In the July 2020 edition of Mealey’s International Arbitration Report, Albert Bates Jr., a partner in Troutman Pepper’s Pittsburgh office and head of the firm’s International Construction Projects Practice, offers his thoughts on developments in the field of international arbitration and the question of whether practitioners expect parties to continue to utilize the traditional international arbitration seats (e.g., London, Paris, Singapore, New York) or shift toward new jurisdictions. As Mr. Bates explains in this piece, with some minor exceptions, it appears unlikely that international arbitration users will trend away from the traditional international arbitration seats and that the United States will remain an important hub for international arbitration.

On June 8, 2020, Level 10 Construction, LP (“Level 10”), a construction company hired by Sea World San Diego (“Sea World”), filed a Complaint in California federal court alleging that Sea World is withholding over $3.2 million dollars in payments from Level 10. In the Complaint, Level 10 alleged that Sea World has declined to issue payments until the Sea World park reopens. Sea World has remained closed since March 2020 due to COVID-19. Continue Reading Level 10 Construction v. Sea World LLC: Can Force Majeure Save Sea World?

This article was originally published in Government Construction (Volume 5, Issue 2 – Summer 2020), an ABA Division 13 Quarterly Newsletter. It is republished here with permission.

The United States Civilian Board of Contract Appeals (the “Board”) recently issued a decision that may be particularly pertinent in light of the COVID-19 pandemic. In Pernix Serka Joint Venture v. Department of State,1 the Board rejected a contractor’s claim for additional costs related to demobilization and remobilization of the job site in Freetown, Sierra Leone, due to an Ebola virus outbreak. The Pernix decision should put government contractors on notice that, depending on applicable contract language, federal contractors may be entitled to schedule relief, but not costs, as contractors deal with COVID-19 related impacts. Continue Reading CBCA Offers Potential Insight Into How Board Will Handle Claims Related to COVID-19

Published in Dispute Resolution Journal (June 2020, Vol. 74, No. 3), the flagship publication of the American Arbitration Association. © 2020, American Arbitration Association. It is reprinted here with permission.

EXCERPT:

“There is a deceptive simplicity about the way in which arbitral proceedings are conducted… In fact, the appearance conceals the reality.”

Introduction

Arbitration is simple. Parties select a person or persons — the arbitrator(s) — whose expertise or judgment they trust to resolve their differences in a privatized forum. After each party puts on their case, the arbitrator(s) consider the arguments and evidence and renders a binding decision. Continue Reading Internationalizing Domestic Arbitration: How International Arbitration Practices Can Improve Domestic Construction Arbitration

United States Army Corps of Engineers v. John C. Grimberg Co., Inc., No. 2019-1608, 2020 BL 215269 (Fed. Cir. June 9, 2020)

The Court of Appeals for the Federal Circuit reversed a decision by the Armed Services Board of Contract Appeals (“Board”), which had found in favor of a contractor on a Type I differing site condition claim. The Board had held that, even though the contractor’s interpretation of the contract documents was unreasonable, it was more reasonable than the government’s. The Federal Circuit reversed, holding, as a matter of law, that the contractor’s unreasonable interpretation of the contract documents barred its claim. Continue Reading Federal Court Holds the Reasonableness of the Government’s Interpretation of Geotechnical Data is Irrelevant to Differing Site Condition Claim

P.A.L. Environmental Safety Corp. v. North American Dismantling Corp. Et Al., No. 19-11630, 2020 BL 198779 (E.D. Mich. May 28, 2020)

A Michigan federal court partially granted Consumers Energy Company’s (“CEC”) motion to dismiss P.A.L. Environmental Safety Corporation’s (“PAL”) complaint alleging numerous causes of action in connection with its suit against CEC and contractor North American Dismantling Corporation (“NADC”) for outstanding payment stemming from asbestos abatement work at a CEC-owned power plant in Essexville, Michigan (the “Power Plant”).

According to the decision, CEC, as owner, and NADC, as prime contractor, entered into a written contract whereby NADC agreed to abate, dismantle, and demolish the Power Plant.  In turn, NADC subcontracted with PAL to perform abatement of all asbestos containing material at the Power Plant.  While the subcontract price was $7,996,331, PAL alleged entitlement to an adjusted price of $23,841,833 in unpaid labor and materials for its asbestos abatement work.  Specifically, PAL alleges that it performed additional work not accounted for in the subcontract including fly ash and coal dust removal, refractory brick abatement, and extra asbestos removal.

While PAL’s complaint included numerous counts against Defendants NADC, CEC, and labor and material payment bond surety North American Specialty Insurance Company (“NASIC”), the opinion is most notable for its treatment of CEC’s motion to dismiss several counts against it including: (i) quasi-contractual claims; (ii) a third-party breach of contract claim; and (iii) a negligent misrepresentation claim. Continue Reading Michigan Federal Court Permits Subcontractor’s Quasi-Contractual Claims to Proceed Despite Existence of Express Contract Covering the Same Subject Matter

Gables Construction, Inc. v. Red Coats, Inc., No. 23, 2020 BL 193791, 2020 MD LEXIS 264 (Md. May 26, 2020)

Upper Rock II, LLC (“Upper Rock”) contracted Gables Construction, Inc. (“GCI”) to construct a multi-building apartment complex in Rockville, Maryland (the “Project”) per the terms of the American Institute of Architects (“AIA”) A102TM-2007, Standard Form Agreement Between Owner and Contractor and AIA A201TM – 2007, General Conditions of the Contract for Construction.  The General Conditions required Upper Rock to purchase and maintain a property insurance policy.  It also contained a waiver of subrogation provision under which Upper Rock waived all rights against GCI and other Project participants for damages caused by fire to the extent covered by insurance. Continue Reading Maryland Court Holds No Right of Contribution Where a Waiver of Subrogation Precludes Common Legal Responsibility

The U.S. Supreme Court issued a unanimous decision on June 1 in GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC, holding that, in some circumstances, even nonsignatories to an agreement may invoke international arbitration. The Court ruled that the U.N. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) did not prohibit the application of the U.S. doctrine of equitable estoppel to permit the enforcement of arbitration agreements by nonsignatories. In doing so, the Court clarified that the doctrine of equitable estoppel recognized under Chapter 1 of the Federal Arbitration Act (FAA) for U.S. domestic arbitrations could also be applied to international arbitration proceedings governed by Chapter 2 of the FAA.

For parties who regularly engage in multi-tiered international commercial arrangements like the kind seen in GE Energy, the ruling expands the reach of international arbitration agreements and gives those parties greater clarity into their own ability to utilize international arbitration to resolve complex disputes. Continue Reading Supreme Court Interprets New York Convention to Allow Arbitration Agreement Nonsignatories to Invoke International Arbitration