Construction Law 2026

Since the beginning of the year, the world has witnessed a number of new conflicts, in addition to already existing ones, causing uncertainty and rising costs. The closure of the Strait of Hormuz poses a challenge for a number of jurisdictions given the effect on fuel prices.

On a national level, the political status in several large jurisdictions is characterised by sharp internal divisions, leading to unpredictable policies and outlooks. As a result, all-important financial drivers, such as interest rates and construction costs, continue to affect the construction industry.

The construction sector, however, can be counted on for its optimistic and “can-do” mentality, which is testified by jurisdictions around the world reporting abundant opportunities for the industry, especially in energy projects, infrastructure overhaul and city development. In addition, in Europe, the geopolitical situation seems to be driving a growing tendency for co-operation across national borders, especially where the durable, stable generation and distribution of energy is concerned, but also in the transport infrastructure sector. This too seems to offer new opportunities in an increasingly integrated market for construction projects.

Recently, the renewed importance of defence infrastructure may also create opportunities for the construction industry, not to mention the need to rebuild entire countries affected by war.

The current common denominators for innovation in the construction sector worldwide seem to be the spread of AI and digitalisation. These developments also call for vigilance in terms of cybersecurity and privacy.

Challenging Circumstances

The circumstances for the construction industry are more challenging than ever. Work seems to be abundant, if only because the generation, transport and distribution of energy needs a fundamental turn-around. The world urgently needs to turn away from fossil fuels to wind, solar and possibly nuclear sources. This also requires new and larger grids, as well as innovative distribution channels.

In the Netherlands, for instance, there is a massive push away from natural gas as the favourite energy source for heating towards wind- and solar-generated electricity, possibly in combination with hydrogen. The construction sector is struggling to keep pace with demand. In Germany, on the other hand, natural gas is being introduced on a large scale to replace traditional heating oil as an energy source. Energy projects are mentioned in almost every jurisdiction, from Canada to Taiwan and from China to Mexico.

These “turn-arounds” involve huge investments, and these in turn require predictable long-term policies. In a number of important jurisdictions, however, politics are sharply divided, resulting in uncertain and sometimes contradictory regulations. Nevertheless, a number of jurisdictions report initiatives to curb “red tape” and to lower the burden of regulation.

The growing demand for affordable housing is another trend in a number of important jurisdictions. This in itself is a source of work and offers many opportunities. However, challenges exist here as well. Several jurisdictions report mounting political pressure to regulate housing markets. An unwanted effect of this kind of regulation is to dampen investment appetite. Several jurisdictions also report changes in taxation, curbing returns on investment for real estate projects.

Climate Transition

It is clear that across almost all jurisdictions, the so-called climate and energy transition promises to be a strong driver for the construction industry. Ambitions are high: China alone strives to peak carbon dioxide emissions before 2030 and has vowed to achieve carbon neutrality before 2060. Japan has set a goal of achieving a 36% or 38% share of renewable energy in power source composition in 2030. The same picture emerges in other jurisdictions – eg, Brazil, Canada, Denmark, Finland, Japan, the Netherlands and the UAE, to name a few. In Brazil, for instance, a National Basic Sanitation Law will facilitate a EUR34.5 billion overhaul of the sanitation system. In Denmark, a “Construction Think Tank for Sustainability” has been established to implement the green transition of the Danish construction sector itself.

All these ambitions combined have led to frantic activity in fields such as:

• solar and wind energy;
• renewed interest in nuclear energy;
• energy storage;
• green building techniques; and
• construction materials.

Greater dependence on electricity necessitates the renewal and extension of power grids across the globe. Everywhere, the construction industry is gearing up and transforming itself to help achieve these Herculean tasks. Qatar, for example, plans to initiate projects worth EUR19 billion for water and electricity projects alone.

An interesting phenomenon is the review of restarting decommissioned nuclear power plants; this is being considered, for example, in Belgium, Slovenia and Taiwan.

Technological Innovation

The third trend that surfaces across almost all jurisdictions is technological innovation, and this is visible in myriad directions:

• BIM;
• big data;
• use of drones;
• IoT;
• IA; and
• modular construction.

Increasingly, construction companies are reinventing themselves as IT companies. In the Netherlands, for example, companies specialising in infrastructure have developed new business models based on mining data to reduce emissions and save energy, by connecting data from NOX and CO2 sensors via intelligent algorithms to traffic signs, thereby rerouting traffic in big cities. Innovation also takes the form of digitalisation of permitting processes – eg, in Bulgaria and Finland.

That said, it is important not to lose sight of cybersecurity issues that accompany digitalisation. In this regard, the two EU Directives “NIS2”and “CER” are worth mentioning. These Directives will have significant implications for construction – for instance, in large infrastructure projects.

Apart from IT, prefabrication and/or off-site modular construction is increasingly used, both in housing and in industrial projects; in the USA, this has also led to the introduction of a new-form modular construction contract, addressing the legal implications of this building method for traditional EPC contracts.

The use of blockchain and “smart contracts” in the construction industry, however, remains far from common practice and is still virtually unheard of.

Legal Trends and Developments

From a legal point of view, a number of legal developments are worth noting, both legislative and in (standard) contracting.

In a number of jurisdictions, initiatives to curb “red tape” and reduce the regulatory burden are being taken. In Canada, the federal government has established the Major Projects Office (MPO) to streamline regulation approvals and co-ordinate financing for major “nation-building” projects. Furthermore, in a move towards collaborative projects, new standardised collaborative contracts such as the CCDC-30 (Integrated Project Delivery) and the CCDC-32 (Progressive Design Builds) have been released. In New Zealand, the Construction Sector Accord was closed, to “transform the construction sector by addressing systemic challenges plaguing the sector”.

In China, the Supreme People’s Court issued the Draft Judicial Interpretation on Project Construction Contracts, exerting a profound impact on the contract negotiation and performance risk control of projects owners and contractors. 

The geostrategic climate has given rise to a number of legislative initiatives aimed at strengthening defence and security. For example, in Denmark a Defence Agreement 2024–2033 has been initiated, to invest approximately DKK143 billion in Danish defence and security, including construction and infrastructure.

As for global legal trends and developments, the construction industry continues to show a growing degree of alignment, both in legislative initiatives and in the use of standard conditions. The implementation and use of internationally accepted standard contract forms continues to gather momentum. A number of countries have recently updated their commonly used standard conditions, including Denmark, the Netherlands, Peru, Singapore and Switzerland.

Furthermore, the use of FIDIC (International Federation of Consulting Engineers) and NEC (New Engineering Contract) suites is becoming more widespread, not only in the English-speaking world but also in South America and Africa. At the same time, the introduction of new contract models is being seen, such as “collaborative contracting” in Singapore. These models seek to align the interests of all project participants in order to achieve project objectives, through a co-operative management approach, profit and risk sharing, and the development of mutual trust and confidence between stakeholders.

Enhanced Labour Protection

Several jurisdictions report initiatives in the field of enhanced labour protection. China saw the nationwide enforcement of the “Regulation on Wage Payment for Migrant Workers”; in Denmark, from 1 January 2026 a Working Environment Authority will be empowered to issue a “stop work order”, where a contractor has repeatedly breached statutory health and safety requirements; in South Korea the Serious Accident Punishment Act was expanded to include smaller workplaces.

Conclusion and Outlook

Global developments have led to rising interest rates, rising construction costs, lower yields and being more averse to risk. These dampen investment in construction projects.

Simultaneously, the need to confront the effects of climate change and the altered energy landscape, as well as urbanisation and the demand for (affordable and durable) housing, remain powerful drivers for the construction industry, further fuelled by technological innovations. In addition, shortage of skilled workers tends to create some scarcity, which may strengthen the bargaining power of construction companies. This effect is especially visible in developed markets such as Western Europe.

It is safe to assume that the construction industry will have to adapt itself, becoming more durable – both in its products and in its processes – and embracing innovations.