Construction Arbitration Proceedings

An overview on risk associated and NEC3 arbitration proceedings


Dr. Eng. Moustafa I. Abu Dief

Contracts and Claims Manager


Kingdom of Saudi Arabia



Arbitration mechanism is evolving and taking the concern for dispute resolution in the commercial contract especially in the current global market of the constructions companies where the international companies are working in different countries in the Middle East and all over the world as well, where arbitration had proved effectiveness as an alternative dispute resolution mechanism. Compared to litigation the arbitration attracts the disputing parties to avoid lengthy procedure and publicity accompanied with the court processes. The parties to a commercial contract identify arbitration in the original contract as they agree to refer all or some identified disputes to the arbitration in order to give final and binding decision. Many cases were resolved through arbitration and put into the sight some facts which call for deep analysis of the arbitration as an attractive mechanism which provides many advantages, has some disadvantages, and includes some risky points that need careful study.

The arbitration mechanism in different acts, institutions will be reviewed in this paper, in addition to an overview of the arbitration mechanism in the new engineering contract “NEC3” and risk concerns associated with the arbitration mechanism.

Keywords:   Arbitration- NEC3- Risk- Egyptian arbitration act 27/1994

  1. Introduction

Arbitration is one of the alternative dispute resolution approaches “ADR” which are the processes that implement procedures that intend to reach a resolution between the disputant parties apart from the traditional litigation processes within the courts. Arbitration is based on the mutual consent of the disputants that establishes the processes and procedures to manage the arbitration process; it has proved its advantages in supporting a speedy and cost-effective dispute resolution mechanism. The Arbitration is expected to preserve the continuity of the business processes between the disputants, unlike the courts procedures which may put the business relationships at risk. This paper will review the arbitration processes as an alternative dispute resolution mechanism in different jurisdictions, such as Egyptian arbitration act, AAA, CIARB, discuss the associated risk, with regard to the implementation in the contractual relationship within the standard forms of construction contracts like NEC3.

  1. Arbitration as a dispute settlement mechanism

The most public mechanism as an alternative dispute resolution mechanism is the arbitration where a third neutral party is assigned to evaluate and decide the appropriate, final, and binding resolution to the disputed event.

2.1 Definition of “arbitration”

The term arbitration is infrequently defined in the national laws in different countries, for example, the UNICITRAL model law on International Commercial Arbitration (1985) did not consider the definition is necessary, while the Egyptian arbitration law identified the arbitration in article four paragraph no. one and also did the Yemen and Palestinian arbitration laws. In the meantime, the arbitration characteristics were demonstrated in different articles of the national laws and considered the prime characteristics as:


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Moustafa Ismail Abu Dief, PhD, CFCC

Kingdom of Saudi Arabia

Dr. Eng. Moustafa Ismail Abu Dief
. Ph.D., FICCP, CFCC™, CCP, PMOC, PMP®, MCIOB, RMP, Certified Forensic Claims Consultant and he is a project management professional with over 25 years of experience in the field in Egypt and Saudi Arabia, mainly in contract and claims domain. Moustafa is delivering training courses in FIDIC, NEC3 contracts and claims management. Dr. Moustafa Ismail can be contacted at the following:


mailto:[email protected]or [email protected]


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