Using Dispute Finance To Derisk Recoverability In The Construction Sector

Construction disputes are often complicated, costly and slow to resolve. For long-suffering claimants, the expectation is that the short-term financial pain will be "worth it" when they finally win an award. But what happens when the respondent doesn't pay? No company wants to "throw good money after bad". In this article we explain why construction companies are uniquely exposed to recoverability risk and how dispute finance can mitigate this risk.

The following issues frequently emerge:

WHERE THE EMPLOYER IS THE STATE

In many emerging economies, attempting to recover award monies from the State through its own courts can be a futile exercise. In practical terms, this means that any enforcement strategy must focus on commercial assets outside the State in enforcement friendly jurisdictions. Sovereign asset tracing is a sophisticated discipline and it should not be assumed that such assets can be located and seized.