Interview with Kaan Aksu

What effect has the COVID-19 pandemic had on the construction industry, particularly in relation to contractual tensions and disputes?  

Restrictions on travel (including the issuance of visas) and interruptions in supply chains led to delays in many of our projects. I believe all international contractors faced similar difficulties over the past year. 

Proving the existence of a force majeure event can sometimes be challenging, but that was not the case with COVID-19. However, it is always a big hurdle to quantify and agree on the impact of these events. Recoverability of additional costs is one of the common dispute areas. 

How important has better communication between construction project stakeholders been in light of the difficulties created by the pandemic? 

We had to monitor our construction projects closely to make sure that we issued timely written notifications to our clients and with the right content to preserve our rights under the respective contracts. We had to increase the number of virtual meetings as some of the personnel could not travel to the site. We could not meet with the other stakeholders as regularly as we did, which delayed resolution of some of the problems.

What kind of pressure has the COVID-19 crisis put on contract management and how have you responded to this in terms of seeking external/additional help, including legal advice? 

We created notification templates for each of our projects taking into account the relevant provisions of their respective contracts and issued guidelines to the executive management for proper record keeping. I believe we managed to get things under control with the help of our in-house teams, with a few exceptions where local law advice was helpful in identifying our exact entitlements.

In dealing with contract tensions and potential disputes, how can the industry improve? 

Record keeping is crucial in dealing with tensions and disputes, no matter how one intends to resolve those, but finding the right communication channel is key to amicable resolution. Contractors and clients should work together to form effective mechanisms to resolve disputes. I find the most effective way to achieve this is to have a layered approach in dispute resolution clauses, where the parties to the dispute try to resolve it at the working level, and if that is not possible, at a management board level formed by the project executives and then at the senior management level. Assuming that both parties will act prudently, this layered approach will allow the parties to crystalise the dispute and then the parties will then be able to make an informed decision about whether they would want to further escalate the dispute.

What is your view on addressing points of contract tension or dispute during the course of a project, or dealing with them towards the end or at the end? How has this approach been affected by COVID-19 factors? 

My view depends on several considerations such as the requirements of the relevant contract, the overall attitude of the client and the magnitude of the dispute. Some forms of contracts encourage parties to resolve their disputes as they arise by introducing hard deadlines and by forcing the parties to exchange documentation before the expiry of that deadline. This is not always helpful, as the impact of an excusable event may not always be quantified at once and the parties may need flexibility to assess the situation before making a big fuss. On the other end of the spectrum, there are clients who do not wish to be bothered by notifications at all, and this may lead to piling up of all claims towards the end of a project and a major dispute. There is no catch-all approach when it comes to dealing with disputes and one should carefully consider the facts and find the best method in each case. 

What is your preferred means of dispute resolution? 

Arbitration, which provides us with a final and binding award, remains our choice. Based on which country we are operating in, or which client we are dealing with, we make an assessment about the enforceability of arbitral awards and we try to select the most appropriate forum for that particular case. 

I am not convinced that dispute boards or mediation are effective ways of resolving a complex dispute under a major construction contract, unless the parties knowingly make the choice to resort to these options at the time when the dispute has already arisen. It is not possible to know beforehand what kind of dispute may arise under a contract and having these alternative methods as mandatory steps in a dispute resolution process can potentially result in waste of time, effort and money. 

What is your view on arbitration as a form of dispute resolution? To what extent is the arbitration process more appealing to you than it used to be? 

I don’t think there is any real alternative to arbitration for resolution of major construction disputes. Yes, it is costly, difficult to deal with and we avoid it as best as we can, but it also gives comfort to us to know that we can fully particularise and present our claims in an arbitration, and our case would be heard and understood by a tribunal, which consists of experienced persons, specialised in their fields.