650.328.9500
Mega Construction Projects: Early Dispute Planning Matters — So Does Who Decides the Case
Oct 1, 2026 · Ken Hagen
Megaprojects rarely fail all at once. Delays accumulate, costs drift, a supplier misses a delivery window, and a disagreement that could have been resolved on site becomes a claim and then an arbitration. By the time counsel hears the words “file the arbitration,” many of the most valuable opportunities to manage the dispute have already passed.
That was my principal takeaway from “Arbitrating the Megaproject: Delay, Disruption, and Cross-Border Chaos,” a panel at the ABA International Law Section’s Fall Conference in London. Paul Kleist, a partner at Cleary Gottlieb in London, moderated the discussion with Daniel González, a partner at Hogan Lovells in Miami; Grace Bailey, director of claims Europe at Fluence; Patrick Baeten, secretary general of BESIX in Brussels; and Krista Lee KC of Keating Chambers in London.
The panel brought together outside counsel, a barrister and the people who manage claims inside owners and contractors. Their perspectives converged on a single point. Sophisticated dispute resolution is not something a party can bolt onto a failed project. It should be designed into the project from the beginning, including a deliberate strategy for who will decide the case if everything else fails.
Contract Structures Are Shifting the Risk
As projects grow larger and more complex, the contracts that govern them are changing. The panel observed less reliance on traditional fixed-price engineering, procurement and construction (EPC) arrangements and greater use of design-build, cost-plus and segmented contracting models. Those structures may reduce some of the risk a contractor carries. They also raise new questions about audit rights, the reasonableness of costs, responsibility for the supply chain and the allocation of risk among owners, contractors and suppliers.
The practical lesson is that risk allocation must be explicit. If an owner assumes procurement or supply risk, the contract should make that allocation unmistakable, and the dispute resolution process should reinforce it. An allocation left to be reconstructed years later from correspondence and change orders is an invitation to arbitrate. Ambiguity that seems tolerable at signing becomes expensive once a project is behind schedule and over budget.
Bring Counsel In Before the Dispute Hardens
On megaprojects, waiting until someone says “file the arbitration” is increasingly untenable. Counsel engaged early can help design escalation procedures, mediation, dispute boards and other mechanisms that address problems while the project is still underway. Early involvement also improves the contemporaneous record, helps identify emerging claims and makes it possible to resolve issues before positions harden.
Timing is central. The best opportunity to resolve a dispute is often while both parties still have commercial leverage and a shared interest in completing the project. Once the project is finished or abandoned, that shared interest disappears. What remains is a contest over money and responsibility, conducted on a record that was assembled for building the project rather than for proving a claim.
Multi-Tier Dispute Resolution Can Work
Multi-tier clauses are sometimes treated as procedural hurdles to clear on the way to arbitration. The panel’s experience suggests they deserve more serious attention. Senior-management escalation, mediation, dispute avoidance boards and dispute adjudication boards can resolve issues while work continues, rather than years later in an arbitral hearing.
Each tier serves a different function. Escalation puts executives with commercial authority in the room. Mediation tests whether a negotiated outcome is available. A standing board gives the parties a neutral who knows the project and can address disagreements as they arise.
These mechanisms work only when they are taken seriously at the drafting stage and actively used during performance. A dispute board that is appointed but never convened, or an escalation step treated as a formality, provides little value at the moment it is needed.
Who Decides the Case
If those mechanisms fail, the choice of tribunal may be one of the most consequential decisions in the entire matter, particularly given the limited scope of review available for arbitral awards. Yet parties often default to the same short list of frequently appointed names, the arbitration “dirty dozen,” rather than evaluating candidates against the needs of the particular dispute.
That evaluation should consider industry knowledge, procedural approach, availability, discovery philosophy, temperament and the ability to work effectively as a member of a tribunal. A dispute built on a voluminous delay record calls for different qualities than a narrow question of contract interpretation. An arbitrator who is well regarded in one setting may not be the right fit in another.
The analysis also should not stop with the party-appointed arbitrator. Counsel should ask how that appointment will affect the selection of the chair, who is likely to be considered for that role and what kind of tribunal the party is ultimately trying to assemble. A party-appointed arbitrator is one member of a three-person decision-making body, and the composition of that body as a whole will shape how the case is heard.
Where the applicable rules and the parties’ agreement permit, appropriately structured candidate interviews can provide valuable insight into availability, case management approach and relevant experience, without any discussion of the merits.
This is a subject I think about often. At FedArb, we encourage parties to approach selection in terms of fit rather than familiarity, drawing on a panel of former federal judges and senior practitioners with experience in complex commercial and technical disputes. The right tribunal for a megaproject dispute is one assembled deliberately for that dispute.
AI Is Changing Claims Management
Artificial intelligence adds another dimension. Project teams can now use AI tools to reconstruct timelines, analyze thousands of project documents, identify potential delay claims and detect disputes before they fully develop. On a project that generates large volumes of email, schedules, daily reports and change orders, that capability can change how early a party understands its position.
It is, however, a double-edged sword. Counterparties have access to the same capabilities. The advantage will belong less to the party that simply uses AI than to the party that uses it early, pairs it with sound legal judgment and builds a record that will hold up when the other side runs the same analysis.
Designing Dispute Resolution Into the Project
The broader lesson from London is that dispute resolution should not be treated as an end-of-project event. On complex projects, it should be designed into the contract and actively managed throughout the life of the project, from risk allocation and escalation procedures to the composition of the tribunal that will decide the case if all else fails.
The objective is not simply to win the eventual arbitration. It is to prevent manageable disagreements from becoming arbitrations in the first place and, where an arbitration cannot be avoided, to ensure that the right decision-makers hear it.
My thanks to the panelists and to the ABA International Law Section for an informative discussion.
Kennen D. Hagen is the president and CEO of FedArb.