Navigating the Surge in Data Centre Disputes
December 2025As the demand for data centres continues to surge, so too does the volume of legal disputes emerging from this high-stakes sector. In September 2024, the UK Government officially recognised data centres as “critical national infrastructure”, a move that underscores their integral role in supporting the UK’s digital economy and future growth agenda.
This designation reflects the increasing complexity and significance of data centre projects, which now span billions of pounds in investment. However, with this complexity comes risk and a growing number of contentious issues.
In this article, we discuss the areas at risk for future disputes, and how to mitigate exposure. This article is further to our note on managing risks in data centre projects.
Where we expect the disputes to arise
Procurement pressure and poor scoping
With demand outpacing supply, procurement timelines are being compressed. This can result in poorly defined scopes of work and rushed contract negotiations, increasing the risk of disputes down the line, particularly where responsibilities for integration and commissioning are unclear.
Power supply delays and interface risk
Access to continuous, high-voltage power is non-negotiable for data centres, and yet power connections are increasingly a bottleneck. Interface risks between the data centre project and the utility provider or power contractor are a key flashpoint for claims and delays.
Design defects and latent failures
Many disputes surface only after a data centre is operational, particularly where design defects affect performance, such as failures in cooling systems or backup energy supplies. These defects often trigger expensive remediation and, where latent defects are involved, substantial claims.
Supply chain and delay claims
Delays in the delivery of key MEP (mechanical, electrical, plumbing) components, which are often sourced globally, are a persistent issue. Fit-out schedules are tight, and any delay in specialist equipment or installation can cascade into significant programme overruns.
Tenant variations and future-proofing conflicts
Data centres must be adaptable to shifting tech demands but this flexibility can lead to costly variations, especially where a tenant’s post-handover requirements diverge from the original design intent.
Contractual complexity and flow-down risk
The privacy and security requirements of end users (including hyperscalers) can create disconnects in contractual information passed down the supply chain. This often makes it harder to apportion liability or defend against downstream claims.
Evolving insurance and indemnity landscape
Recent rulings in the UK around Construction All Risks (CAR) policies are reshaping how insurers respond to latent defects and post-completion claims. This is creating uncertainty for owners, contractors, and insurers alike.
Planning challenges and regulatory change
While the proposed Planning and Infrastructure Bill 2025 promises to accelerate infrastructure delivery, planning remains a significant risk area, especially where communities oppose developments near urban centres due to noise, heat, or environmental concerns.
How Beale & Co can support you
Data centre projects bring together construction, technology, energy, and real estate all under tight programmes and commercial scrutiny. We help clients across the sector manage:
- project set-up and contract negotiation;
- claims management, including delay, disruption, and defects;
- dispute resolution (adjudication, arbitration, and litigation); and
- insurance, indemnity, and interface risk advice.
Our multi-disciplinary team combines deep infrastructure expertise with practical insight into digital infrastructure and mission-critical systems. Whether you’re a developer, funder, contractor, or operator, we can help you anticipate, avoid, and resolve disputes effectively.
Key takeaways
As the data centre sector matures and expands, legal teams must be prepared for an uptick in disputes ranging from design defects to procurement delays and insurance claims. Understanding the unique challenges of data centre construction and operation, from technical complexity to regulatory shifts, will be key to advising clients effectively in this evolving landscape.
If you have any questions relating to the information discussed in this article, or if you’re involved in a data centre project or are facing challenges with an existing one, please contact Joanna Lewis and Karina Alibhai.
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