Hidden Cross-Border Risks in Australian Construction Projects

Introduction

Conflicts of laws aren’t just an overseas issue. On major Australian projects, offshore supply, foreign investors, and global insurers increasingly dictate where disputes are fought — and under which law. Contractors and subcontractors who assume “local projects mean local law” are taking unnecessary risks.

How Common Are These Risks?

These risks aren’t theoretical. They’re embedded in today’s project landscape:

• 1 in 3 major Australian projects with foreign investors or offshore supply chains end up tied to Singapore or other offshore arbitration forums (SIAC 2024: 625 cases, 91% international).

• 40–50% of project plant, prefabricated modules, or façade systems are imported. Each offshore contract carries the potential to import foreign governing law.

• >50% of large-value insurance disputes are controlled by London or Singapore reinsurers. Most wrap-up project policies are reinsured offshore.

• 7 in 10 contracts reviewed by Riakos Consulting in the past year contained at least one foreign law or offshore forum clause flowing down to subcontractors.

Real-World Examples

Australian projects have already faced these challenges:

• Roy Hill Iron Ore (WA): Multiple subcontract disputes (Samsung v Duro; Samsung v Laing O’Rourke) were heard in Singapore arbitration (SIAC), not in Australia.

• Ichthys LNG (Darwin): Offshore supply agreements dragged disputes into Singapore arbitration and even Japanese courts, despite work being performed in Australia.

• Insurance Disputes: London-based reinsurers routinely control settlement strategies — leaving Australian contractors fighting on foreign legal turf.

Why It Matters

Cross-border clauses change the rules of the game:

• Offshore arbitration = higher cost and travel.

• Foreign law = loss of home court advantage.

• Flow-down clauses = subcontractors inherit obligations they never directly signed.

• Insurance = claims decided overseas, not in Australia.

How to Protect Yourself

Contractors and subcontractors can’t afford to ignore these risks. Practical steps include:

• Map forums & laws across contracts, subcontracts, purchase orders, and insurance.

• Negotiate early: push for Australian law and ACICA (Australian Centre for International Commercial Arbitration) where possible.

• Align downstreams: ensure subcontract terms don’t create “split-forum” disputes.

• Price the risk: account for potential foreign dispute costs in your bids.

Conclusion

Hidden cross-border risks are now part of the fabric of Australian construction. The key is to identify them early, negotiate them hard, and plan for their impact. At Riakos Consulting, we help contractors and subcontractors spot these issues before they turn into expensive surprises — ensuring disputes are resolved on the right terms, in the right forum.