James Bremen and Elizabeth Wilson, Quinn Emanuel Urquhart & Sullivan
This is an extract from the fourth edition of GAR’s The Guide to Advocacy. The whole publication is available here.
Why is advocacy in the context of construction arbitration different from any other complex commercial dispute?
Claims in construction arbitrations certainly address legal issues that present themselves in other commercial arbitrations: breach of contract, tort, estoppel, mistake, good faith, the operation of indemnities, warranties. However, they tend to do so in combination with issues that are more specific to construction: the enforceability of liquidated damages and penalties, recovery of consequential or indirect losses, allocation of risk for concurrent delay, the scope and applicability of insurance cover, global claims, the extent of and allocation of liability and responsibility for design and interpretation of applicable engineering codes and standards.
Despite the stereotypical image, construction disputes can sometimes relate almost solely to issues of contractual interpretation (though there are often follow-on disputes to deal with the implications).
Long-term legal practice in the construction sector brings with it a familiarity as to how construction contracts ‘work’ (or rather, should work, in many unfortunate instances). This undoubtedly assists in the efficiency and insight of the legal analysis, and indeed the clarity of its presentation.
All lawyers can read and interpret a contract, of course. However, construction projects that lead to international arbitration involve many contracts, between many different parties. While liability between two particular parties is usually defined by the contractual relationship between them, that is rarely the end of the matter. One must often have an eye to, for instance, how one arbitration might affect a subsequent or different claim against a different project party – for example, an insurer who has otherwise refused to cover the damage, or a specialist consultant who assisted on a particular scope of work. If the project has been financed by external lenders, is consent required for the action being taken?
These competing considerations bring with them the need for consistency in approach and a cohesive strategy to ensure the interests of one’s client are not prejudiced in any way. Contractual arrangements on construction projects are designed to ‘fit together’ in the sense that risk is often allocated in particular and (for an experienced practitioner) expected ways. It is essential to be mindful of this, while not operating on the basis of assumption.
Accordingly, legal argument before a tribunal, whether written or oral, also requires an ability to explain clearly and logically the contractual framework and operative risk allocation.
Expect assertive case management
The complexity and voluminous documentation of typically large construction cases requires assertive case management by tribunals to achieve an expeditious and cost-effective outcome, which most institutional rules prescribe, and end users want. An early case management conference to seek effective case management procedures is necessary, as is an early meeting with experts to identify methodologies and issues, well before experts’ reports and joint meetings. Redfern Schedules should be directed for document requests rather than the old-fashioned common law listing of all documents. It is particularly important to direct joint statements on agreement and disagreement between experts of like disciplines, as properly implemented this can resolve a lot of expert issues. For pleadings, memorials and witness statements, succinct and focused is better than War and Peace. Guerrilla tactics by the respondent should be put down firmly, possibly by costs orders.– David Bateson, 39 Essex Chambers
The other obvious, and perhaps more often-quoted, factor that sets construction disputes apart from others is the need for examination of technical matters. ‘Technical’ in this context entails any of or all the issues that require specialist input before, during the course of or after a construction project (depending on the nature and location of that project). Experienced counsel have the practised project management skills that assist with the navigation, review, analysis and assimilation of vast amounts of technical information, in addition to ways of presenting technical concepts to a tribunal otherwise unfamiliar with the issues.
Are all these documents really necessary?
The potential for vast amounts of documentation and disclosure is a vision that immediately comes to mind at the mention of ‘construction’ disputes. It is certainly true that the sheer quantity of documentation involved is something that sets construction arbitrations apart, and that renders successful conduct of construction arbitration particularly challenging.
Why so many?
Unfortunately, in construction disputes, there is no getting away from the need for review of a large amount of documentation. In the respectful view of the authors, this is true whatever a practitioner’s legal background (civil or common law). The necessity to grapple with the underlying documentary record, whatever that may be, is no different from any other commercial dispute. However, the nature and number of activities taking place on a construction project (and the number of parties undertaking them) results in the volume of documents so often referred to. It is a rare occasion that a witness remembers precisely what was happening on site on a Tuesday five years ago on one of the world’s largest construction projects: contemporaneous documentation is essential.
Take, for example, an allegation that the owner terminated a contractor for accumulated poor performance during the course of a project. That, in turn, creates a large number of allegations of failure on the contractor’s part, one of which is the late installation of a crucial piece of equipment that prevented the start-up of the facility and earning of substantial revenue for several weeks or months. Consider again, even on this one example, how many activities are taking place on a construction project from design, procurement through to construction.
It is not simply a question of whether the piece of equipment in question was in fact late on site. The owner could have, in parallel, delayed approval of the design of an equally important part of the works, without which the project could not be completed. In turn, that may raise a technical question as to whether the design was adequate.
Drawings, daily, weekly and monthly reports, evidence of orders placed, site photographs, emails, programmes and schedules (in addition to factual and expert evidence) will all be necessary to resolve the question of who caused the delay to completion and to what extent (putting aside the legal result of that).
This also highlights that, in the context of construction disputes, causation can be a particularly challenging aspect of one’s case to analyse and prove. It is again most often assisted, if not determined, by the contemporaneous record.
Early review and preparation
Nonetheless, counsel in construction arbitrations do still – often on the basis that the arbitration is said to be civil law-based – attempt to convince tribunals at the earliest possible stage that disclosure should be ‘limited’, even when the dispute is obviously highly complex and comprises numerous allegations.
Opposing counsel and tribunals should be wary of such vague submissions – they are meaningless in the context of construction disputes. A slavish division between civil and common law practices in respect of disclosure in construction arbitration is often not appropriate. Ultimately one has to produce the documentation that will discharge its burden of proof. In a construction context, disclosure of day-to-day project records will often be required.
A review of contemporaneous documentary evidence needs to be planned as early in case preparation as possible. It is a costly exercise and parties can (understandably) be resistant to making such an investment so far in advance of formal disclosure and preparation of evidence. However, it cannot be assumed that significant document review and investigation can wait until the formal procedural step of disclosure. After all, counsel cannot properly advise their clients (including, for example, whether they would be well advised to settle their case before incurring further costs) until they have had the benefit of review of the documentation (and discussion with witnesses).
Delaying this exercise results in counsel having to juggle first-level review of several thousands, if not hundreds of thousands, of documents with the very first assessment of the potential impact and significance of such documents – through interviews with witnesses and experts. The possible deleterious consequences of this course cannot be overstated. Supplementing earlier work, in which the likely road map for a party’s case has been determined, is an entirely different exercise from grappling with the issues from a standing start when one is already in the throes of meeting procedural deadlines.
It is often, frustratingly (both for clients and counsel), not until a hearing that the benefits of this detailed work are truly seen. At that stage, there is no hiding which (if only one) of the parties has a proper handle on the underlying detail of the case, including the documents. Unfortunately, some parties do attempt to proceed on the basis of vague and superficial statements both in witness and expert evidence, often unsupported by documentary references. That can also be a challenge in cross-examination, as such witnesses provide nothing more than the vaguest of responses on the basis of difficulty in recollection. However, demonstrating that a witness has clearly not been referred to relevant documentation in the course of preparation of either their statement or their testimony is often a satisfactory conclusion on its own.
Only if a party has a mastery of the underlying documents and a deep understanding of the evidence and technical issues can the above approach be adequately dealt with. This is critical in large construction cases if they are not to descend into merely a battle of poorly evidenced assertion.
Build your case around the evidence, not the other way around
It is important that a party’s case is thought through from the outset of the arbitration, especially in disputes involving a large volume of facts and technical evidence, such as typically in construction disputes. This requires that delay experts, for example, are engaged at the outset of the arbitration to provide an objective and as detailed as possible assessment of the existing evidence that can enable a party to construct a solid case. The main thrust of the case should be built around the existing evidence and not on evidence that counsel assume will be taken in the course of the arbitration. It is often the case that counsel have to change the whole narrative and supporting basis of their parties’ case, or drop some of the claims in the course of the arbitration when they realise that the evidence that was eventually procured does not support the parties’ original claims, or at least the full extent of their original claims. When this happens, counsel risk losing credibility with the tribunal in relation to the entire case. Importantly, too, tribunals may be minded to take haphazard handling of evidence into account at the allocation of costs, especially when dropping claims or changing the narrative of a case has resulted in unnecessary delays and expenses.– Stavros Brekoulakis, 3 Verulam Buildings
Selection of arbitrators
The real question when it comes to selecting arbitrators in construction arbitrations is whether the arbitrators (or some of them, if a panel of three) should have at least some expertise in construction law, whether as previous arbitrators, judges or experienced practitioners. There is much to be said for this approach, both for the benefit of the parties, and the tribunal themselves. The most recent ICC Construction Arbitration Report also recognises that a tribunal that is familiar with the construction sector, and both civil and common law, is beneficial.
Arbitrators with relevant experience understand and are familiar with the legal and technical concepts that arise, as well as the contractual frameworks that operate in large projects. In addition, they are used to managing issues that present evidential challenges in construction cases, such as complicated delay analyses – and the manner in which to examine global claims and causation – and disclosure. These individuals also appreciate and expect the intensive and substantial workload (often taking place over a number of years) that may be required from them in the course of numerous lengthy substantive hearings. In that context, they can also be more realistic in their assessment of the necessary timing of future procedural steps.
Procedure and timing in construction arbitration
Good arbitrators are often very busy people, who rarely have convenient substantial windows in their diaries waiting to be filled. That problem is obviously exacerbated when the diaries of three such arbitrators need to be coordinated. In addition, one has to have regard to the complexities, volume of material, resources and costs that will be incurred in running (say) a case involving hundreds of individual defects or variations.
This being so, it is not unusual to see construction arbitrations broken into phases to enable particular issues or groups of issues to be dealt with in stages over several years. As with other arbitration, thought must be given at an early stage to how that might most sensibly be approached and managed, and which course is the most beneficial to one’s case. There are many factors that feed into this question.
However, caution must be exercised. While this course provides parties some welcome, though perhaps limited, relief from the burden of preparing an all-consuming case, it can present problems later. Regard must be had as to whether, if the case is split in a particular way, it will allow a party simply to revisit an argument that should have been disposed of previously. In addition, it is not particularly useful for a claimant (or counterclaimant) to win issues of liability and then learn that the documentary evidence of loss (whether proof of the reasonableness of monies expended in settling claims with other parties, or simply evidence of paid invoices) is inadequate.
Again, the experience of the tribunal will be central. It is essential that arbitrations, including in particular large complex disputes that may otherwise spiral out of control, be carefully and rigorously case managed. However, construction disputes involve a very large amount of work. Proceeding on the basis that the arbitration must be finished within a defined period, that there will be one substantive hearing only, and setting hearing dates in a manner that allows for little to no flexibility, is counter-productive and quite possibly unsafe. It may be, for example, that only following the exchange of pleadings that a potential split or bifurcation of proceedings is clearly the appropriate course to take.
Detailed submission to the tribunal at the first case management conference, by reference to clear and realistic examples, is required to avoid setting a course from which it then becomes difficult to deviate.
The necessity for proper particulars
Regardless of the style of pleading employed, issues that arise in the context of construction disputes often require hundreds of pages of witness evidence and thousands of pages of expert analysis.
It should go without saying that particulars of the allegations being made, and the evidential support for them, are required. A failure to provide proper particulars of allegations on large and complex construction projects is one of the key reasons why construction disputes tend to become protracted, with repeated applications for further information followed inevitably by strike-out applications. That can result, in part, from the challenges referred to above with respect to proving causation.
Some development of pleadings from time to time is unavoidable. However, it is not appropriate in construction disputes, which are often worth vast sums of money, for general allegations to be made and maintained simply because providing particulars is difficult or for the purpose of retaining the original claim value.
Sensible proposals should be considered at an early stage of proceedings that will see the arbitration progress, but will assist the parties in properly putting their case (for example, by exchanging pleadings on specific issues, such as delay).
The best construction advocates know how to present technical concepts and arguments to a tribunal in an accessible manner. These advocates spend many hours with the experts, understanding the concepts and, in turn, determining how best to articulate and therefore translate them into written and oral form.
There are numerous articles, and indeed cases, in the construction context, and otherwise, that illustrate the pitfalls of failing to properly manage the expert process. This issue continues to pervade practice generally in both litigation and arbitration and is core to construction arbitration given the importance of expert evidence in that context. Ultimately, it is counsel’s responsibility to ensure that the task carried out by experts is both appropriate and of assistance to the tribunal. It is a task requiring commitment by the expert and an appreciation of the implications of his or her opinion by the parties, often disputing very substantial sums of money.
Of particular concern in the context of construction arbitration is the (unfortunately) seemingly regular engagement of experts who clearly act as advocates for their clients rather than being someone engaged to provide the tribunal with an independent view. This practice continues to this day, regardless of the value of the dispute or the governing law or seat. Most surprising is perhaps the assumption that this approach is desirable before an intelligent and sophisticated tribunal.
While confidentiality in arbitration is of course an advantage, it can provide a cloak of anonymity and unaccountability for many experts who suffer trenchant criticism from tribunals yet simply move on to the next engagement. This emphasises the need for a careful selection process in respect of experts, regardless of an individual’s discipline and experience of testifying.
As a related but separate matter, one must be aware in construction arbitration of claims consultants, who tend to be retained by clients during the life of a project to advise and assist in the management of claims. However, they are appointed to fulfil a particular role that is almost without exception a different task from that of an independent expert. Further, claims consultants have the benefit of information obtained through discussion with their client over lengthy periods. This raises issues again not only of independence but privilege over these communications. It must be remembered that each party’s independent expert should be entitled to access the same information to provide their opinion.
Preparation for and advocacy at the hearing
Advocacy in construction arbitrations is a particularly time-consuming type of dispute, in terms of the preparation required by the arbitrator, for many reasons, including all those already discussed.
Preparation for and conduct of advocacy is (obviously) a very personal matter and the best advocates have refined their approach over a number of years. Presentation must also be tailored to the tribunal to which one is presenting and the particular issues being debated. However, there are nonetheless a number of important points to be made.
Any advocate will spend hours with relevant experts preparing cross-examination of their opposite number. However, in construction disputes, there are often several (sometimes more than 10) expert disciplines and, therefore, experts. How that is to be dealt with needs to be given early and realistic consideration.
Preparation time should not be underestimated, particularly in the case of solicitor advocates juggling a busy practice of multiple cases. Construction disputes are won and lost on the detail. All disputes practitioners know that developments across issues can, and often do, occur during hearings, and therefore need to be addressed urgently. This can only be tackled with a deep understanding of the subject matter and underlying evidence.
It is always obvious when an advocate has been provided with nothing more than a very slim selection of the underlying documentary record or have had their submissions or cross-examination scripted for them almost entirely by others. Again, it is for each advocate to judge what they consider appropriate or necessary. However, this type of approach unavoidably restricts one’s ability to be agile during submissions and cross-examination. If another document in the bundle would demonstrate that the witness is being untruthful, it is of little use if the advocate is unaware of its existence or a team member has failed to appreciate its importance. Assessment as to what may be asked and what responses are likely to be given is a matter of judgement and experience.
None of this is meant to suggest that a single advocate must memorise the entire content of the hearing bundle. That is clearly not practical, in particular in construction. However, again one must give thought to the formation of the team assisting and their scope and extent of responsibility both during hearing preparation and at the hearing itself. A pure ‘divide and conquer’ approach is also unlikely to be satisfactory. Counsel are presenting a case theory to the tribunal in its totality. Team members need to understand the broader implications of developments and discoveries on one area of the case to the others.
Memorials, please, not pleadings
Because of their complexity, construction arbitrations will usually benefit from the parties undertaking as early as possible during the process, and certainly by the date of the hearing, to do as much as they can to define clearly and precisely for the tribunal the nature and scope of the issues that divide the parties. In my experience, two tools are particularly useful in this regard. The first, which has been commonplace in international arbitrations conducted in many jurisdictions, but to some extent less so in common law jurisdictions such as England, is to jettison the English practice of exchanging pleadings in advance of producing the evidence upon which the parties rely and to adopt instead the continental practice of memorial-style pleading in which the memorials are accompanied by all the evidence upon which the parties respectively rely. This helps to ensure that each party knows as early as possible the case that it is required to meet and avoids tiresome debates between the parties, and before the tribunal, as to whether the pleadings have been sufficiently particularised or effectively amended by evidence subsequently submitted.
Second, early and frequent consultation between the parties’ expert witnesses in the disciplines for which they have been retained – leading to the production of one or more joint reports summarising areas of agreement and disagreement between them – is invaluable. This is a practice that is today the norm in some jurisdictions, such as England, but, unfortunately, insufficiently adopted in much of the rest of the world, where experts all too frequently meet each other for the first time at the hearing. Parties and counsel in many parts of the world are reluctant to accept expert witness conferencing of this kind out of fear as to where it might lead. But where it usually leads is to a narrowing of the dispute and, accordingly, greater efficiency, which is ultimately beneficial to the process and very helpful to, and much appreciated by, the tribunal.– Eric Schwartz, Schwartz Arbitration
Of all matters, precision in construction arbitration advocacy is key. It is key in answering the tribunal’s questions, key in preparing witnesses for cross-examination, key (perhaps most importantly) in cross-examination. It is the habit of some advocates to ask questions in a deliberately vague manner, seeking to seduce the witness into agreeing seemingly uncontroversial propositions. It is the responsibility, again, of counsel to ensure that witnesses are prepared for such tactics. This approach to cross-examination is unlikely to gain much headway with a tribunal, particularly if the advocate is overly relaxed as to what does and does not need to be put to a witness to test his or her evidence.
As with other disputes, the best cross-examination breaks down each issue into its discrete constituent (and brief) parts, working through each methodically and in logical order with the witness to ensure all bases are covered. It is difficult for a witness to maintain that they cannot understand questions that are put in the simplest and most straightforward of terms. The ability to do this with highly technical issues is the added necessary skill in construction arbitration.
One must always give thought to what is most helpful to the tribunal by way of presentation of evidence that numbers in the thousands of pages. There are various tools that can be deployed – graphics, flow charts, road maps, brief summaries of key events, chronologies, full sets of photographs collated into a chronological run. Again, there is no one appropriate answer. In general, however, this can be an obvious weakness in lawyers who have been entrenched in a matter for so long that they understand every detail but struggle to take a helicopter view. This is also often only addressed in the throes of preparing opening submissions. However, first-class arbitrators often do not have weeks to read into matters. They require assistance in understanding these issues and counsel is best placed to provide it.
‘Hot-tubbing’, or witness conferencing, is the practice of concurrently cross-examining expert (or factual) witnesses. This method of giving evidence has become increasingly prevalent, particularly in technical disputes; however, in the largest and most complex cases, it does not appear to be the norm.
Whatever the approach to expert evidence, one must remember that experts have been retained for their expertise in technical matters. They are not advocates. A hot-tubbing environment can be both totally foreign and uncomfortable to what is otherwise a very honest and diligent expert who would give straightforward answers to questions reasonably asked.
The ability for experts to provide lengthy introductory presentations prior to being cross-examined (which seems to be specific to arbitration rather than litigation) appears also to be increasing in prevalence. There are issues arising from this approach that counsel must bear in mind. It may be helpful to the tribunal for an expert briefly to set out certain introductory conceptual matters. However, what if an opinion is expressed that does not appear in a written report – how can opposing counsel fairly prepare for cross-examination on such a matter? A truly uncontroversial summary should be capable of agreement between the parties in advance of testimony.
Electronic hearing platforms and the use of technology
Most will be familiar with the increasing prevalence of electronic bundles. Indeed, in larger arbitrations, it is unusual for an electronic bundle not to be ordered by a tribunal.
The functionality of e-bundles need not be set out. However, particularly in construction disputes, with their large numbers of documents and witnesses (factual and expert), e-bundles, coupled with live transcripts, simultaneous translations (if necessary) and use of other technology, such as large screens to view technical documents, save substantial time and make the entire experience much more user-friendly (for parties, tribunal members, counsel and witnesses).
However, as with all hearing preparation, these matters do not magically organise themselves. A great deal of cooperation between opposing solicitors and the various technical providers is required, along with rigorous attention to detail. All eventualities must be considered and catered for. Disputes often involve witnesses giving evidence in various languages from various jurisdictions. The potential for disruption to a hearing, if not carefully managed, is great particularly where reliance upon technology is involved.
Early and detailed evidence review is required to identify and refine key arguments and case theory. Investigation should not be driven or limited by an assumption that there will be one short substantive hearing. Rather, the investigations and their outcome should drive identification of the most appropriate procedural course.
Selection and management of expert evidence is crucial. An expert who has clearly undertaken a thorough and independent expert analysis is always to be preferred over one who acts as an advocate for their client and indiscriminately accepts their own clients’ evidence.
Even a tribunal fully comprised of construction specialists will need substantial assistance from the parties in the translation of the vast and detailed evidence and documentary record. Written documentation and presentation at the hearing must take account of this.
The best advocacy results from a detailed and deep understanding of the factual, technical and documentary evidence. That is the best tool not only for persuasively responding to assertion from the opposition, but for assisting the tribunal throughout the proceedings and at the hearing in particular.
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