Chapter 14. Risk Allocation and Migrant Worker Safeguards in Global Construction Contracts: A Common-Law Approach

International construction projects require a significant volume of hired labor and thus inevitably generate steady flows of labor migration. The resulting “construction ↔ migration” model creates a complex web of international legal relations in which the host state, the home state, the transnational construction company, and the migrant worker all interact under a multi-level system of norms of public and private international law. Modern scholarship emphasizes that the fragmentation of these norms and the lack of reliable accountability mechanisms contribute to the persistence of the risk of exploitation of migrant construction workers [1]. Studies by F. L. Cooke, who analyzed in detail the staffing practices of Chinese state contractors on overseas projects and showed their impact on international labor standards for migrant workers [2], by A. Halegua, who examined contractor liability for the violation of workers’ rights on projects linked to China’s Belt and Road Initiative and stressed the need for coherence between national and international norms on migrant protection [3], and by J. Wells, who identified a correlation between the “pay-when-paid” clause in standard FIDIC contracts and the vulnerability of migrant workers on Middle East megaprojects, thereby justifying the introduction of joint liability across the entire contracting chain [4], all highlight this problem. In an increasingly multipolar and interdependent world, protecting the rights of migrant workers in the construction industry becomes especially critical. International construction contracts are increasingly bringing in foreign labor, making the regulation of migration a central issue in international law [5]. Establishing unified legal mechanisms and applying international standards are seen as necessary conditions to minimize legal risks and ensure fair working conditions for migrants.

At the same time, a contractual and corporate layer of regulation is developing. The draft UN Business & Human Rights Treaty aims to transform companies’ voluntary social commitments into legally binding standards, which is particularly significant for the construction sector that systematically faces labor rights violations [6]. The post-Soviet region remains one of the largest hubs of labor migration: labor-exporting and labor-importing states there have built their own regimes, often diverging from the universal conventions of the International Labour Organization (ILO). Without reliance on international standards, national practices tend to be either overly repressive or, conversely, insufficiently protective of migrants [7]. Meanwhile, bilateral agreements, being the most flexible instrument, today create the de facto “skeleton” of the system of sources of law in labor migration, fixing the balance of interests of the parties and procedures for mutual recognition of documents — which is critical for construction-investment projects under tight schedules [8]. The institutional inconsistency among soft corporate standards, universal conventions, and bilateral agreements thus leads to legal gaps that heighten the risks of migrant exploitation; conversely, a comprehensive unification of key obligations based on emerging business and human rights treaties, while preserving flexibility at the bilateral level, could fill those gaps and improve legal predictability for all actors.

Multi-level International Norms Protecting Migrant Construction Workers. International protection of migrant workers is shaped by an extensive multi-tiered system of norms. The United Nations Charter of 1945 establishes the general goal of respecting human rights, obligating states to uphold rights and cooperate. Specific standards of equal treatment for migrant workers are set out in ILO Convention No. 97 “Migration for Employment (Revised), 1949” and ILO Convention No. 143 “Migrant Workers (Supplementary Provisions), 1975,” which require non-discrimination in pay, equal access to trade unions, and exchange of migration statistics. As of 6 May 2025, Convention 97 has 54 states parties and Convention 143 has 30. Freedom of movement and equal right to work are proclaimed in the 1948 Universal Declaration of Human Rights, the 1966 ICCPR and ICESCR. These guarantees were expanded by the 1990 UN International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families, which added obligations on fair remuneration, occupational safety, and family reunification (60 ratifications by May 2025). In Europe, the regional framework is complemented by the 1950 European Convention on Human Rights (ECHR) and the case-law of the European Court of Human Rights. Within the European Union, minimum conditions for posted construction workers are laid down by Directive 96/71/EC on posting of workers, which sets requirements on pay, working time and accommodation; EU member states retain sovereign control over admission of migrants but are simultaneously bound to observe these minimum Union standards, creating a flexible albeit uneven migration law framework in the EU. Notably, since 30 July 2020 (the transposition deadline for recent amendments), the EU has implemented the principle of “same work – same pay” for posted workers and extended guarantees for construction labor (e.g. reimbursement of travel and living expenses, lodging provisions, protection against abusive subcontracting).

Regional trade agreements increasingly serve as “corridors” for lawful labor migration. Chapters on temporary movement of professionals are built into the United States–Mexico–Canada Agreement (USMCA, formerly NAFTA), the Treaty on the Eurasian Economic Union, and the CIS Free Trade Zone Agreement. Multilateral WTO agreements, primarily the General Agreement on Trade in Services (GATS), through “Mode 4” allow companies to send managers and engineers abroad. Soft-law instruments reinforce this system: in 2016 the ILO adopted the Global Principles and Operational Guidelines for Fair Recruitment, along with ILO Recommendations R97 and R151 requiring transparent hiring, a ban on recruitment fees, and protection of vulnerable migrants. Additional standards are promoted by UN bodies — e.g. the International Organization for Migration (IOM) via its World Migration Reports, and the Organization for Security and Co-operation in Europe (OSCE) with its comprehensive “International Framework for the Protection of Migrant Workers” document. Financial institutions like the World Bank include labor and social protections as conditions in financing large construction projects, effectively turning them into oversight mechanisms for labor rights compliance.

Regional and bilateral agreements specific to construction, including arrangements within the Eurasian Economic Union, facilitate migrants’ access to labor markets while simultaneously creating special regulatory regimes that need alignment with commonly accepted international standards. Domestic labor and migration laws, such as Russia’s Federal Law “On the Legal Status of Foreign Nationals,” explicitly reference ratified ILO conventions, and enforcement is divided among courts, migration commissions, and labor inspectorates. Analysis shows that in countries with less developed legal systems, migrant construction workers more often suffer underpayment, lack of union protection, and risk of forced labor, confirming the need to unify norms at the international level [9]. The scale of the problem is significant: the IOM’s Migration Data Portal records roughly 280.6 million international migrants, and the Global Migration Indicators 2024 report indicates that this number is rising due to economic crises, conflicts, and climate change. According to the ILO, women are slowly increasing their presence in migration flows, but the majority of those employed in construction remain low- and semi-skilled workers in the informal sector, where they are especially prone to labor and social rights violations. It is the ILO and UN conventions, decisions of European courts, and provisions of trade agreements that together form the necessary “legal framework,” while international organizations act both as lawmakers and monitoring mechanisms, ensuring protection of migrants and stability of construction projects.

Case Law: Balancing Migrant Rights and Economic Freedoms. Precedents from international human rights and economic courts vividly illustrate the tension between protecting migrant workers and upholding market freedoms. The European Court of Human Rights (ECtHR) in Chowdury and Others v. Greece (No. 21884/15, judgment of 30 March 2017) dealt with a complaint by 42 Bangladeshi nationals — irregular migrants hired in 2012–2013 to work on a strawberry farm in Greece without work or residence permits. They were promised €22 per day, but wages were systematically withheld, living conditions were abysmal, and their labor was overseen by armed guards. After the workers began demanding their pay, one of the guards opened fire on them, wounding several individuals. In 2014, a Greek court convicted those responsible only for grievous bodily harm and acquitted on human trafficking charges, reasoning that the migrants had ostensibly consented to work and were not confined in their movement. The ECtHR found Greece in violation of Article 4 of the ECHR, citing also the Council of Europe’s Anti-Trafficking Convention and the UN Palermo Protocol. The Court stated that a worker’s consent does not exclude forced labor if exploitation of vulnerability occurs, and further noted that a state must not only refrain from allowing exploitation but also effectively prevent it by private actors. As a result, the Court held Greece responsible for failing to prevent and prosecute trafficking, and for not providing adequate compensation: it awarded €16,000 to each applicant who had participated in the domestic proceedings and €12,000 to each of the others. Greece had not fulfilled its obligations to prevent, investigate and punish trafficking, nor to secure appropriate redress. This decision has direct relevance for international construction contract law, since similar forms of exploitation can arise on construction projects involving migrant labor, and in such cases the state bears international responsibility for inaction.

The Court of Justice of the European Union (CJEU) has likewise contributed to delineating the boundaries of worker protection versus economic freedoms. In Laval un Partneri Ltd v. Svenska Byggnadsarbetareförbundet (Case C 341/05, 2007), a Latvian construction company posted workers to Sweden but refused to sign the local collective agreement that provided for higher pay than Latvian law. In response, a Swedish trade union organized a collective action (a blockade of the site), stopping work and forcing the company to cease operations. Laval sued, and ultimately the CJEU ruled in its favor, holding that the freedom to provide services under Article 49 TFEU takes precedence over union actions that impose requirements beyond the officially established minimum standards available to a foreign contractor (the “nucleus of mandatory rules” under Directive 96/71/EC on posted workers). The union’s action was deemed to infringe EU law: Laval won the case, wages were not raised, and the precedent limited excessive pressure on foreign contractors in construction.

A similar balance was at issue in International Transport Workers’ Federation & Finnish Seamen’s Union v. Viking Line ABP (Case C 438/05, 2007). Finnish ferry operator Viking Line ABP planned to “reflag” a vessel to Estonia and hire cheaper labor, to save costs. Unions sought to prevent wage undercutting by threatening strike action to force the employer to uphold the Finnish collective agreement. Viking sued in the UK, and the case went to the CJEU. The court affirmed the right to strike as fundamental, but found it cannot be used in a disproportionate manner that essentially blocks the freedom of establishment (Article 43 EC Treaty). The union pressure that would render reflagging economically pointless was viewed as a restriction on that freedom and permissible only if it was proven necessary to protect workers and if the least burdensome measures were used. Thus, legally Viking “prevailed,” since it was allowed to invoke Article 43 directly against the unions, the strike was deemed potentially unlawful, and no wage increases were achieved. The key takeaway for international construction (and similar) contracts involving migrants is that while unions may act to protect wage levels, their actions must be strictly proportionate and based on transparent legal standards, otherwise they violate internal market freedoms.

In Commission v. Luxembourg (Case C 319/06, 2008), the European Commission challenged Luxembourg for imposing overly strict requirements on foreign construction companies posting workers from other EU states. Luxembourg required each such company to have a designated representative residing in the country to keep all employment documents on site, and it tried to enforce additional labor rules under the guise of “public order” without sufficient justification. The CJEU found these requirements illegal and contrary to the freedom to provide services. Luxembourg lost and had to repeal the measures. For international construction contract practice, this case signaled that under FIDIC contracts in the EU context, one cannot include excessive or unreasonable administrative constraints (like mandating a local agent or on-site document storage) unless justified by specific labor risks. The decision helped simplify operations for construction companies and facilitated the posting of workers without compromising their rights.

In Dirk Rüffert v. Land Niedersachsen (Case C 346/06, judgment of 3 April 2008), a insolvency administrator of Objekt und Bauregie GmbH & Co. KG contested the termination of a public works contract and a penalty imposed by the German state of Lower Saxony. A Polish subcontractor on the project had paid posted workers only about 46% of the wage set by a regional collective agreement for construction. The Land’s procurement law required contractors to guarantee wages at least at the level of that agreement. The CJEU held that this requirement violated the freedom to provide services (Article 49 TFEU) and the Posted Workers Directive 96/71/EC, since the collective agreement in question was not declared universally binding. The directive allows mandatory compliance with labor conditions (including minimum pay) only if they are laid down by law or universally applicable collective agreements. Since that was not the case, the additional wage requirement constituted an unjustified obstacle to free movement of services and was deemed impermissible. Lower Saxony lost the case, and the requirement to pay the local rate was annulled, meaning wages remained as set by the Polish subcontractor and the workers did not receive any increase. This precedent limited the ability to insert “social clauses” into international construction contracts in the EU unless backed by universally applicable law.

Investor–state arbitration further complements this picture by assessing state migration measures through the lens of investment obligations. In Biwater Gauff (Tanzania) Ltd. v. Tanzania (ICSID Case No. ARB/05/22, 2008), a British investor in a water services concession in Dar es Salaam sued Tanzania over the forcible deportation of foreign managers, unilateral termination of the concession contract, seizure of assets, and transfer of operations to a state entity (DAWASCO). The investor claimed breaches of the UK–Tanzania bilateral investment treaty (BIT), including unlawful expropriation, failure to accord fair and equitable treatment, and failure to provide full protection and security. The tribunal found that deporting foreign experts without due process, combined with seizure of infrastructure and contract termination, amounted to a composite breach of investment obligations. Although no damages were awarded (since the project had no economic value at the time of state interference), the arbitrators underscored that migration measures affecting key technical personnel involved in international construction contracts can give rise to state responsibility if they impede the realization of an investment project. The Biwater Gauff case illustrates that in the realm of international construction contract law, effective legal regulation of labor migration matters not only domestically but also as a condition for states’ compliance with investment protection obligations, especially when migration-related measures impact the performance of infrastructure projects and the operations of foreign contractors.

In Caratube International Oil Company LLP v. Republic of Kazakhstan (I) (ICSID Case No. ARB/08/12, award of 2014), the claimant — a Kazakh-registered company allegedly controlled by a U.S. citizen (D. Khourani) — argued that Kazakhstan’s extensive inspections by state authorities in an oil field development and pipeline construction project violated the U.S.–Kazakhstan BIT by hindering project implementation, including the hiring of foreign labor and the issuance of visas and work permits. The ICSID tribunal dismissed the claim, holding that the claimant had failed to prove “foreign control” under Article 25(2)(b) of the ICSID Convention, and that the state’s actions enforcing migration and labor laws fell within its legitimate regulatory powers (an exercise of “police powers”) and did not breach international obligations. The inspections were lawful, non-expropriatory, and constituted the state’s enforcement of domestic laws; no compensation was due, and the claimant was ordered to pay Kazakhstan $3.2 million in costs. The workers themselves were not parties to the case and no claims about their wages or conditions were adjudicated. This case shows that international arbitration does not treat the protection of migrants’ rights as an end in itself, but evaluates state conduct based on investment commitments. A state’s enforcement of visa, permit and labor requirements is a sovereign prerogative that does not violate international law if done in good faith and without discrimination. Consequently, construction companies must ensure strict legal compliance with migration and labor rules in advance, or else face administrative consequences and the potential loss of international legal protection.

In Muhammet Çap & Sehil İnşaat Endüstri ve Ticaret Ltd. Şti. v. Turkmenistan (ICSID Case No. ARB/12/6, decision 2021), Turkish investors claimed Turkmenistan breached the Turkey–Turkmenistan BIT by obstructing construction projects in the Avaza tourist zone through systematically refusing visas and barring foreign labor. In their view, this violated their right to engage qualified migrant workers and undermined the performance of construction contracts; they argued they applied for visas, but Turkmen authorities imposed excessive bureaucratic barriers (especially for entry into the Dashoguz region). However, the tribunal did not reach the merits, finding it lacked jurisdiction because the investors had failed to comply with a procedural precondition in the BIT: Article VII(2) required submitting the dispute first to Turkmen courts for a year, and only if no decision was obtained could ICSID arbitration be pursued. The investors had gone straight to ICSID without litigating in Turkmenistan, so the tribunal deemed its jurisdiction “unconfirmed” and dismissed the case without awarding compensation. The decision relied on international investment law norms (notably the ICSID Convention 1965 and the Vienna Convention on the Law of Treaties 1969) since it concerned a BIT, and ultimately neither the workers nor the investors obtained any remedy or acknowledgment of their claims — the case was primarily about protecting investors’ rights, not the migrants themselves. This outcome underscores that state migration control measures, even if they de facto hinder project implementation and foreign labor inflows, can be upheld as lawful in arbitration when formal treaty procedures are not followed. The failure to meet such procedural conditions precludes consideration of the substance and limits both investors’ and associated migrant workers’ ability to protect their interests.

Contractual Mechanisms and Corporate Standards. International construction contracts (for example, FIDIC standard forms) are private agreements among project participants. Despite their private nature, these contracts intersect with public international law wherever employment and migration issues are concerned: requirements for work visas, engagement of local personnel, social security obligations, etc. Most FIDIC standard contracts include choice-of-law clauses and require compliance with national laws. They typically obligate the contractor to observe “all applicable laws, including labor laws” in executing the work. In practice, this means the contractor must obtain work permits for foreign specialists or hire the required number of local workers in accordance with host country regulations. A recent FIDIC guidance noted that “forced labor is prohibited in most countries,” and that the client’s task is to ensure contracts allow the implementation of measures against the use of illegal labor. Such provisions echo the international principle of preventing labor exploitation: by including these contractual rules, attempts to circumvent national requirements or to employ migrants unlawfully are thwarted.

Sometimes contracts explicitly stipulate quotas for hiring local workers or obligations to train the local workforce. These terms aim at development goals and protecting the local labor market, but they must be reconciled with international obligations. For example, if the host state has ratified ILO equality conventions, such quotas should not formally discriminate against foreign workers in the protection of their rights (equal pay, social benefits, etc.). Otherwise, a contractor might question the host state’s good faith and seek international arbitration (e.g. ICSID). International law recognizes that enforcing domestic immigration rules and quota conditions falls under a state’s sovereign right, but that the host state must still respect its commitments under ratified conventions.

The role of international financial institutions must also be noted. Development banks (the BRICS New Development Bank, World Bank, EBRD, etc.) that finance large construction projects impose conditions in loan agreements and social and environmental standards that address workers’ rights. They require governments and contractors to abide not only by domestic laws but also by international standards (for example, to avoid forced labor, comply with minimum wage requirements, observe occupational safety norms, etc.). Although these stipulations formally belong to the financing contract, they strengthen the international legal basis of labor migration governance: actual project contracts effectively incorporate references to international norms.

Alongside state and intergovernmental forums, quasi-judicial grievance mechanisms established by multilateral development banks and transnational corporations play a significant role in protecting labor standards. The World Bank’s independent ombudsman (Compliance Advisor Ombudsman, CAO) reviews complaints from workers on World Bank–financed enterprises, including construction projects employing migrants. Despite its unofficial status, CAO decisions prompt borrowers to remedy violations, thereby complementing international oversight mechanisms for labor conditions.

Finally, the construction sector attracts the attention of transnational corporate human rights initiatives (e.g. the UN Guiding Principles on Business and Human Rights, the UN Global Compact). These soft-law instruments encourage companies involved in international projects to guarantee workers’ rights, including those of migrants. For instance, companies are expected to avoid employing undocumented migrants and to protect them from abuses by subcontractors. While these norms are not legally binding, they create a corporate responsibility environment in construction and are taken into account in project financing and insurance.

Global Trends and Humanitarian Aspects of Migration. The study revealed that international construction contract law faces serious challenges in ensuring legal protection of migrant workers and in fulfilling international obligations. Vincent Chetail [5,9] and T. Alexander Aleinikoff [9] emphasize the need to develop international legal norms aimed at protecting migrants’ rights and creating conditions for their legal and secure employment. International projects increasingly require labor from abroad, heightening the importance of international standards and legal mechanisms in this field. Poverty stands out as one of the main factors driving migration flows and generating new challenges for the international community. Economic instability leads to deteriorating living conditions, rising unemployment, and a lower level of migrant rights protection. Migrant poverty often causes vulnerability and exploitation in the workplace, which calls for comprehensive legal measures to safeguard their interests.

The international community is actively working towards the UN Sustainable Development Goals [18], which aim to eradicate poverty and improve living conditions. This is directly related to labor migration in construction, where migrants often occupy low-paid and unsafe jobs. Alleviating poverty and ensuring decent working conditions are fundamental to developing legal mechanisms for protecting migrants and integrating them into host economies.

An analysis of the 2015 migration crisis in Europe — when more than a million migrants arrived — showed that this mass influx became a serious challenge for the international community. The crisis exposed the inability of existing international mechanisms to effectively manage migration flows and highlighted political and social divisions among European states. The issue of fair burden-sharing of migrants within the EU underscored the need to reform international legal norms with an emphasis on enhanced coordination and more equitable distribution of responsibility for refugees [19]. Debates over the humanitarian aspects of migration intensified in 2019, when the UN High Commissioner for Refugees appealed to European governments to allow the disembarkation of over 500 rescued migrants adrift in the Mediterranean Sea. The plight of those migrants, stranded at sea without a port of safety, underscored disagreements among EU countries on migration policy. This demonstrated the need to rethink existing approaches to migration in order to create a more equitable and humane regulatory system. As E. V. Eremyan notes, immigration has a substantial impact on the political stability of the European Union, causing a crisis of liberal democracy due to the mass influx of refugees [20]. States’ failure to integrate immigrants leads to the degradation of democratic institutions and heightened social tension.

A key element in migration management is the institution of readmission, which enables states to combat illegal migration effectively by returning persons with irregular status to their countries of citizenship or permanent residence. As A. Yu. Yastrebova observes [21], the successful implementation of readmission agreements requires inter-state cooperation based on mutual obligations to identify individuals, determine the nationality of irregular migrants, and take back one’s own nationals. In the construction sector, utilizing readmission mechanisms promotes the legality of migration processes and enhances national and public security.

International Coordination and National Adaptation. Since the mid-20th century, the United Nations has played a leading role in coordinating international efforts on migration governance. The adoption of the New York Declaration for Refugees and Migrants in 2016 and the Global Compact for Safe, Orderly and Regular Migration in 2018 were key steps in developing international migration law. These documents laid the groundwork for coordinated international efforts and underscored the importance of protecting migrants’ rights, which is especially relevant for the construction industry. The IOM plays a significant role in developing effective mechanisms for managing migration, operating on the principle that orderly and humane migration benefits both migrants and receiving states, contributing to socio-economic development.

Migration data plays a crucial role in the global information space, and amid intense information conflicts surrounding population movements, it is particularly important to foster a favorable legal and social environment for migrants. The UN–IOM “I am a migrant” platform, which shares real-life stories of people involved in migration, helps raise public awareness of migrant construction workers’ contributions to host countries’ economies and at the same time strengthens tolerance towards law-abiding migrant workers who often face discrimination in the construction sector.

Notably, in the context of an emerging multipolar world and a shortage of skilled personnel in construction, international regulation of migration flows becomes even more significant for securing workforce needs. As Russian Deputy Prime Minister M. Sh. Khusnullin stated, attracting labor from abroad demands effective legal regulation of migration and protection of migrants’ rights [22]. Integrating international standards into national legal systems is a key factor in creating safe conditions for migrant workers and reducing social tensions in host countries. Using the European Union’s experience in regulating labor migration can serve as a model for unifying legal norms and standards of labor rights protection. However, the EU experience is not entirely positive, as an unprecedented rise in migration has already led to street unrest in France and the UK, and rising crime in Germany. Adapting national legal systems should be based on recommendations of international organizations such as the UN and ILO. Implementing such norms would integrate best practices of migrant rights protection into national legislation. For example, in Russia, legislative initiatives developed in September 2024 aimed at regulating labor migration and tightening control over illegal residence [23]. At the same time, a decline in Russia’s attractiveness for migrants due to the periodic collapse of the ruble (over 100 rubles per USD), political tensions, and increased migration controls coincides with a growing need for human resources, especially for rebuilding industrial and residential facilities in new territories. This makes the problem particularly acute and in need of solutions.

International cooperation and legal support for migrants should become a strategic direction of development. Strengthening collaboration between migrant-sending and migrant-receiving countries entails not only legal protection but also creating conditions for migrants’ integration into host economies. This is especially relevant for the construction industry, where migrants play a key role in delivering international projects. Russia, as a UN member, should take international norms into account in its migration governance while devising its own approach that avoids the mistakes of Europe.

The effectiveness of global standards depends on their implementation at the national level. Most states enshrine in their migration and labor laws special statuses for work visas, wage guarantees, and minimum social rights. However, certain domestic requirements — for example, mandatory registration or limited housing access for migrants — sometimes conflict with the non-discrimination principles of ILO Convention 97. In such cases, national courts increasingly turn to the norms and spirit of international conventions as an interpretative tool, aided by emerging case-law in Southeast Asia and the CIS.

Judicial and arbitral practice confirms the applicability of universal human rights principles and the freedom to provide cross-border services to construction labor migration. The ECtHR in Chowdury v. Greece established state liability for forced labor, whereas the CJEU in Laval underlined the need to balance protecting workers with employers’ economic freedoms. Outside Europe, international arbitrators generally affirm the primacy of states’ sovereign rights if their measures do not contravene ratified inte