Case Study: When a Missing Clause Delayed a Multi-Million Dollar Infrastructure Delivery

How a supplier–contractor dispute over inspection rights nearly collapsed a cross-border project — and how structuring the contract properly saved it.

Background

A European supplier secured a contract to deliver specialised industrial equipment for an energy project in Iraq.

Both sides agreed verbally on quality standards, inspection procedures and delivery milestones — but these details were not properly reflected in the written contract.

The contract was a generic template:

• drafted quickly

• missing cross-border provisions

• silent on pre-shipment inspection

• vague on who carries risk at different stages

• unclear on defect claims

• no mechanism for dispute resolution

• no reference to Iraqi conformity requirements

Everyone assumed it was “fine.”

Until the equipment reached the port.

The Legal Issue

When the shipment arrived in Iraq, the client refused to release final payment, citing:

• lack of a pre-shipment inspection report

• concerns over conformity

• minor surface damage from transport

The supplier insisted:

• inspection was not contractually required

• any damage occurred after risk had passed

• the buyer had no right to withhold payment

The contract wasn’t clear enough to support either side.

Legally, both had arguments — and that’s exactly the problem.

The dispute stalled the project for five weeks.

Every day meant:

• penalties building

• the site contractor delayed

• equipment sitting at port accruing storage fees

• tension escalating

• lawyers drafting letters

• commercial relationships deteriorating

All because the contract didn’t match operational reality.

CARMA Group’s Intervention

1. Contract Diagnostics

We carried out a clause-by-clause review, identifying:

• ambiguous inspection rights

• unclear risk transfer point

• missing acceptance procedure

• contradictory language around defects

• no reference to Iraqi standards or conformity requirements

• no mechanism for resolving deadlock without litigation

The core issue:

the contract was not written for a cross-border energy project.

2. Reconstructing the Commercial Framework

Instead of escalating into a formal dispute, we rebuilt the commercial terms in a way both sides could accept:

• Introduced a retrospective inspection and acceptance procedure

• Defined condition thresholds and allowable variances

• Split responsibility for port damage based on risk transfer moments

• Set clear payment triggers tied to measurable events

• Confirmed required Iraqi conformity documents

• Created a fast-track dispute resolution mechanism (strict timelines)

This created clarity where there had been none.

3. Legal–Operational Alignment

We coordinated between:

• supplier legal counsel

• client’s local legal team

• the engineering contractor

• customs clearance agents

• insurance reps

The goal was simple:

align the legal positions with what was actually happening on the ground.

The biggest value was in translating between European legal expectations and Iraqi operational realities.

4. Negotiated Resolution

We structured a deal both sides accepted:

• client released partial payment immediately

• supplier issued additional documentation (non-admission basis)

• independent inspection performed locally

• remaining payment tied to verified technical functionality

• both parties waived punitive claims

This avoided arbitration, litigation and a very public commercial fallout.

Outcome

• Shipment released

• Payments settled

• Project resumed

• Commercial relationship preserved

• New contract template adopted for future cross-border work

Most importantly:

a multi-million dollar project avoided collapse over a preventable legal gap.

Key Lessons

1. Generic contracts are dangerous in cross-border delivery.

2. Inspection, risk-transfer and acceptance clauses must be explicit.

3. Iraqi conformity requirements should never be an afterthought.

4. Legal disputes often come from operational misunderstandings, not bad faith.

5. A contract only works if it reflects how the project actually operates.

Bottom Line

CARMA Group bridges the legal, commercial and operational gaps that cause UK–Iraq delivery failures.

With on-the-ground coordination and legal structuring, we help keep projects moving — even when the paperwork falls behind the reality.