Energy projects now involve larger investments, longer timelines, and more parties than ever before. When disputes arise, the consequences can extend well beyond the contract itself. Delays, cost overruns, and operational disruption can all follow from a single breakdown in a complex project.
Kevin O’Gorman, global co-head of international arbitration at Norton Rose Fulbright and a longtime arbitrator with the American Arbitration Association®, sees this most clearly in energy transactions.
“As transactions themselves grow larger in value, disputes that arise out of those transactions also grow in value and in complexity,” he said.
Understanding where risk concentrates in these disputes — and how to manage it — is critical to controlling cost, timing, and business impact.
Where Risk Concentrates in Energy Disputes
Risk in energy disputes often stems from two sources: the project’s structure and the external environment.
Energy projects rely on multiple interdependent agreements. Construction, supply, financing, and long-term sales contracts must all align.
“One project might have 10 or 15 very substantial agreements that all need to work together for the project to work,” O’Gorman said.
A problem in one area rarely stays contained. Issues can cascade across contracts, timelines, and counterparties.
Cross-border transactions add another layer of complexity. Energy disputes often involve state-owned enterprises or sovereign interests, where legal issues intersect with regulation, market conditions, and political dynamics.
“There’s always political intrigue in many of these international cases,” O’Gorman noted.
External pressures can influence how disputes develop and how quickly they can be resolved.
Managing Complex Energy Disputes
How these disputes are managed can shape cost, duration, and overall impact.
Complex disputes require a process that can adapt to the structure of the deal. Arbitration allows parties to shape how a dispute will be handled. Key issues can be addressed early. Discovery can be limited where appropriate. Timelines can reflect the needs of the case.
“One of the principal benefits of arbitration is its inherent flexibility to tailor the dispute and the arbitration to the type of dispute that you actually have,” O’Gorman said.
This level of control helps keep disputes manageable, even when the underlying transactions are not.
Arbitration also provides a globally recognized framework for resolving cross-border disputes, enabling enforcement across jurisdictions. That predictability is critical for long-term projects where risk extends beyond a single market.
Together, the flexibility and enforceability of arbitration enable businesses to manage disputes in line with the scale, structure, and global exposure of the underlying project.
See How Disputes Are Being Resolved Across Industries
A Wall Street Journal feature highlights how companies are addressing complex disputes and turning to alternative approaches to resolve them more efficiently.