OUT-LAW ANALYSIS 4 min. read
Navigating Asia-Pacific data centre disputes in the age of digital infrastructure
31 Mar 2026, 8:45 am
After more than US$15 billion in loans and financing was committed for data centres throughout Asia-Pacific in 2025, with India, Malaysia, Thailand and Vietnam hotspots for investment, capacity is projected to double to an estimated 30 gigawatts (GW) by 2028. Despite this, a 15-25GW supply gap is expected during this same period.
Data centre investment and development involve unique risks that may ultimately result in increased disputes. In particular, failure to meet technology agreement performance indicators due to delays in commissioning or achieving ‘ready for service’ status, and failure to reach the minimum capacity of uptime standard may generate legal claims.
The structure of funding and development, often featuring consortium structures and joint ventures, can also create shareholder conflicts. Deadlocks over expansion strategy or technology adoption could create further complexity within the sector, rendering deadlock resolution clauses necessary.
Dividend and profit distribution from completed projects can also prove to be a point of contention for shareholders, while exit rights for investors should be clearly defined in contracts.
Data centres rely on uninterrupted service to be effective. If access to data centres is disrupted, user operations can be paralysed, with the data centre’s value dependant on data relevance, accuracy and integration within specific business processes. Even if another provider offers similar datasets or services, they may not replicate the historical, proprietary and relational aspects embedded in the original arrangement.
Contractual ambiguity on the remedies and resolution of interruptions to service is an emerging area of disputes from data centre development. Combined with challenges arising from surges in demand, extreme weather and cyber attacks, interruptions may result in disputes if users are affected by outages beyond their control. These issues can be exacerbated by the high concentration of data centres in hubs straining local grids, which can also introduce regulatory uncertainty.
Service level agreements are another emerging area for disputes, due to high dependency on uninterrupted service and ambiguity in service level agreement remedies and caps on liability. Whether a cap, which sets fixed limits on liability, or a carve-out, which allows for exclusions or limitations, for example for data breach or interruption, is the preferred approach is a consideration that must be factored into contracts.
Data centres also have a huge appetite for highly specialised components and parts, which is already creating supply chain disruption in consumer markets given increased demand for artificial intelligence service capacity. These disruptions, when applied to the development and construction of data centres, can create delays, disputes and the halting of projects.
Supply chain issues, combined with shortages of critical components and specialised labour scarcity, can challenge contractually required timeframes and the delivery of projects, particularly as the industry becomes increasingly competitive for these resources. Long-term partnerships with critical suppliers, built on the bedrock of commercially solid contracts, are increasing becoming a requirement for developers.
Major technology projects are also prone to variations and scope changes, which may create difficulties for developers in anticipating future capacity needs and legal limits on unilateral variation rights.
The integration of untested technologies, reliability concerns and non-compliance can lead to outages and reputational harm, creating further risk of disputes between the owners of data centres and the organisations that rely on their services.
Regulatory uncertainty and compliance with data protection laws is another factor that may lead to disputes. Shared infrastructure amplifies liability exposure, and developers must also consider compliance with relevant laws such as the EU’s GDPR, the California Consumer Privacy Act (CCPA) and Singapore’s Personal Data Protection Act (PDPA) when offering services that may be accessed internationally. Singapore has recently announced plans to tighten data centre regulation under its proposed Digital Infrastructure Act. Providers will be required to meet power efficiency standards and implement cybersecurity and service disruption measures. Failure to comply with local laws can result in reputational harm, fines and the cancellation of contracts.
Subsea cables are critical to the growth of data centres throughout the region, with rapid cloud expansion dependant on connectivity. As ‘hyperscalers’ and investors increase their involvement in this space, disputes relating to construction delays, allocation and access rights are emerging. Geopolitical concerns, with routes for subsea cables often crossing multiple jurisdictions, heighten the chances of regulatory or national security-related disputes.
Globally, developers and owners of data centres are also experiencing increasing opposition from local communities because of the strain they create on resources, with high water consumption and energy usage impacting residents. Developers must be aware that increasing opposition to data centres may create legal disputes from residents or governments and manage both public perception and planning.
All of these factors highlight the importance of clear risk allocation within contracts, which can help alleviate any disputes arising. Innovative approaches, collaborative models and relational contracts, and long-term partnerships with critical suppliers are further measures that can reduce risk.
Arbitration has positioned itself as a privileged forum for resolving data centre disputes in part because the confidentiality of arbitration protects sensitive commercial and technical knowledge. In addition, parties can select arbitrators with sector-specific knowledge and technical expertise, and arbitration centres represent neutral forums for international projects.
Major arbitration institutions such as the Singapore International Arbitration Centre (SIAC) and the Hong Kong International Arbitration Centre (HKIAC) have recently enhanced their rules, with a focus on cost-efficient procedural tools such as expedited and emergency proceedings as well as early determination. Under the SIAC Rules 2025, a protective preliminary order can be issued ‘ex parte’ which may be useful to prevent further dissemination of data in a data breach disputes or when a counterparty is refusing to stop using unlawfully accessed data.
In a sector defined by cross‑border infrastructure and multinational counterparties, the ease with which arbitral awards can be enforced under the New York Convention further strengthens arbitration as the preferred mechanism for resolving data centre disputes.
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