Mastering Delay and Disruption Disputes: LegaTech’s Landmark Arbitration Success
In the challenging world of construction, disputes over delays and disruptions can significantly impact projects. At LegaTech, we understand the intricate interplay of contracts, engineering realities, and legal requirements involved in such disputes. By collaborating closely with our technical team, we effectively execute our projects and deliver exceptional results. Our recent success in an arbitration case concerning two major petrochemical plants in Assaluyeh, Iran, demonstrates how we combine legal expertise with technical precision to resolve even the most complex cases. This case study was compiled with the insightful collaboration of the client’s technical team.
The dispute arose from an EPC lump-sum contract—a rigid agreement type that allows minimal margin for error and requires adherence to strict timelines. The primary issue originated from the employer’s failure to provide essential inputs critical to the project’s execution, including the licensor’s contributions, engineering documents, and timely, adequate responses to the contractor’s inquiries. This failure created a domino effect, delaying key project components and severely disrupting the contractor’s performance. As a result, our client, the contractor, faced 41 months of excusable delays, leading to substantial financial and operational losses.
When representing the contractor before the arbitral tribunal, our team undertook a complex challenge. We analyzed the intricate interdependencies of various project elements, addressed overlapping obligations, and managed an extensive body of evidence—comprising over 8,000 pages of schedules, memos, technical documents, and legal records. This case was not only critical for our client but also had the potential to set a significant precedent in arbitration cases across the region.
Our strategy hinged on technical precision and innovative legal reasoning. A team of delay experts conducted a comprehensive analysis of the project’s critical path, pinpointing how delays were directly linked to the employer’s failure to meet its obligations. Using advanced scheduling tools, we presented clear evidence demonstrating that the delays were excusable and attributable to the employer (the respondent). This approach not only established the employer’s liability but also safeguarded our client from penalties related to the project’s timeline.
What made this case particularly distinctive was our introduction of disruption claims—a seldom-utilized concept in Iranian arbitration. We meticulously calculated the contractor’s loss of efficiency, which pertained to reduced productivity caused by the disruptions, and accounted for broader costs stemming from these disruptions. This comprehensive assessment required the integration of detailed engineering data with compelling legal arguments, crafting a narrative that was both technically accurate and legally persuasive. This innovative approach not only strengthened our client’s case but also paved the way for broader claims in similar disputes in the future.
The arbitration concluded with a groundbreaking decision. The tribunal awarded our client 41 months of excusable delay, absolving them of liability for the delays, and granted €34 million in compensation. This award covered both delay-related costs and productivity losses substantiated through our disruption claims. The result underscored LegaTech’s unparalleled ability to combine legal and technical expertise to achieve remarkable outcomes.
This case demonstrates why LegaTech is the premier choice for addressing delay and disruption disputes. It exemplifies our ability to distill thousands of pages of technical and legal information into clear, persuasive arguments. It also highlights our innovative mindset, as we successfully introduced disruption claims in a jurisdiction where such claims had previously been overlooked.
Above all, this case reflects our commitment to our clients. At every stage, we focused on safeguarding our client’s rights and ensuring justice. The €34 million award and recognition of 41 months of excusable delay are more than just numbers—they represent the tangible value we deliver, even in the most challenging circumstances.
At LegaTech, we view delay and disruption disputes not merely as legal challenges but as opportunities to innovate, advocate, and achieve success. Whether you are facing critical path delays, productivity disruptions, or complex contractual issues, our team is your trusted partner. Let us help you transform obstacles into achievements. Contact us today and experience how LegaTech leads the way in construction law and engineering dispute resolution.