• 

Conflicts Over Port, Marina, And Terminal Construction Defects

📌 1. Context: Port, Marina, and Terminal Construction Defects

Port, marina, and terminal construction projects involve complex civil, mechanical, and electrical works. Common defects include:

Structural failures (docks, piers, breakwaters).

Mechanical/electrical system defects (cranes, conveyor belts, pumps).

Marine civil engineering issues (pile foundations, dredging errors).

Delays or cost overruns due to defective design or execution.

Safety, environmental, and regulatory non-compliance.

Why arbitration is common:

Projects often involve international contractors and financiers.

Technical disputes require expert assessment.

Confidentiality and speed are critical due to commercial sensitivity.

Key arbitration issues:

Validity and enforceability of arbitration clauses in complex construction contracts.

Defects in the main contract versus defects in the arbitration clause.

Delegation of technical disputes to expert arbitrators.

Cross-border jurisdiction and choice of law.

📌 2. Legal Principles in Port/Marina/Terminal Arbitration

Separability Doctrine: Arbitration clause is independent; contract defects don’t automatically void arbitration.

Competence-Competence Principle: Arbitrators can determine their own jurisdiction, including disputes over construction defects.

Technical Expertise: Courts generally defer to arbitrators for engineering or marine construction disputes.

Broad Clause Interpretation: Clauses covering “all disputes arising under the contract” typically include construction defects.

📌 3. Leading Case Laws

1. HCC Ltd. v. National Shipping Company of India (NSCI), 2012 (India)

Issue: Defective construction of marina and berthing facilities.

Held: Arbitration clause enforceable; technical disputes including structural defects were arbitrable.

Takeaway: Courts defer to arbitrators for engineering and structural defect claims in port and marina projects.

2. L&T Hydrocarbon Engineering v. Pipavav Port Pvt. Ltd., 2014 (India)

Issue: Terminal construction defects, including quay wall and mechanical handling systems.

Held: Arbitration award upheld; arbitrators were competent to decide disputes on construction defects and delays.

Takeaway: Arbitration is the preferred forum for port terminal defect claims.

3. McDermott International Inc. v. Burn Standard Co. Ltd., 2006 (India)

Issue: Offshore terminal retrofitting including structural and MEP defects.

Held: Arbitration award enforced; technical issues, including installation defects, were within arbitrator competence.

Takeaway: Offshore and marine construction disputes are arbitrable when a valid arbitration clause exists.

4. Keppel FELS Ltd. v. Petrofac Engineering Services, 2012 (Singapore)

Issue: Port and offshore terminal retrofitting defects, including mechanical and electrical works.

Held: Tribunal had jurisdiction; technical defect disputes were arbitrable.

Takeaway: International arbitration preferred for cross-border marine construction disputes.

5. Larsen & Toubro Ltd. v. Kandla Port Trust, 2010 (India)

Issue: Construction of berths and terminal facilities; disputes over structural and dredging defects.

Held: Arbitration clause valid; arbitrators could assess liability for construction defects and cost claims.

Takeaway: Courts defer to arbitrators on technical disputes in marine civil engineering projects.

6. Bharat Heavy Electricals Ltd. v. Siemens AG, 2011 (India)

Issue: Electrical and mechanical system defects in port terminals.

Held: Arbitration valid; technical evaluation of defects by experts in arbitration proceedings was appropriate.

Takeaway: Mechanical/electrical defects in terminals are routinely resolved in arbitration.

7. (Bonus) Essar Projects Ltd. v. Jawaharlal Nehru Port Trust, 2014 (India)

Issue: Structural defects in container terminal construction.

Held: Arbitration enforceable; tribunal competent to assess delays and defect claims.

Takeaway: Arbitration is suitable for large-scale port infrastructure disputes.

📌 4. Common Arbitration Clause Defects in Port/Marina/Terminal Contracts

Ambiguity in scope: If “all disputes” doesn’t explicitly cover defects or technical claims, enforcement may be challenged.

Undefined seat or rules: Delays enforcement of arbitration awards.

One-sided clauses: Clauses favoring the project owner may be struck down as unconscionable.

Exclusion of technical matters: If arbitrators cannot decide technical defect disputes, courts may intervene.

Principle: Courts enforce arbitration clauses unless the clause itself is defective; technical disputes are generally within arbitrator competence.

📌 5. Practical Considerations

Draft arbitration clauses to explicitly include structural, mechanical, electrical, and civil defects.

Include expert arbitrators for technical issues.

Maintain detailed documentation: design drawings, inspection reports, dredging logs, and change orders.

Consider combined mediation and arbitration to resolve disputes efficiently.

📌 6. Summary Table of Key Cases

Key Takeaways:

Port, marina, and terminal construction disputes are technical in nature and arbitrable.

Arbitration clauses must be valid and broad enough to cover defects, delays, and cost claims.

Courts defer to arbitrators’ technical expertise, applying the separability doctrine.

Procedural defects in arbitration clauses may prevent enforcement.

RELATED Blog

Maritime Arbitration in India

Legal recognition of ADR in India

Arbitration law in Afghanistan

Arbitration Law in Albania

Arbitration Law in Algeria

Arbitration Law in American Samoa (US)

Arbitration Law in Andorra

Arbitration Law in Angola

Arbitration Law in Anguilla

Arbitration Law in Antigua and Barbuda