Alma Gómez Valdés: “There will surely be an increase in disputes related to Covid”

Tecnicas Reunidas’ head of arbitration discusses the changes in arbitration that are here to stay.

Posted Tuesday, April 26th 2022
Alma Gómez Valdés: “There will surely be an increase in disputes related to Covid”

Alma Gómez, Head of Arbitration for Tecnicas Reunidas

LL: Many of your clients have long-term supply contracts that have been affected by the recent spikes in energy prices. Are you seeing more hardship clauses being triggered?

Gómez: In our case as EPC contractors, the pandemic has led to the implementation of all the clauses that allow relief of contractual requirements (basically, schedule and fixed prices). There is no doubt that force majeure is one of them, but we have also seen clauses such as change of law and hardship (or rebus sic stantibus) applied. We have also been affected by the disproportionate rise in the prices of materials, in which case it is possible to appeal to hardship or rebus sic stantibus to be compensated by our customers. But obviously to be able to apply that exception you must meet certain conditions, depending on the applicable legislation.

 

Have you seen a spike in arbitration and disputes in construction projects recently?

Without a doubt, the pandemic has generated more disputes and arbitration with both customers and the supply chain. However, contrary to what we all thought at the beginning of the pandemic, a portion of those disputes are being resolved amicably before arbitration begins. In general, all parties are interested in continuing their projects in the least expensive way possible and on good terms (when that is an option). Maybe we’ll see a more obvious increase in alternative dispute resolution mechanisms that help the parties reach that amicable settlement.

 

Is litigation and arbitration funding becoming more common? Are there any changes youd like to see in the regulations governing arbitration and litigation funding?

Probably. The pandemic has touched the foundations of many companies that are now looking for ways of financing to be able to continue and recover, and within these forms of financing is the sale of litigious assets. Yes, it would be advisable to regulate this, including issues such as conflicts of interest, economic conditions etc.

 

What new trends do you see in arbitration?

I would highlight the extensive use of remote (or hybrid) hearings. What began as an exception has come to stay and make arbitrations more efficient. Hybrid arbitration proceedings allow all expert witnesses and participants to be available without as many inconveniences and at much less expense. I think this trend is here to stay.

As for arbitration and litigation, there will surely be an increase in disputes related to Covid, including insolvency and related proceedings.

“A good portion of construction disputes are being resolved before arbitration begins”

What do you look for when hiring external legal counsel?

We need lawyers who know our sector and the risks involved, who know the ins and outs of arbitration, and who are willing and prepared to work in a coordinated manner with the in-house team in an integrated manner.