International EPC Projects: Three Major Disputes of the 2020s and Their Lessons

01 – INTRODUCTIONIntroduction

Engineering, procurement and construction (“EPC”) projects frequently give rise to complex and high-value disputes. The latest ICC statistics show that construction and engineering disputes accounted for 28% of all new ICC cases registered in 2025, while disputes in the energy sector accounted for a further 15%.^[1] The LCIA’s 2024 Annual Casework Report records a lower proportion of construction-related cases (8%). However, when cases are classified by contract type, 36% concerned sale-of-goods agreements and 19% concerned service agreements, both of which may form part of the broader contractual framework of an EPC project.^[2]

This article examines three EPC disputes selected for their scale and legal significance from among those that have entered the public domain. A significant proportion of major cross-border commercial disputes, including disputes arising from EPC projects, are referred to arbitration; commercial arbitration is also commonly chosen because it allows for the confidential treatment of proceedings and commercially sensitive information.^[3] Consequently, details of numerous potentially interesting EPC disputes, arbitral awards and settlements will not be publicly available.

02 – REFICAR V CB&IReficar v CB&I

Dispute

In 2009, a Colombian state-owned refinery company, Refinería de Cartagena S.A.S. (“Reficar”), awarded a new refinery EPC project to a major international EPC contractor, Chicago Bridge & Iron Company (“CB&I”).^[4] The suite of contracts made on June 15, 2010^[5] included an offshore EPC contract governed by New York law, principally covering design, engineering and procurement undertaken by CB&I’s UK arm, and an onshore EPC contract governed by Colombian law, principally covering construction performed in Colombia by CB&I’s Colombian arm.^[6]

The project was initially budgeted at US$1.4 billion and scheduled to be completed in 2012;^[7] however, eventual total cost ran to US$5.9 billion and completion overran for around two years.^[8] In 2016, Reficar started an arbitration which lasted for nine years and concluded only in 2023.^[9] The case was extremely complex and evidence-heavy: the parties marshalled over 6,000 numbered factual exhibits (a number of which included hundreds of individual documents) and over 1,500 legal exhibits.^[10]

Reficar sought relief for alleged cost overruns, delay and deficiencies in CB&I’s planning and execution of the project.

The tribunal issued its final award in June 2023. It ordered CB&I to pay Reficar US$845.4 million for breach of cost-control obligations,^[11] US$152.75 million for breach of schedule-control obligations^[12] and US$10.3 million for failure to correct defects.^[13] The tribunal also awarded interest from the end of 2015 and some US$61 million in arbitration costs.^[14]

Key takeaways

Reimbursable cost does not mean uncontrolled cost

At the start, the EPC project was conceived as a lump sum contract, but was later changed into a cost reimbursable one.^[15] At the same time, CB&I promised to “rigorously control cost and schedule similar to a lump sum contract, and to safeguard Reficar’s resources as if their own” and to only incur costs which are reasonable and properly incurred in accordance with the contract.^[16] Against that promise, the initial cost estimate of US$3.495 billion^[17] was revised in January 2012 to US$3.971 billion,^[18] and the works were ultimately delivered at a cost of US$5.9 billion.^[19]

The tribunal accepted that under a cost-reimbursable contract the owner pays the costs incurred. But it held that the control undertakings were substantive obligations, not mere cost-control tools: CB&I owed a fiduciary duty to safeguard Reficar’s resources as if they were its own and could charge only costs reasonably and properly incurred. Costs incurred in breach of that duty could be clawed back.^[20]

A single coherent dispute framework for a single project, however complex

The Reficar dispute illustrates complications created when governance of an integrated EPC project is divided between contracts governed by different laws. Onshore works were governed by a Colombian law contract and offshore works by a New York law contract.^[21] The contractual framework, however, expressly recognized that disputes under the two agreements could be interrelated and sought to ensure their consistent resolution.^[22]

This became relevant to Reficar’s pre-contractual claims concerning allegedly misleading information on overall project costs and schedule.^[23] The Tribunal found that those allegations could not sensibly be divided between the onshore and offshore contracts and rejected CB&I’s argument that part of the claim should fail because it had been advanced under the wrong law.^[24] The parties had agreed that a claim could not be defeated on the grounds that it was brought under the “wrong” contract. The Tribunal held that the same applied to a claim brought under the “wrong” law.^[25]

A liability cap is only as good as the carve-outs are narrow

The contract capped CB&I’s aggregate liability at US$85.75 million.^[26] Like most EPC caps, it was subject to carve-outs – here, liability arising from fraude, culpa grave or dolo under the Colombian-law contract and from fraud, gross negligence or willful misconduct under the New York-law contract.^[27] The tribunal found that the carve out was made out and the cap fell away.^[28] Contractor’s exposure increased from under US$90 million to more than US$1 billion in consequence of a finding about the quality of the contractor’s conduct.^[29]

An award is not yet a recovery

Reficar won and then had to collect on the award. CB&I had by then been acquired by McDermott International, which had itself emerged from Chapter 11 in 2020, and the award became the subject of proceedings in the Netherlands, England and New York.^[30] The matter was resolved in March 2024 by a package reported at approximately US$900 million, consisting principally of preferred shares convertible into 19.9% of McDermott’s common stock, a US$95 million letter of credit, US$70 million of retained proceeds and up to US$215 million of insurance recovery rights.^[31]

03 – ROSATOM V. FENNOVOIMA: HANHIKIVI 1Rosatom v. Fennovoima: Hanhikivi 1

Dispute

In December 2013 Fennovoima Oy, a Finnish consortium company, contracted with RAOS Project Oy, a subsidiary of the Russian state nuclear corporation Rosatom, for engineering, procurement and construction of a 1,200 Mwe nuclear plant at Hanhikivi in Pyhäjoki, on a fixed-price basis.^[32] The project never left the design phase. On 2 May 2022 Fennovoima terminated the EPC contract, citing significant delays and the contractor’s inability to deliver.^[33]

Fennovoima commenced arbitration seeking approximately €2 billion, of which the largest single item was the return of an advance payment of some €800 million; RAOS entities counterclaimed approximately US$3 billion.^[34] In December 2022 the project’s Dispute Review Board found the termination unlawful. That finding did not become binding: under the contract, the Board’s decision binds only if no party objects within 30 days, and both parties served notices of dissatisfaction.^[35]

In January 2023 RAOS Project and JSC Rusatom Energy International commenced ICC arbitration in which they sought to bring claims against Fennovoima’s shareholders. On 14 February 2025 the tribunal held that it had no jurisdiction over the shareholder Outokumpu Oyj, which had no contract or arbitration agreement with the Rosatom entities.^[36] In May 2025 Rosatom filed a claim of RUB 227.8 billion (approximately US$2.8 billion) in a Moscow court against Fortum and Outokumpu, relying on the EPC contract, the shareholders’ agreement, a fuel supply contract and project loans.^[37] The proceedings continue.^[38]

Key takeaways

A dispute board decision is a stage, not an outcome

The December 2022 Dispute Review Board decision was reported as a finding that the termination was unlawful. That was indeed the finding, and it was also provisional and contingent: met with notices of dissatisfaction, it bound nobody and determined no liability. Then, in March 2024 Rosatom’s director general said that “the Paris Arbitration recognized the actions of our Finnish partners as ungrounded and politically motivated”; Fennovoima replied that no tribunal in any proceedings concerning the project had issued any decision or award.^[39]

Advance payment is the exposure

The largest single element of Fennovoima’s claim was not damages but the return of its own money. Where a project is terminated before construction begins, the owner’s principal exposure is usually what it has already paid out: advances, milestone payments for undelivered work, and long-lead equipment paid for and never shipped. Whether that money comes back depends on the security taken at the outset, which is usually a bank documentary credit of one type or other: the form of the instrument, the identity and location of the issuing bank, and whether a demand can realistically be made and honoured once relations have broken down.

The arbitration clause decides one question, not all of them

An arbitration agreement binds the contracting parties. It does not bind others. When the Rosatom entities sought to bring arbitration against Fennovoima’s shareholders, the tribunal held that it had no jurisdiction. The same claims then reappeared before a Moscow court against those same shareholders. Since 2020, Articles 248.1 and 248.2 of the Russian Commercial Litigation (Arbitrazh) Procedure Code have given Russian courts exclusive jurisdiction over disputes involving sanctioned Russian persons where sanctions are said to impede access to justice elsewhere, with a power to restrain foreign proceedings on pain of orders to pay compensation up to the full amount claimed abroad.^[40]

04 – GRUPO UNIDOS POR EL CANAL V AUTORIDAD DEL CANAL DE PANAMÁGrupo Unidos por el Canal v Autoridad del Canal de Panamá

Dispute

In July 2009 the Panama Canal Authority awarded the design-build contract for the third set of Panama canal locks to Grupo Unidos por el Canal, a consortium of Sacyr, Impregilo (now Webuild), Jan De Nul and Constructora Urbana, at the contractual price of approximately US$3.12 billion.^[41] Construction began that year towards an October 2014 completion date; the works were delivered more than twenty months late, and the parties went on to conduct seven arbitrations.^[42]

One of those arbitrations concerned the concrete works and was seated in Miami under the ICC Rules. A partial award of 21 September 2020 awarded US$26.8 million to the consortium and US$265.3 million to the Authority;^[43] a final award of 17 February 2021 brought the Authority’s award to approximately US$285 million. The consortium applied to vacate the final award for evident partiality, alleging four undisclosed professional relationships between the arbitrators and the Authority’s counsel. The district court refused^[44] and the Eleventh Circuit affirmed that decision, holding that “familiarity due to confluent areas of expertise does not indicate bias”.^[45] The U.S. Supreme Court declined to intervene on 26 March 2024.^[46]

Sacyr claimed over US$2.6 billion against Panama under the Spain–Panama bilateral investment treaty, alleging that the State had withheld material geotechnical information on basalt quality and on the seismic reduction factor for the rolling gates. On 31 October 2025 the tribunal dismissed the claims in their entirety on the merits.^[47]

Key takeaways

Money received under an interim decision is a contingent amount

On the contractor’s own account, dispute adjudication boards awarded the consortium approximately €227 million between 2013 and 2016, which it collected, and the less favourable arbitral outcome left the difference to be paid back.^[48] Interim binding decisions exist to keep cash moving on a live project, not to determine entitlement. On a project of this length the reversal arrives years later, and then with hefty interest.

Conflicts are a front-end exercise

The challenge to arbitrators’ impartiality failed, and the standard applied explains why: professional overlap within the small group of specialists who sit in major construction arbitrations is not, without more, evidence of bias. The challenge nonetheless ran from 2021 to 2024 through two levels of the United States federal courts, a futile attempt to dislodge an award the consortium had to pay in the end.

An investment treaty claim will not compensate for absence of contractual recourse

Sacyr’s treaty claim covered the same geotechnical ground as the contractual claims, which ICC tribunals had already rejected.^[49] The treaty tribunal held by a majority that treaty protection addressed sovereign risk and was engaged only where the State used sovereign powers unavailable to a private counterparty. Where the State makes a private contract with a private party, “It is not the function of an investment treaty to recalibrate a contractual relationship … or revisit the terms of the contractual bargain itself simply because one party to the contract is an organ of the State.”^[50] Contractual liability is a matter of a causal link between an act and a loss, such that it “is strict liability, which has no place in investment law”.^[51] Investment law only protects against wrongdoing by abuse of sovereign power, and “[i]t is not the function of an investment treaty to provide a second set of remedial options for grievances that never transcend the contractual realm.”^[52] The claims failed on the merits, but the tribunal added that it would in any event have held them inadmissible because their essential basis was the contract.^[53]

05 – CONCLUSIONConclusion

Three projects, three jurisdictions, one pattern. In each case the outcome turned on choices made years before the dispute: agreed carve-outs from a liability cap, attaching control obligations to a pricing mechanism, adopting a tiered structure of the dispute clause, selecting the contracting entity and assessing the strength of her paying covenant. By the time each dispute reached a tribunal, these choices had been made, and their consequences had to be reaped in the form of the eventual award.

These three disputes are visible because enforcement proceedings, listed-company disclosure and involvement of a sovereign state put them into the public domain. Disputes that settle quietly leave no public trace. They are certainly the majority, and good contractual drafting will substantially improve the settlement prospects.

The law is stated as at the date of publication. The information contained in this document is provided for general informational purposes only, does not constitute legal advice, and does not purport to be an exhaustive analysis of the issues addressed herein. Neither AKTA nor any of its partners or employees accept any responsibility for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this document, and in no event shall they be liable for any losses resulting from reliance on or use of this information. For tailored, considered advice on your specific circumstances, please contact AKTA.