Resolution of disputes arising from major infrastructure projects in developing countries

Multilateral Development Banks including the World Bank have identified infrastructure development as a crucial component of any poverty alleviation strategy in developing countries. The last two decades have seen tremendous increase in the percentage of resources developing countries have invested in infrastructure development. About £755 million was committed to private-public infrastructure development in the developing world between 1990 and 2001. Unfortunately, as exemplified by the Dam Construction Project in Lesotho, disputes often arise from major infrastructure projects in the developing world that are resolved at great cost by courts and arbitral tribunals constituted from the most expensive legal professionals in the developed world. This research presents a critical review of the literature on the experience of such disputes and the methods used in resolving them. It derives from the preliminary phase of a study aimed at developing the knowledge and understanding necessary for more cost effective resolution of such disputes. The key findings of the review so far are as follows. What literature exists is limited largely to resolution by international commercial arbitration. As to be expected of the size of these projects, governments or state entities are often parties to the underlying contract and, therefore, the disputes from the projects. In the overwhelming majority cases, the parties from developing countries are often the respondents and rarely the claimants. There is a perception that developing countries are always at a considerable disadvantage in the conduct of arbitration proceedings, which is a source of disaffection with the process on the part of these States. However, what is most remarkable about the literature is that, although there is a rapidly growing use of alternative dispute resolution (ADR) methods other than arbitration to resolve similar disputes in the developed world, the literature is silent on the use of such methods on projects in developing countries. The paper also considers the implications of the findings of the review for the design of the study.