigating evidence.
  5. Award: The final act of the arbitration.
  6. Enforcement: Engaging the Enforcement Bureau to recover funds.

Why Use Legal.ge?

The specialists represented on our platform are not just lawyers, but strategic advisors in the construction industry. They will help you resolve complex technical disputes in a way that minimizes financial loss and maintains your reputation. Legal.ge is your guide through the labyrinth of construction law.

Updated: ...

Specialists for this service

Loading...