Renewables projects: Effective and efficient dispute management

Introduction

In our article on how commercial parties can protect themselves, we explained the substantive areas of disputes risk on renewables projects and how they can be mitigated.  In this article, we explain how commercial disputes in the renewables sector can be managed efficiently and cost-effectively.  

In our experience, disputes in the renewables sector are commonly resolved through international arbitration. One of the advantages of international arbitration as a dispute resolution mechanism is the flexibility that the parties retain over the process. (For further advantages read our article on why you should be thinking about International Arbitration). There are a number of steps that the parties involved can take to ensure that any arbitration proceedings do not become disproportionately expensive and time-consuming. These steps relate to:

1. joinder, consolidation and third parties;
2. confidentiality and reputational concerns;
3. the request for relief;
4. preservation of evidence;
5. how best to educate the Tribunal, including the use of site visits and experts; and
6. document creation, management and privilege.

1.  Joinder, consolidation and third parties

Thought needs to be given at the outset as to whether there are any third parties with a relevant interest in the proceedings. For example, in a dispute about the under-performance of an energy-from-waste plant, a construction contractor facing a claim from the owner might want to claim against the feedstock supplier to argue that it was the quality of the feedstock supplied, and not the design of the plant, that led to the underperformance. 

Joining relevant third parties to the proceedings, or seeking to consolidate a number of different proceedings, can bring about time and cost efficiencies and may make it easier to secure any relevant documents held by third parties. Certain institutional arbitration rules provide for joinder of third parties, almost automatically in certain circumstances, and so it is prudent to ensure you opt for the best rules when drafting your arbitration agreement. There might, however, be tactical advantages to keeping third parties, and claims by or against them, separate.

2.  Confidentiality and reputational concerns

All disputes run the risk of undermining the reputation of those involved. Parties may also be required to disclose trade secrets or commercially sensitive information in order finally to resolve a dispute. While arbitration is typically a private process, confidentiality of the proceedings (and any materials produced in them) is not guaranteed. The underlying project documents may include confidentiality obligations, but these will rarely be sufficient to cover disclosure of the fact of a dispute or its subject matter. The agreed procedural rules and the law of the seat may also include provisions on confidentiality. However, it can be helpful also to negotiate express confidentiality obligations at the outset of any arbitral proceedings and to include those obligations in the Tribunal's procedural order.

3.  Formulating the request for relief

From the outset, it is helpful to consider what sort of meaningful relief is required; for example, do you need a declaration that a contractual clause has a certain meaning? Or an order that a party issue a certificate? Moreover, in order to give the decision requested, does the Tribunal first need to make a series of smaller decisions or calculations based on the evidence before it? It is important that the request for relief is formulated to give the appropriate mandate to the Tribunal. Parties should also be aware that the Tribunal might ask that the request for relief be revisited, either prior to, during or after the hearing. This can come as a surprise – particularly to those parties from common law jurisdictions who are new to arbitration.

4. Preservation of evidence

As with any dispute, taking steps early on to preserve evidence and ensure that your case can be properly supported is crucial to its prospects of success. Reviewing document retention policies and making sure that potential relevant documents will not fall within the scope of any automatic deletion or overwriting process is key to avoiding any request that an adverse inference be drawn from the non-availability of such documents. 

In addition, parties should consider speaking to potential witnesses as soon as possible. Waiting too long to speak to witnesses increases the risk that they will forget key details, lose records or become unavailable to assist. Indeed, given that disputes in the renewables sector often cover a long period of time, it is not unusual to find that key witnesses of fact have moved on by the time dispute resolution proceedings are formally commenced. Securing their assistance early on is essential.

Engaging experts at an early stage is also important. In a renewable energy dispute, there may only be a few individuals with relevant experience of the technology at issue and there is significant scope for experts to be "conflicted out" of acting because of prior involvement either in the project or with the parties. Identifying the right expert and appreciating any shortcomings in their experience is key when preparing for oral testimony. Parties should also consider whether the Tribunal is likely to need its own expert, for example to run complex performance-model calculations in order to grant the relief sought by the parties. At the very least, thought needs to be given regarding the extent to which the Tribunal should be permitted to engage directly with the party-appointed experts in preparing its award, and about how to ensure that it does so in a manner which maintains an equal footing between the parties.

5.  "Educating" the Tribunal

Thinking early on about how you will educate the Tribunal about the complexities of the project and the relevant technologies will pay dividends later on. In our experience, site visits can be a particularly effective tool, even when conducted virtually. Proper planning of the format and content of such visits is key to ensuring that the potential strategic advantage of the visit is fully realised.

6.  Document creation, management and privilege

Documents will inevitably play a key role in any renewables dispute. During a process known as "document production", the parties to an arbitration are able to obtain from each other copies of relevant and material documents within their possession, custody or control. Experience suggests that this stage of a dispute gives scope for satellite disputes which increase costs and cause delay. 

For that reason, thinking carefully about what documents are created, who has access to them, where and how they are stored, and how easily navigable they are can help streamline the process. The incorporation of appropriate procedural rules and protocols can also assist.

7.  Do not undermine your position

Care needs to be taken from the commencement of any project to ensure that any documents created do not undermine any position you might wish to take later on. The creation and sharing of new documents about a potential dispute, its prospects of success, legal advice, expert input or related insurance claims should be limited to as few people as possible. Steps should be taken to ensure that legal privilege attaches to such documents, where available, and that this is not inadvertently waived.

Conclusion

With the continued focus on 'green' agendas and the phasing out of fossil fuel projects, as well as geopolitical events, we can expect to see the rise in renewables disputes continue. There are lessons to be learned from experiences to date which can ensure that those disputes are resolved at a proportionate cost and with a time commitment that does not distract from the underlying commercial - and environmental - goal of ending dependency on fossil fuels. As ever, the importance of seeking specialist legal advice from the outset cannot be overestimated. 

Our specialists are available to discuss any of the issues raised in this article, or more generally. See more insights on our Renewable Energy Disputes resources page here.