4 Construction Contracts and Arbitration

The construction market involves the construction and development of residential and non-residential buildings, construction work on civil engineering projects, and specialist construction activities.1 In 2018, construction contributed £117 billion to the UK economy, 6% of the total.2 A high proportion of people working in this sector are self-employed.3 A great number of jobs pertaining to this sector are governed by contracts that are made specifically on the individual aspects of the overall construction project and these often include many small and independent construction firms. ‘The construction industry is unusual because of the high proportion of self-employment in the sector – 36% in Q2 2019, compared to the average for the whole economy of 13%.’4 The technically complex nature of most construction projects often necessitates the involvement of various contractors undertaking different parts of the overall project. Accordingly, different works concerning specific parts of the project are executed by different parties due to the technicality and specific expertise that even the simplest construction work may require. In other words, a construction project often involves multiple contracts, and the alignment of these, as it is in shipping and insurance contexts, constitutes a significant contractual goal to be achieved also in the construction context. Accordingly, the International Federation of Consulting Engineers (FIDIC), an international standards organization mainly providing contract templates, published some conditions pertaining to construction contracts in 1999 and 2011, and these rules generally facilitate contractual alignment.