Chapter 9. Dispute-Driven Strategies for Counteracting Coercion in Global Construction Contracting

The multipolar configuration of the contemporary international order and the intensifying pressure of sanctions have radically complicated the architecture of international construction contracts: they now reach far beyond technical and commercial matters, integrating politico-legal, economic and administrative dimensions. This is clearly reflected in the practice of Russian participants in cross-border projects, for whom the choice of governing law and an arbitration clause often results in proceedings in London—as illustrated by case No. A56-111059/2024, where the national court declined jurisdiction due to the parties’ contractual submission to English law and forum. Against this backdrop, scholarly attention shifts toward coercion: its typology in large construction and infrastructure projects and the toolkit for reducing the risks of abusive pressure.

In public international law doctrine, coercion is regarded as one of the central threats to the stability of the legal order because it leads to violations of norms and the rights of the parties and assumes diverse forms—from economic pressure and restrictions on access to resources to threats of the use of force (Lukashuk, 2004). A comparable conclusion is reached in foreign scholarship, which underscores the need to refine existing norms and ensure their effective enforcement to protect the interests of actors in transnational projects (Kolb, 2017). Sanctions, as a public-law instrument, simultaneously function as a mechanism for pursuing the objectives of the international legal order and as a field of competing interests; their ambiguous application can become a lever of pressure on counterparties, including by inducing them to revisit or terminate contractual relations (Rusinova, 2017). In contemporary comparative discourse, economic and other forms of pressure emerge as factors that unbalance the allocation of risks, thereby threatening the fairness of contractual relations and revealing the need for unified legal tools protecting against unlawful pressure (Milanovic, 2023). International organisations and arbitral systems are intended to curb abuses and ensure fair dispute settlement, which requires effective standards preventing the improper use of coercion (Helal, 2019).

The Russian scholarly debate in the field of international construction contracts already provides baseline guidance on normative requirements for contractual clauses and on procedural aspects of dispute resolution in international commercial arbitration (Anosov, 2024; Sapozhnikova & Khusainova, 2021). A special place is occupied by the question of adapting the standard contracts of the International Federation of Consulting Engineers (FIDIC) to national law—comparative analysis reveals their potential as instruments to counter abusive pressure when properly localised (Varavenko, 2021). In a broader theoretical frame, the development of a multipolar world affects the content and mechanisms of international agreements, including construction contracts, as shown in studies on the legal foundations and problems of the emerging multipolar order (Lisitsyn-Svetlanov, 2024).

Arbitral practice demonstrates the key forms and mechanisms of pressure. In Dirk Herzig as Insolvency Administrator over the Assets of Unionmatex Industrieanlagen GmbH v. Turkmenistan (ICSID Case No. ARB/18/35), requirements to perform additional works without funding guarantees and other discriminatory measures led to the contractor’s insolvency; here indirect economic coercion manifested itself through the imposition of costs amid defective financing and administration. In Jan de Nul N.V. and Dredging International N.V. v. Arab Republic of Egypt (ICSID Case No. ARB/04/13), insufficient disclosure of baseline data on soil composition and volume shifted the risk to the contractor; although no intent to defraud was established, the informational asymmetry nonetheless revealed a latent coercive effect. The case L.E.S.I. S.p.A. and ASTALDI S.p.A. v. République Algérienne Démocratique et Populaire (ICSID Case No. ARB/05/3) reflected politico-administrative coercion: the state’s emergency measures, financing constraints and heightened security requirements effectively compelled the contractor to proceed under adverse conditions, while gaps in force-majeure risk allocation increased the private party’s vulnerability. In Muhammet Çap & Sehil İnşaat Endüstri ve Ticaret Ltd. Şti. v. Turkmenistan (ICSID Case No. ARB/12/6), a combination of arbitrary fines, restrictions on removing equipment, the imposition of unpaid works and prosecutorial oversight exemplified direct state coercion, aggravated by the state’s dual role as both employer and regulator. The decision in Salini Costruttori S.p.A. and Italstrade S.p.A. v. Kingdom of Morocco (ICSID Case No. ARB/00/4) conferred investment status on construction contracts where the “Salini test” is met, thereby expanding the protective perimeter against unilateral changes by a public employer. Finally, in COMMISA v. Pemex (ICC Case No. 13613/CCO/JRF), the state entity’s unilateral “administrative rescission” and the subsequent setting aside of the arbitral award in the national forum were counterbalanced by recognition and enforcement of that award by U.S. courts, revealing the limits of public-law prerogatives of a state employer vis-à-vis international obligations of good faith and an arbitration agreement.

Taken together, this practice permits a typology of unlawful coercion in international construction contracts: economic pressure (e.g., non-payment; imposition of additional works without compensation); administrative measures (prolonging permitting procedures; discriminatory conditions; unilateral termination); legal collisions (annulment or obstruction of award enforcement under the rubric of “public interest”); political factors (regional instability; external risks requiring uncompensated technological changes). A common denominator is the insufficiency of preventive safeguards and the deficit of fast-track settlement procedures, especially when interacting with state actors.

From a historical-theoretical perspective, the special nature of international responsibility is well established. Nihilistic concepts denying state responsibility toward other subjects have been overcome through the evolution of doctrine and practice; responsibility has come to be understood as an immanent attribute of law, without which legal order loses coherence. Early approaches analogous to the civil-law logic of damage compensation gradually yielded to a broader vision encompassing restoration of legal order and prevention, beyond purely material components of violations (Pradier-Fodéré & Pradier-Fodéré, 1906; Evans, 2014; Martens, 2008). The culmination of decades of codification—“Responsibility of States for Internationally Wrongful Acts” (UNGA Resolution 56/83 of 12 December 2001)—confirmed the sui generis character of the institution and the need for a holistic approach that accounts for the specificity of public authority, the horizontal nature of inter-state relations and the absence of a centralised enforcement apparatus (Gasanov & Shalyagin, 2012; Keshner, 2016; Bazylev, 1985; Ivanov & Ivanov, 2006; Lazarev, 2005).

Sanctions as an instrument of international law possess a compulsory character ensured by collective enforcement within multilateral frameworks (Rusinova, 2017). Their public-law nature implies that states and international organisations are the initiators and bearers of coercive authority, while the operative norms must be formally defined and publicly accessible. In infrastructure projects, sanctions regimes affect access to materials and equipment as well as supply and finance chains, which directly shape the risk profile and stability of the contract. In this sphere, sanctions are not only punitive but also safeguarding mechanisms that support compliance with international obligations and the balance of parties’ interests (Tupchienko, 2024).

In the absence of a supranational “enforcer”, arbitration has a central role. The effect of the New York Convention, investment treaties and procedural reforms manifests in greater predictability of award enforcement; yet, particularly in disputes involving state entities, challenges persist relating to immunities and public policy (Orlov & Yarkov, 2017; Galenskaya, 2010). This pushes toward strengthening contractual mechanisms: precise arbitration agreements, enhanced binding force for public employers, and pre-agreed procedural roadmaps for enforcement.

The FIDIC standard conditions are a key practical tool for risk mitigation. Their structure allocates risks in detail, introduces staged notifications and changes, and provides sequential dispute-resolution means. With respect to economic and administrative pressure, transparent procedures for adjusting time and price, documented notices and time-bar regimes minimise interpretive variance over the parties’ powers and opportunities to impose uncompensated works. Russian and foreign scholarship underscores the effectiveness of these mechanisms when properly localised: from comparative analysis of EPC/EPCM and construction contracts (Lavrenyak, 2023) to specific studies on compensation for property losses and the applicability of on-demand and other security instruments in Russian practice (Lyapustina & Rybka, 2024). The efficacy of pre-arbitral mechanisms is further supported by works on the enforcement of DAB/DAAB decisions, which stress the need for reliable enforcement procedures and even proposals to adjust the convention framework to protect their effect (Dedezade, 2021; Anisi, 2021).

Given the politico-legal dynamics of cross-border projects—including in energy—there is a growing demand to reconcile public and private-law objectives. This is reflected in domestic studies on investment disputes and on mechanisms for protecting foreign investment, which outline a normative model oriented toward balancing public interests with the stability of private expectations (Lisitsyn-Svetlanov, 2021; Matveev, 2022). In practical terms, such a model entails: (1) contractual stabilisation and compensation mechanisms for sanction and force-majeure shocks; (2) clear protocols for baseline data disclosure and risk reallocation upon changes; and (3) mandatory multi-tier dispute-resolution procedures, including prompt DAAB decisions and arbitration with a pre-set cross-jurisdictional enforcement roadmap.

The conclusion, supported by doctrine and arbitral practice alike, is that the risks of economic and administrative pressure can be mitigated by prioritising transparent procedures for modifying contractual terms, strict documentation of notices and a reasonable allocation of risks embedded in FIDIC standard forms with localised special conditions; this approach reduces the likelihood of opportunistic reallocation of obligations and the emergence of uncompensated works (Lavrenyak, 2023; Lyapustina & Rybka, 2024; Dedezade, 2021; Anisi, 2021). At the same time, legal-political risks cannot be eliminated by contractual instruments alone: inter-state agreements and the harmonisation of investment-law guarantees are needed to establish reproducible behavioural frameworks for public actors and to erect barriers against “administrative rescission” and analogous practices undermining good faith in the contractual sphere (Lisitsyn-Svetlanov, 2021; Matveev, 2022).

Overall, the picture indicates three avenues for development: the unification of anti-coercion norms in both soft- and hard-law formats with the participation of international organisations; institutional strengthening of rapid dispute-resolution mechanisms involving state employers and ensuring the practical enforceability of decisions; and systematic localisation of FIDIC standard conditions into national systems, with due regard to public-law constraints and infrastructure priorities. Implementing this programme will enhance the predictability and resilience of international construction projects, increase the parties’ trust and reduce transaction costs.