The involvement of insurers in the arbitration process.

Without a doubt, construction projects are businesses of a complex nature, in which the contracting parties invest a significant amount of resources, mainly economic, and where the risk of conflicts and non-compliance that jeopardize the success of the work is a latent reality. ; That is why the participation of insurance companies has become a key element in this type of contracts.

At this point, we must also emphasize that the arbitration route has emerged as the preferred method for resolving disputes that arise in construction projects, and this is primarily due to a determining factor: time.

Certainly the worst enemies of a project in progress are delays and, even worse, the risk of paralysis, all of which entails high costs and losses; Arbitration is an effective alternative method, which in practice has been more agile for this area than ordinary justice.

In this sense, it is appropriate to address in this article some aspects of crucial importance, from the point of view of the owner or owner of the work, for the adequate management in relation to insurers during the execution of the construction contract, particularly in the event of the emergence of a controversy, so that the execution of the guarantees granted is possible, even in the event of an arbitration claim.

Thus, the link of insurers in relation to the construction contract is given through the granting of policies or bonds, the following being some of the most frequent: (i) CAR Insurance Policy or All Risk Policy, called so by its acronym in English Contractors All Risk, which provides coverage against losses and damages that occur to the work during the construction period; (ii) Performance Bond, to guarantee the obligations under the construction contract; (iii) Advance Payment Bond, as a guarantee for the advance disbursed to start the work; (iv) Good Quality Bond, as a guarantee against defects or construction defects; among other.

In accordance with the above, although in a construction contract with an arbitration clause or agreement, signed between the owner of the work and the contractor, from a formalist perspective, it could be suggested that such clause or agreement is binding only for the contracting parties, taking Keep in mind that, as a general rule, insurers are not subscribers to the construction contract; The truth is that judicial and arbitration decisions have evolved over the years, advancing towards a much more accurate criterion and in accordance with the realities of the construction sector, accepting that the link to the arbitration clause originates whenever the person involved constitutes an essential part. of the substantial legal relationship or business in question, thus extending the arbitration agreement to insurers, whether or not they are signatories of the arbitration clause or agreement.

The link of the insurers with respect to the legal relationship emanating from the construction contract comes precisely from the policies or bonds that are fully integrated into it in their function of guarantees, and by virtue of which the insurer is constituted as an obligated, essential subject. in said relationship; being that even if the original construction contract undergoes any variation or extension by agreement between the parties, to ensure the permanence of the insurer, such modifications must inevitably be promptly notified to the latter, since any change or variation regarding the object and obligations of the construction contract, affects the guarantees; It is appropriate that in such cases, the guarantees are expanded accordingly and maintain adequate coverage in accordance with the new reality demanded by the work.

The same applies in cases of breach of contract by any of the parties, which must also be notified to the insurer, so that it can intervene in a timely manner in the resolution of conflicts, in a conciliatory manner or activate its guarantees before the non-compliance worsens and generates greater financial responsibility; or ultimately, that the controversy be submitted to arbitration, also with the participation of the insurer; Arbitration being the method mostly agreed upon in construction contracts, when the conflict is sought to be resolved by an independent and impartial third party, in this case, the Arbitration Court.

On a practical level, it is necessary to maintain the link of the insurer at all times, constituting it as an essential obligated subject within the operational and contractual mechanism of the work, in order to guarantee that it remains protected and covered against the risks that could affect it.

Although the mere involvement of an insurer in the construction contractual relationship does not guarantee, by itself, the success and integrity of the work, the truth is that its participation in the equation constitutes a tool of great value in terms of mitigating risks, which when well managed makes the difference between being protected and not being protected; and even more so, when the parties are settling a conflict through arbitration, where the insurer, without a doubt, must also intervene in the process; which is not foreign to our environment, being what has made possible the advances experienced in terms of criteria, in relation to the role and scope of responsibility of insurers.

By: Patricia Cardoze