Alternative Dispute Resolution Flashcards
What are the different forms of alternative dispute resolution?
- Negotiation
- Mediation
- Adjudication
- Arbitration
What is alternative dispute resolution and what is its value?
- Dispute resolution methods are used as alternatives to the traditional binding dispute resolution method of litigation.
- Alternative dispute resolution methods are used as they can be faster, cheaper, private and can maintain business relationships between parties in dispute.
What is negotiation and what are the advantages and disadvantages?
- Parties confer amongst themselves to resolve a dispute.
- Power to settle a dispute rests with the parties but does not lead to a binding decision.
- Advantages include:
o Quick.
o Inexpensive.
o Preserves commercial relationships.
- Disadvantages include:
o Decision is not legally binding.
o Lack of third party to act as a ‘reality-tester’ can lead to lack of progress.
Neogtiations can reach a point of impasse - point where no further progress or agreement is possible, often due to disagreement or deadlock.
What is mediation and what are the advantages and disadvantages?
- Independent third party assists the parties in resolving a dispute.
- A mediator does not make recommendations but can act as a reality tester to ensure parties are taking a realistic view of the dispute.
- Power to settle a dispute rests with the parties but does not lead to a binding decision.
- Advantages include:
o Quick.
o Relatively inexpensive.
o Preserves commercial relationships.
- Disadvantages include:
o Decision is not legally binding.
o Mediator cannot make recommendations, which can lead to a lack of progress.
What is adjudication and what are the advantages and disadvantages?
- An adjudicator oversees the dispute between the parties.
- Adjudicator has the power to issue a legally binding decision unless amended by arbitration or litigation.
- Adjudication process is governed by the Housing Grants, Construction and Regeneration Act 1996 as amended by the Local Democracy, Economic Development and Construction Act 2011.
- Advantages include:
o Parties can agree on an expert adjudicator.
o Leads to a legally binding decision.
o Relatively quick due to statutory timescales contained within either the Housing Grants, Construction and Regeneration Act 1996 and Local Democracy, Economic Development and Construction Act 2009 OR The Scheme for Construction Contract Regulations.
o Less expensive than arbitration.
- Disadvantages include:
o Incorrect decision is legally binding unless overturned by arbitration or litigation.
What is arbitration and what are the advantages and disadvantages?
- A private tribunal oversees the dispute between the parties.
- Arbitrator has the power to issue a legally binding decision.
- Arbitration process is governed by the Construction Industry Model Arbitration Rules or the Arbitration Act 1996.
- Advantages include:
o Parties can agree on the arbitrator.
o Leads to a legally binding decision.
o Dispute remains private.
- Disadvantages include:
o Incorrect decision is legally binding with limited rights of appeal.
o Can be expensive if parties opt for a formal hearing or appoint a technical expert to provide evidence.
What are the key provisions of the Housing Grants, Construction and Regeneration Act 1996 in relation to adjudication?
- The Housing Grants, Construction and Regeneration Act 1996 as amended by the Local Democracy, Economic Development and Construction Act 2009 has numerous key provisions relating to construction contracts:
o Parties to a construction contract have the right to refer a dispute to adjudication at any point.
o The act applies to all construction contracts including oral contracts (although adjudication provisions must still be in writing).
o Adjudicator can amend typographical errors within 5 days of the adjudication decision.
What are the key changes made to adjudication by the Local Democracy, Economic Development and Construction Act 2009?
- The act now applies to all construction contracts including oral contracts (although adjudication provisions must still be in writing).
- The adjudicator is able to correct typographical errors within 5 days of the adjudication decision.
Outline the adjudication process?
- The referring party serves ‘notice of adjudication’ on defending party which is his intention to refer the dispute to adjudication.
- Appointment of adjudicator should be completed within seven days of ‘notice of adjudication’.
- The referring party serves ‘notice of referral’ to both the adjudicator and other party within seven days of the ‘notice of adjudication’.
- Adjudicator to reach a legally binding decision with 28 days of the ‘notice of referral’. The- referring party can extend the period by up to 14 days. Any further extension must be agreed by both parties.
- Adjudicator is to ascertain the facts and relevant law and act impartially.
- Adjudicator’s decision will be legally binding unless and until amended by arbitration or litigation.
Which party is responsible for selecting the adjudicator?
- The parties can agree on an individual to act as an adjudicator.
- If an agreement cannot be reached, the referring party can make an application to an adjudicator nominating body (such as the RICS) who will communicate their selection within five days of the request.
Which party is responsible for the costs of adjudication such as adjudicator’s fees and additional expenses?
- In accordance with the Local Democracy, Economic Development and Construction Act 2009, parties are unable to allocate the costs, expenses and fees of adjudication in the contract.
- Parties can allocate the costs, expenses and fees of adjudication in writing after the notice of intention to refer has been issued.
- Otherwise, the adjudicator is able to allocate liability for his own fees and expenses between the parties. The parties will be liable for any of their own costs.
What happens if a construction contract does not comply with the Housing Grants, Construction and Regeneration Act 1996?
- If a construction contract does not comply the Housing Grants, Construction and Regeneration Act 1996, the Scheme for Construction Contracts Regulations 1998 applies.
- Part 1 of the scheme details adjudication procedures if the contract does not comply with the adjudication procedures.
- Part 2 of the scheme details payment procedures if the contract does not comply with the payment procedures.
