Construction Disputes

18 Mar 2026

By Stephen Forsyth, Legal Director, Litigation, Gilson Gray

Construction is one of Scotland’s most economically significant sectors, but it is also one of the most dispute-prone.

Projects are complex, margins are tight, and the contractual risk profile is often poorly understood at the outset. When pressure builds – whether through delay, disruption, payment issues, or defects – disputes can arise quickly and, if mishandled, become disproportionately expensive.

Drawing on practice in the Scottish market and Gilson Gray’s wealth of experience acting for developers and consumers in all manner of construction disputes – from a garage or attic conversion in a residential property to the construction of large business complexes – this article outlines the common sources of construction disputes and the principal mechanisms available to resolve them effectively.

Common Causes of Construction Disputes

While every project has its own factual matrix, most disputes fall into familiar categories:

•  Delay and disruption claims remain the most frequent. Arguments typically centre on entitlement to extensions of time, loss and expense, or prolongation costs. In Scotland, as elsewhere, these disputes often hinge on the quality of contemporaneous records and the contractual machinery governing notice and assessment.
• Payment disputes are another perennial issue. Despite the statutory payment regime introduced under the Housing Grants, Construction and Regeneration Act 1996 (as amended) (the “Construction Act”), disagreements over interim valuations, pay less notices, and final accounts remain common. The Scottish courts and adjudicators continue to see cases where a party’s failure to comply strictly with notice requirements proves decisive.
• Variations and scope creep frequently give rise to disputes, particularly where instructions are informal or inadequately documented. Contractors may proceed in good faith, only to find that entitlement to additional payment is challenged later.
•  Defects disputes often emerge towards project completion or during the defects liability period. These can involve difficult questions of causation, standard of workmanship, and the allocation of responsibility between contractors, designers, and specialist sub-contractors.

The Scottish Legal Framework

Construction disputes in Scotland are resolved within a distinct legal framework, albeit one that shares features with the rest of the UK.

The Construction Act applies in Scotland and confers a statutory right to adjudication at any time. Adjudication has become the default forum for many disputes due to its speed and cash-flow-focused ethos. Decisions are temporarily binding and enforceable, subject to later final determination by arbitration or litigation.

Litigation in Scotland proceeds either in the Sheriff Court or the Court of Session, depending on value and complexity. The establishment of the specialist Commercial Courts, and more recently the All-Scotland Sheriff Personal Injury Court’s influence on case management culture, has improved efficiency, but court proceedings remain relatively slow and costly when compared to adjudication.

Arbitration remains relevant, particularly for high-value or technically complex disputes and in contracts where confidentiality is a priority. Scotland benefits from a modern statutory regime under the Arbitration (Scotland) Act 2010, which provides a clear and supportive framework.

Contract Choice and Its Impact

The form of contract used on a project can materially affect both the likelihood and the trajectory of a dispute.

Standard forms such as Joint Contracts Tribunal (JCT) and (NEC) are widely used in Scotland, with NEC contracts particularly prevalent in the public sector. NEC’s emphasis on early warning and proactive contract management can reduce disputes when operated properly, but its procedural rigour can also expose parties who fail to follow the contract strictly. The Minor Works Contract (MWC)are widely used for construction projects valued at less than £500,000 and lasting 12 months or less.

Bespoke amendments are a frequent source of difficulty. Parties often underestimate how changes to payment provisions, time bars, or dispute resolution clauses can shift risk in unintended ways.

Managing Disputes Strategically

From a legal perspective, the most successful outcomes are rarely achieved by reacting late. Early legal input – ideally before positions harden – can help frame the dispute correctly and preserve commercial leverage.

Key strategic considerations include:

• Evidence: Contemporaneous records are often determinative, particularly in adjudication.
• Jurisdiction and forum: Choosing the appropriate dispute resolution mechanism can be as important as the merits.
• Proportionality: Not every dispute warrants escalation; commercial resolution should always be assessed.
• Enforcement risk: A “win” is of limited value if it cannot be enforced or recovered.

Conclusion

Construction disputes are an unfortunate but predictable feature of the industry. In Scotland, the combination of statutory adjudication, specialist courts, and modern arbitration legislation provides parties with a robust toolkit for resolution. The challenge lies not in the absence of remedies, but in deploying them strategically and proportionately.

For developers, contractors, and consultants alike, the key lesson is clear: understand your contract, manage it actively, and seek advice early. Disputes may be inevitable, but their impact need not be.

Gilson Gray’s award-winning Commercial Dispute Resolution team has a wealth of knowledge and experience in dealing with all manner of constructions disputes. Whether you have terminated a builder in an attic conversion or are a commercial developer building a shopping complex and are in dispute with a stakeholder, Gilson Gray’s expert team are on hand to assist.

Our Solicitor-Advocate Partner Alex Gairoch is noted in the Legal 500 as being a ‘key name’ for construction claims in Scotland. 

If you have any construction queries, please contact myself, Fraser or Alex via our contact details below.

To discuss any of the points raised further, please contact a member of our Litigation team here.