From Conflict to Resolution: Tackling Multi-Contract Arbitrations in Construction – Event Summary

Multi-contract and multi-party disputes are an increasingly defining feature of today’s large-scale construction projects, and navigating them effectively requires equal measures of strategy, coordination and legal precision. At an Australian Arbitration Week event hosted by HFW Australia in Sydney, a panel of leading Australian and international practitioners explored the challenges and opportunities inherent in these complex arbitrations. This article captures the key insights shared, and the practical guidance offered for parties seeking to move construction disputes from conflict to resolution.

On 16 October 2025, HFW Australia hosted an event at our Sydney office for the Society of Construction Law Australia (SOCLA) as part of Australian Arbitration Week 2025. Titled “From Conflict to Resolution: Tackling Multi-Contract Arbitrations in Construction”, the event featured a stellar panel of Australian and international arbitration practitioners – namely, Andrew Goddard KC (Barrister, Atkins Chambers), Jo Delaney (Partner, HFW Australia), Adam Robb KC (Barrister, 39 Essex Chambers) and Sharon McGahey (Managing Director, Berkeley Research Group) – who explored the complexities of managing multi-party and multi-contract arbitrations in large-scale construction disputes.

Advantages and Disadvantages of Multi-Party Arbitrations

The evening commenced by emphasising that enforceability is undoubtedly the biggest advantage of opting for a multi-party arbitration. This is due to the relative ease of enforcing arbitral awards in jurisdictions which are signatories to the New York Convention.

Commercial considerations were also considered relevant to weighing the advantages of a multi-party or a multi-contract arbitration. For example, it may be beneficial from a time and cost perspective for a party to join forces with another party to commence proceedings against a mutual opponent rather than bringing the proceedings on their own. This would allow the parties to better share costs (where there is more than one party on a side) and potentially also have access to a broader range of documents (since subcontractors typically have access to contemporaneous project correspondence, unlike employers), whilst still maintaining the confidentiality of the proceedings. A multi-party arbitration also has the added advantage of minimising the occurrence of inconsistent results where there are multiple disputes between several parties arising from the same contractual matrix.

Cost was considered the primary disadvantage of a multi-party arbitration. This is because a subcontractor typically only plays a small role in an overall project. By participating in a multi-party arbitration, a subcontractor may find itself participating in a large arbitration and incurring unnecessary costs.

The discussion then focussed on the matters relevant to experts in a multi-party arbitration. It was emphasised that the first question for an expert is to consider what scope is being analysed and whether it is package specific. This is easy in a normal arbitration between one main contractor and one subcontractor. However, where there are multiple parties, there are then multiple programs which also need to be analysed. This is because the main contractor will be working on an overarching program which has specific timeframes and milestones in respect of the overall project. Each subcontractor, however, has their own program and scope which is limited to their relevant specialisation. This means that there will be different milestones and calculations of liquidated damages although there may be some float. In some instances, the critical path for a subcontract may not be relevant to the critical path for the overall project. This needs to be factored into the delay analysis.

Commencing a Multi-Party Arbitration and Recent Cases

The panel observed that multi-party arbitrations either commence by consolidation or joinder. Consolidation is where two arbitrations (usually under different contracts) are merged into one. Joinder is where a third party is joined as a party to an existing arbitration. Typically, the power of joinder or consolidation comes from the rules of the relevant arbitral institution which administers the arbitration. However, the institution is not the final arbiter on the matter – a Court is.

Jurisdictional Disputes

The panel referenced CBI Constructors Pty Ltd & Anor v Chevron Australia Pty Ltd [2024] HCA 28 to illustrate a situation where an arbitral tribunal determined it had jurisdiction to decide on a particular issue which was subsequently overturned by the High Court of Australia and resulted in the setting aside of the relevant arbitral award. It was emphasised that parties in a dispute need to be alive to such issues to ensure they do not waste unnecessary time and money on a matter, particularly given that they would already be incurring high costs through their involvement in the multi-party arbitration. On the other hand, having more parties involved in a dispute could also create better circumstances for a settlement.

Appointing the Arbitral Tribunal 

The panel also considered the French Cour de Cassation case of Siemens AG v BKMI Industrienlagen GmbH and Dutco Construction to emphasise the issues which could arise when appointing arbitrators in a multi-party arbitration.

In that case, a dispute arose between three parties to a consortium agreement which contained an ICC arbitration clause that expressly provided for a three-member arbitral tribunal. The claimant, Dutco Construction, submitted a joint request for arbitration against the respondents, Siemens AG and BKMI, both of whom objected to the joint proceedings. The claimant’s nominated arbitrator was confirmed by the ICC. However, the respondents were unable to agree on an arbitrator and contended that they each be given a right to nominate.

The ICC Court informed the respondents that their inability to agree on an arbitrator would be considered a failure to nominate an arbitrator under the ICC Rules and result in the ICC Court making the relevant appointment. This led to the respondents jointly nominating an arbitrator under protest.

An interim award was issued by the arbitral tribunal which the respondents sought to set aside on the basis that the arbitral tribunal was not properly constituted. The French Cour de Cassation found that the appointment procedure in this instance violated French public policy as the parties were not afforded equal treatment in the appointment of arbitrators.

Proportional Liability Regime in Australia

The panel then considered the implications of the High Court of Australia’s decision in Tesseract International Pty Ltd v Pascale Construction Pty Ltd [2024] HCA 24 (Tesseract)in the context of the application of the proportionate liability regime on arbitrations seated in Australia.

The dispute in that matter related to a design and construction contract where Tesseract agreed to provide engineering consultancy work to Pascale with respect to the construction of a Bunnings warehouse in South Australia. A dispute arose regarding whether Tesseract’s work was performed to the contractual standard, which was eventually referred to arbitration. Tesseract denied liability and argued that its liability should be reduced on account of the negligence of a third party in accordance with the proportionate liability regime in South Australia.¹

The Supreme Court of South Australia held that the proportionate liability regime does not apply to arbitrations. This was overturned by the High Court of Australia which held by a 5:2 majority that the proportionate liability regime applied to the arbitration since it formed part of the substantive law of South Australia which the parties had freely selected in accordance with the principle of party autonomy. The dissenting opinions, however, emphasised that substantial modifications are required to fit the regime within the sphere of arbitration.

The panel noted that there were three key challenges arising from the Tesseract decision.

First, under the proportionate liability regime, the party relying on the regime must provide information to the other side regarding the potential third party concurrent wrongdoer (Third Party Wrongdoer). However, if the Third Party Wrongdoer is not a party to the arbitration agreement, then it cannot be joined as a party to the arbitration without express consent. This is because there is nothing in the proportionate liability regime which compels an identified Third Party Wrongdoer to be joined as a party to an arbitration. The High Court determined that there would be no disadvantage to a claimant who is unable to join a Third Party Wrongdoer since the parties could agree to contract out of the proportionate liability regime. However, this ignores the fact that the ability of the parties to contract out of the proportionate liability regime varies across Australian States. In some States it is possible for the parties to contract out of the regime; in some it is expressly prohibited in the relevant legislation; and in others, there is no express provision either way.

Second, if the Third Party Wrongdoer does not agree to being joined to the arbitration, then the implication of the Tesseract decision is that the arbitral tribunal needs to consider the notional damages (that is, the overall pot) and then determine how much the Third Party should be liable for. This decision needs to be equitable. However, it will be based on limited information if there is no evidence or submissions from the Third Party Wrongdoer.

Third, once a claimant has brought an action to which the proportionate liability regime applies, then the Tesseract decision requires that the arbitral tribunal’s determination on the issue of proportionate liability needs to be considered by a future arbitral tribunal as binding on related disputes. This does not correlate with the confidential nature of an arbitration unless the parties agree to waive confidentiality.

These factors suggest that the majority of the High Court may not have appreciated the wider ramifications of the Tesseract decision on arbitrations seated in Australia.

Strategies for conducting a Multi-Party Arbitration

Finally, the panellists commented that the parties should give thought to the architecture of the dispute before making a request for a multi-party arbitration.

An example was provided of a situation where an employer is sued and issues a notice of arbitration to an engineer and a subcontractor, following which the engineer also brings a tort case against the subcontractor, all of which are referred to an ad hoc arbitration. How would such an arbitration work in practice? Will the evidence be exchanged in a staggered manner? With respect to disclosure, would everyone receive all the documents? Would all the parties be required to participate in the hearing? What will happen with the award – will there be one or four?

The panellists emphasised that these are all matters the parties should consider and seek to agree on prior to requesting a multi-party arbitration. This would likely involve the parties’ representatives spending time working together to find an appropriate solution for addressing such issues. In some circumstances, it may also be prudent to involve the arbitral tribunal in such discussions.

Conclusion

The panellists concluded with the reminder that “arbitration is what you dream”! This is because so long as there is consent or the arbitral tribunal can make the relevant order, the parties are free to use their imagination to figure out how best to conduct their multi-party and / or multi-contract arbitration. 

Footnote:

1. This is contained in Part 3 of the Law Reform Act (Contributory Negligence and Apportionment of Liability) Act 2001 (SA) and / or Part VIA of the Competition and Consumer Act 2010 (Cth).