Compare and Contrast

Question 1

Disputes in the Construction Industry

Answer 1

• Lowest price competitive tendering: Bidding process where the lowest bid is often chosen, potentially sacrificing quality
• Prototype in a muddy field: Testing and experimenting in challenging conditions
• Multiple contractual relationships: Many parties are involved with various contracts, increasing the risk of disputes
• Time pressure: Tight deadlines may lead to compromises in quality or missed deadlines
• Incomplete design: Insufficient design information can cause disputes due to different interpretations
• Inappropriate allocation of risk: Unfair distribution of risk can create conflicts among parties
• Conflicts of interest: Situations where parties may have competing interests, creating potential disputes
• Latham Report: A UK report that examined the construction industry and recommended various improvements

Question 2

Dispute Resolution Terminology

Answer 2

• Alternative Dispute Resolution (ADR): Methods for resolving disputes outside of court
• Traditional Dispute Resolution: Formal court-based methods of resolving disputes, such as litigation
• Adjudicative Dispute Resolution: A decision is imposed on the parties by an external authority
• Consensual Dispute Resolution: The parties resolve the dispute through mutual agreement

Question 3

Adjudicative Dispute Resolution Methods

Answer 3

• Litigation: A formal court-based process to resolve disputes, typically public and potentially time-consuming
• Arbitration: A private, often quicker alternative to litigation where an impartial third party makes a binding decision
• Statutory Adjudication (HGCR Act 1996): A mandatory, fast-tracked dispute resolution process for construction contracts in the UK
• Contractual Adjudication: A dispute resolution process agreed upon by parties within the contract
• Expert Determination: A binding decision made by a subject matter expert
• Binding Reference: A decision made by a third party that the parties have agreed to be bound by
• Dispute Resolution Boards: Panels of experts that help resolve disputes between parties

Question 4

Consensual Dispute Resolution Methods

Answer 4

• Negotiation: Direct communication between parties to resolve disputes
• Mediation: An impartial third party helps facilitate communication and negotiations between parties
• Conciliation: A third party actively helps parties reach a settlement
• On Site Neutral: A neutral party on-site to help resolve disputes as they arise
• Mini Trial: A condensed, non-binding trial where parties present their case to a neutral party or panel

Question 5

Objectives when a dispute arises

Answer 5

• Fast resolution: Settling the dispute quickly to minimize impact on the project
• Preserving commercial relationships: Resolving the dispute without damaging relationships between parties
• Extracting maximum payment: Maximizing financial recovery from the dispute
• Revenge: Seeking retribution for perceived wrongs
• Legalistic approach vs. commercial approach: Focusing on legal rights and obligations vs. finding practical, mutually beneficial solutions
• Avoiding Pyrrhic victories: Avoiding costly or damaging victories where the winner still suffers substantial losses

Question 6

Factors to consider when picking a dispute resolution method

Answer 6

• Speed of the process: The time it takes to resolve the dispute
• Quality of the decision: Ensuring the decision is legally and practically sound
• Practical expertise of the decision maker: The decision maker’s understanding of the subject matter and industry
• Cost: The financial impact of the dispute resolution process
• Recoverability of expense: The ability to recover costs incurred during the process
• Finality of the decision: Whether the decision is binding and enforceable
• Privacy of the process: The level of confidentiality maintained during the process
• Preserving commercial relationships: Maintaining goodwill between parties for future collaboration
• Finding creative solutions: Exploring alternative outcomes and mutually beneficial resolutions

Question 7

Speed of the process

Answer 7

• Priority of speed: Determining whether a quick resolution is important to the parties involved
• Quick decision examples: Comparing timeframes for various dispute resolution methods
• Two years in the Sheriff Court
• 9 months in the Commercial Court
• 6 months in arbitration
• 28 days of an adjudication
• 1 week decision from an expert
• 2 day mediation
• Conflict between speed and proper time needed: Balancing the desire for a quick resolution with the time required for a thorough consideration of the issues

Question 8

Quality of the decision

Answer 8

• Legal correctness priority: Ensuring the decision aligns with legal principles and precedents
• Decision maker options: Choosing the most suitable decision maker based on their expertise
• Senator of the College of Justice
• Sheriff
• Experienced arbitrator
• Non-legally qualified expert
• “Rough Justice”: Accepting a less precise but quicker decision in the interest of speed

Question 9

Practical expertise of the decision maker

Answer 9

• Judges: Have vast legal experience but may lack practical industry knowledge
• Arbitrators, adjudicators, and expert determiners: May have extensive practical experience but limited formal legal training
• Experience of the practical situation: A decision maker with hands-on experience in the industry may be more suitable depending on the situation

Question 10

Cost considerations

Answer 10

• Legal representation requirements: Determining if legal representation is necessary or optional
• Fees for decision maker, venue, and clerk: Assessing additional costs associated with the dispute resolution process

Question 11

Recoverability of legal/professional advisor expense

Answer 11

• Chances to recover expenses: Evaluating the likelihood of recouping costs incurred during the process
• Liability for other side’s expenses: Assessing the risk of being responsible for the opposing party’s costs in the event of a loss

Question 12

Finality of the decision

Answer 12

• Right of appeal: Determining whether the dispute resolution method allows for appeals
• Final and binding: Assessing the enforceability and permanence of the decision
• Circumstances for challenging the decision: Identifying situations where the decision may be contested or overturned

Question 13

Privacy of process

Answer 13

• Confidentiality: Maintaining privacy and discretion throughout the dispute resolution process
• Publicity: Utilizing media attention or public exposure to influence the outcome
• Publicity as a dispute resolution tool: Leveraging public perception to encourage settlement or resolution

Question 14

Preserving Commercial Relationships

Answer 14

• Ongoing commercial relationships: Considering the impact of the dispute resolution method on long-term business partnerships
• Ongoing contracts: Assessing the effect on current contractual agreements
• Prospect of future contracts: Evaluating the potential for future collaboration after the dispute resolution process

Question 15

Finding creative solutions

Answer 15

• Win-lose, lose-lose, mixed success, win-win: Exploring various outcomes and their implications for the parties involved
• Looking outside the sum in dispute: Identifying additional factors and opportunities for mutual benefit

Question 16

Enforceability

Answer 16

• Automatic enforcement: Determining if the decision is immediately enforceable without further action
• Enforcement by courts: Assessing the need for court intervention to enforce the decision
• International enforceability: Evaluating the enforceability of the decision across different jurisdictions

Question 17

Comparing and contrasting dispute methods

Answer 17

• Mediation-Arbitration
• Arbitration-Mediation
• Online Dispute Resolution (ODR)
• Drawing lots
• Tossing a coin
• Trial by combat
• Scissors-paper-stone
• Litigation

Question 18

Litigation - Court of Session (Ordinary Cause)

Answer 18

• Speed: Slow, can take years
• Quality: High, experienced judges
• Practical expertise: Unlikely for judges to have technical experience
• Cost: High, formal court process, advocate or solicitor advocate required
• Recoverability of expense: 40-70% generally recoverable if successful, same payable if failed
• Finality: Appealable to Inner House, then UK Supreme Court with leave
• Privacy: No, public proceedings
• Preserving commercial relationships: Unlikely
• Creative solutions: No, decision according to the law
• Enforceability: By officer of court, international enforcement with relevant treaty

Question 19

Litigation - Sheriff Court (Ordinary Cause)

Answer 19

• Speed: Slow, can take years
• Quality: High, experienced Sheriffs, some with more criminal law focus
• Practical expertise: Unlikely for Sheriffs to have technical experience
• Cost: High, formal court process, solicitor required
• Recoverability of expense: 40-70% generally recoverable if successful, same payable if failed
• Finality: Appealable to Sheriff Appeal Court, Inner House with leave, then UK Supreme Court with leave
• Privacy: No, public proceedings
• Preserving commercial relationships: Unlikely
• Creative solutions: No, decision according to the law

Question 20

Litigation - Court of Session (Commercial Court)

Answer 20

• Speed: Quicker, as fast as six months
• Quality: High, experienced commercial judges
• Practical expertise: Unlikely for judges to have technical experience, but have commercial dispute experience
• Cost: High, advocate or solicitor advocate required, frontloading of work
• Recoverability of expense: 40-70% generally recoverable if successful, same payable if failed
• Finality: Appealable to Inner House, then UK Supreme Court with leave
• Privacy: No, public proceedings
• Preserving commercial relationships: Unlikely
• Creative solutions: No, decision according to the law

Question 21

Litigation - Sheriff Court (Commercial Court)

Answer 21

• Speed: Quicker, as fast as six months
• Quality: High, experienced commercial judges
• Practical expertise: Unlikely for judges to have technical experience, but have commercial dispute experience
• Cost: Relatively high, solicitor required, frontloading of work, efficient process
• Recoverability of expense: 40-70% generally recoverable if successful, same payable if failed
• Finality: Appealable to Sheriff Appeal Court, Inner House with leave, then UK Supreme Court with leave
• Privacy: No, public proceedings
• Preserving commercial relationships: Unlikely
• Creative solutions: No, decision according to the law

Question 22

Arbitration

Answer 22

• Speed: Can vary, depends on arbitrator and rules used
• Quality: Good if arbitrator is from a recognized body with high standards
• Practical expertise: Likely to have practical experience, but not to use own expertise in decision
• Cost: No requirement for solicitor/counsel, arbitrator and clerk/legal assessor charge hourly, venue fee
• Recoverability of expense: 40-70% generally recoverable if successful, same payable if failed, sometimes 100%
• Finality: Challenges limited, appeals filtered, no appeal to UK Supreme Court
• Privacy: Yes, confidentiality
• Preserving commercial relationships: Unlikely, but confidentiality and commerciality of process can help
• Creative solutions: No, decision according to the law
• Enforceability: Enforcement by courts, New York Convention applicable

Question 23

Online Dispute Resolution (ODR)

Answer 23

• A method of dispute resolution using digital technology
• Can be a more efficient and cost-effective alternative to traditional methods
• Allows parties to resolve disputes remotely, reducing the need for physical meetings
• Can be used in conjunction with other dispute resolution methods like mediation and arbitration

Question 24

Overview of Litigation

Answer 24

• Adjudicative form of dispute resolution
• One of the longest established forms
• Involves an appeal to the power of the state to impose a decision strictly according to the law
• Different courts available (e.g., Court of Session, Sheriff Court)
• Formal and adversarial process where parties present their case before a judge who makes a binding decision based on the law
• Advantages: Well-established form, clear structure and procedures, binding decisions
• Disadvantages: Time-consuming, expensive, may damage relationships between parties

Question 25

Overview of Arbitration

Answer 25

• Adjudicative form of dispute resolution
• Parties agree to refer a dispute to a third party (arbitrator) and be bound by their decision
• Can be included in a contract as an arbitration clause or decided upon after a dispute arises
• Excludes jurisdiction of the court if an arbitration clause is present, unless parties waive their right to arbitration
• Private and more flexible alternative to litigation
• Parties select an impartial arbitrator with specific expertise in the subject matter
• Can be tailored to suit the needs of the parties
• Confidentiality can be maintained, beneficial for sensitive disputes

Question 26

Overview of Statutory Adjudication (HGRC Act 1996)

Answer 26

• Introduced in 1998 to address construction disputes efficiently
• Applies only to contracts for ‘construction operations’
• Has become very popular and significantly impacted the construction industry
• Provides a temporarily binding decision, quickly resolving disputes
• Relatively few adjudicator decisions are litigated, arbitrated, or challenged
• Courts tend to uphold adjudicator decisions and support the policy decisions behind the 1996 Act
• Adjudicators are usually experts in construction law and practice
• Decisions are typically reached within 28 days, ensuring a speedy resolution
• Parties can still pursue litigation or arbitration if they are dissatisfied with the adjudicator’s decision

Question 27

Statutory Adjudication (HGRC Act 1996)

Answer 27

• Speed: Fast, 28 days with possible extensions
• Quality: Variable, depends on adjudicator and case complexity
• Practical expertise: Likely, adjudicators chosen based on experience or legal expertise
• Cost: Moderate, solicitors optional but intensity of activity increases costs
• Recoverability of expense: Generally not recoverable, unless agreed upon in contract or adjudication agreement
• Finality: Binding, limited grounds for challenge or reversal in subsequent litigation/arbitration
• Privacy: Yes, private but not confidential; becomes public if challenged in court
• Preserving commercial relationships: Unlikely, but may continue for contract duration
• Creative solutions: No, decision according to the law, may seem more practical
• Enforceability: Through court proceedings or registration

Question 28

Contractual Adjudication: Definition and Key Cases

Answer 28

• Contractual adjudication is a dispute resolution process voluntarily agreed upon by parties in a contract, separate from statutory adjudication under the HGCR Act 1996
• Key cases: Deko, Ritchie v Philp, Domsalla v Dyason [2007] EWHC 1174 (TCC)
• Policy decisions behind statutory adjudication may not necessarily apply

Arises in two situations:

• Parties obligated under the 1996 Act to have an adjudication scheme in place (implementation of the Act)
• 1996 Act does not apply (e.g., employer is a residential occupier), but parties use a contract form that includes a right to adjudicate (true contractual adjudication)

Question 29

Contractual Adjudication

Answer 29

• Speed: Quick, usually 28 days, but can be specified in a truly contractual adjudication
• Quality: Depends on the adjudicator’s ability, similar to statutory adjudication
• Practical expertise: Adjudicator selected based on relevant experience or legal expertise, as in statutory adjudication
• Cost: Comparable to statutory adjudication
• Recoverability of expense: Determined by contract, as in statutory adjudication
• Finality: Decision is binding, can be overturned by subsequent litigation/arbitration; courts may be more receptive to retention/compensation arguments, but Scottish position unclear (see Domsalla v Dyason)
• Privacy: Private unless action is taken to enforce or challenge the award, not confidential
• Preserving commercial relationships: Unlikely
• Creative solutions: No, win or lose game, similar to statutory adjudication

Question 30

Expert Determination: Overview and Applicability

Answer 30

• Adjudicative form of dispute resolution
• Commonly used for rent reviews and other factual or opinion-based matters (e.g., quality, square footage, value)
• Expert utilizes their own expertise to determine the issue
• Not ideal for resolving legal issues; ensure the decision maker is acting as an expert, not an arbitrator to avoid unexpected consequences

Question 31

Expert Determination

Answer 31

• Speed: Can be very quick, with decisions reached within weeks or even days
• Quality: Depends on various factors; as the decision is the expert’s opinion, they can’t necessarily be wrong
• Practical expertise: Expert selected based on relevant practical expertise
• Cost: Generally low, minimal procedure involved, lawyers not required but may draft the reference; experts charge hourly rate or fixed fee
• Recoverability of expense: Depends on what parties agree, usually no provision on expenses, debatable whether expert has implied powers
• Finality: Difficult to challenge, no requirement for expert to give reasons unless contractually required, limited basis for challenge; judicial review possible on certain grounds
• Privacy: Completely private unless court proceedings are necessary to enforce or challenge the decision
• Preserving commercial relationships: Possible, depends on circumstances; often used when parties need binding decision on value, quality, etc., or in ongoing contracts like leases or development agreements
• Creative solutions: Limited scope, expert’s role is to answer the referred question, not to propose settlement ideas

Question 32

Binding Reference: Definition and Key Features

Answer 32

• In expert determination, parties generally agree on the law but need a decision on factual matters like value or quality, with possible incidental legal questions
• In a binding reference, parties agree on the facts but require a determination on the applicable law
• This is achieved through a joint memorandum to a senior lawyer, often an advocate, university lecturer, or authority in the relevant area of law affecting the dispute

Question 33

Binding Reference

Answer 33

• Speed: Fast, process duration depends on referee’s time to issue the decision
• Quality: Should be high if an appropriate referee is instructed
• Practical expertise: Decision maker’s expertise is legal, not practical, but should have significant experience in the relevant area of law
• Cost: Potentially low, no need for lawyers to draft joint memorandum; referee’s fee significant but proportionate and may be fixed in advance
• Recoverability of expense: Matter of contract, unusual for referee to award legal expenses, more common for referee to award their own costs against unsuccessful party
• Finality: Decisions should be final, challengeable only on very limited grounds (e.g., bribery)
• Privacy: Yes, unless enforcement or challenge in courts is necessary
• Preserving commercial relationships: Possible, better chance of survival if parties choose this route over court
• Creative solutions: No, straightforward exercise in asking a question and receiving an answer

Question 34

Dispute Boards: Types and Key Features

Answer 34

Terminology:

• Dispute Resolution Boards (DRB): Umbrella term, often refers to binding decision
• Dispute Adjudication Board (DAB): Binding DRB (e.g., FIDIC 1999)
• Dispute Advisory Boards: Non-binding
• Dispute Avoidance and Adjudication Boards (DAABs): FIDIC 2017 Contracts, dual role

Dispute Resolution/Adjudication Boards:

• DRB/DAB of three or more independent ‘neutrals’ engaged at project start
• Contract specifies that disputes will be determined by the DRB
• DRB decision is binding, cannot be challenged until project completion
• In most cases, parties accept the decision and do not challenge it after completion

Dispute Avoidance and Adjudication Boards:

• Appointed at the outset
• Parties may request recommendations from the DAAB
• Disputes resolved by adjudication in an 84-day process
• Referral to arbitration possible if a Notice of Dissatisfaction (NOD) is served within 28 days; if no arbitration commenced within 182 days after the NOD, DAAB decision becomes final

Question 35

Dispute Resolution Boards

Answer 35

• Speed: Depends on contract; aims for quick decisions to allow contract works to progress uninterrupted
• Quality: ‘Quick fix’ decisions; mix of legally qualified and practically experienced appointees can lead to well-balanced decisions
• Practical expertise: DRB members often have practical backgrounds; full coverage of all disciplines impractical
• Cost: Comparatively high upfront costs; savings possible in case of multiple disputes or if DRB decisions accepted without further litigation/arbitration; best suited for large projects
• Recoverability of expense: Determined by contract setting up DRB
• Finality: Decision binding until contract end; difficult to challenge pre-completion unless corruption involved; parties may accept decisions or litigate after completion
• Privacy: Private process
• Preserving Commercial Relationships: Yes, main goal of the process
• Creative solutions: No, DRB imposes quick fix solutions to allow contract continuation

Question 36

Negotiation: Key Features

Answer 36

• Consensual dispute process: No binding effect unless parties reach agreement
• Timing: Best chance of success when attempted early, before positions become entrenched or legal expenses distort the situation
• Representatives: Success more likely with representatives who have decision-making power and can bind parties to a deal
• Realistic views: Parties should have good advice beforehand, understanding the strengths and weaknesses of their position and bargaining strength
• Successful outcomes: Poorly advised parties may refuse to settle when they should or settle for less than they could have achieved

Question 37

Negotiation

Answer 37

• Speed: Can be very quick or take weeks/months, depends on the will of the parties
• Quality: No imposed decision; parties ensure the deal takes all relevant factors into account
• Practical expertise: No decision maker other than the parties themselves
• Cost: Low; lawyers optional, no charge from third party judge/arbitrator
• Recoverability of expense: Anything can be agreed as part of a settlement deal
• Finality: Negotiated settlements are final and binding; challenged only in cases of fraud/deception
• Privacy: Negotiations are private; confidentiality clause can be built into the deal
• Preserving commercial relationships: Depends on circumstances; negotiation offers the best prospect, especially with win-win deals
• Creative solutions: Possible to agree on anything, including factors beyond the immediate dispute, such as future collaborations

Question 38

Mediation: Key Features

Answer 38

• Similar factors apply as in negotiation
• Mediator assists parties in achieving a binding settlement agreement
• Mediation has strong support in English courts due to “Woolf reforms”
• Gaining support in Scotland
• Mediator helps parties identify common ground, clarify issues, and explore creative solutions
• Mediation can be faster, more cost-effective, and less adversarial than other dispute resolution methods
• Parties maintain control over the outcome and can preserve relationships
• Confidentiality is maintained throughout the process, unless required by law or agreed otherwise

Question 39

Mediation

Answer 39

• Speed of the process: Generally very quick, with the mediation taking a day or two after initial preparation, which can take several weeks
• Quality of the decision: No imposed decision; parties must ensure the negotiated deal takes relevant factors into account with mediator’s guidance
• Practical expertise of the decision maker: Mediator should be an expert in mediation, though experience in the field of dispute is helpful
• Cost: Comparatively low due to short duration; lawyers are optional but can be helpful for recording the deal
• Recoverability of expense: Any terms can be agreed as part of the settlement; unusual to agree on payment of legal expenses if no action has been raised
• Finality of the decision: Settlements are final and binding; can be challenged if procured by fraud or deception
• Privacy of the process: Private and confidential; confidentiality clause can be included in the deal
• Preserving Commercial Relationships: Mediation can help preserve relationships depending on circumstances
• Creative solutions: Mediation allows for creative solutions, including agreements on future projects or other factors outside the immediate dispute

Question 40

Variations on Mediation

Answer 40

Conciliation:
- Similar to mediation, without direct meetings between opposing parties
- Involves ‘shuttle diplomacy’

On-site Neutral:
- Neutral appointed at the start of the contract, attending site meetings
- Neutral mediates disputes using their knowledge of the project
- Significant expense, justified only on larger projects

Mini Trial:
- Parties present arguments to a neutral observer as if in court
- Parties attempt a negotiated settlement after presentations
- Neutral observer gives non-binding opinion on likely court outcome
- Further negotiation and possible mediation follow

Med-Arb:
- Mediation followed by arbitration if needed
- Mediator becomes arbitrator if no agreement is reached
- Guarantees an outcome, but may lose tactical advantage from mediating first

Arb-Med:
- Arbitration before mediation, with the decision placed in a sealed envelope
- If mediation is successful, the decision is discarded
- If mediation fails, the envelope is opened, and the award becomes binding

Question 41

Worked example 1

• You are a subcontractor
• The main contractor is withholding £200,000 because of a difference of interpretation in a contractual provision
• The contract works are complete
• You are reliant on the main contractor for 60% of your orders
• There is no dispute resolution provision in your subcontract
• How would you proceed?
• What factors would you consider?

Answer 41

Preserve commercial relationship:

• Consider negotiation or mediation to maintain a positive relationship with the main contractor

Cost and resource management:

• Explore low-cost options like negotiation, mediation, or conciliation to minimize financial impact

Speed and efficiency:

• Prioritise methods with faster resolution, such as negotiation or mediation

Expertise in the decision-making process:

• If a decision on the contractual interpretation is needed, consider a binding reference with a joint memorandum to a senior lawyer

Finality of the decision:

• Choose a method that provides a final, binding decision to avoid future disputes

Privacy:

• Opt for private dispute resolution methods like negotiation or mediation to protect sensitive information

In this scenario, the best course of action would likely involve initially attempting negotiation or mediation to maintain the commercial relationship while resolving the dispute efficiently and cost-effectively. If these methods fail, consider moving to a binding reference to obtain a final decision on the contractual interpretation.

Question 42

Worked example 2

• You are a contractor working for a one off employer
• The employer has restricted the valuation by £350,000 for spurious reasons
• The works have another six months to run
• The standard form contract provides for adjudication and arbitration under the CIArb Scottish Code
• How would you proceed?
• What factors would you consider?

Answer 42

Timing and project duration:

• Consider the remaining six months of the project, which may impact the choice of dispute resolution method

Cost and resource management:

• Analyze the costs and resources associated with adjudication and arbitration

Speed and efficiency:

• Evaluate the time required for each method; adjudication is usually faster than arbitration

Finality of the decision:

• Adjudication provides a temporary binding decision, while arbitration generally results in a final and binding decision

Expertise of the decision-maker:

• Adjudicators and arbitrators are usually experienced in the construction industry and legal matters, but arbitrators may have more specialized expertise

Enforcement and legal precedent:

• Assess the enforceability of the decision and potential implications for legal precedents

In this scenario, the contractor might initially consider adjudication due to its faster process, allowing for a temporary binding decision while the works continue. This decision can then be challenged in arbitration after the completion of the project, if necessary. However, if the contractor seeks a final and binding decision with potential legal implications, they may proceed directly to arbitration.

Question 43

Worked example 3

• You are a contractor working for your local public authority
• The contract has a detailed dispute procedure requiring mediation as a precursor to any formal dispute resolution
• The public authorities (internal) architect is refusing to certify works to the value of £950,000 on quality grounds
• How would you proceed?
• What factors would you consider?

Answer 43

Contractual requirements:

• Follow the contract’s dispute resolution procedure, starting with mediation as a prerequisite to formal dispute resolution methods

Communication and negotiation:

• Attempt to resolve the issue through open communication and negotiation with the public authority and the architect before proceeding to mediation

Expertise and evidence:

• Gather evidence supporting the quality of the work and consider involving an independent expert to assess the work quality and provide an unbiased opinion

Impact on reputation and public relations:

• Evaluate the potential impact on the contractor’s reputation and relationship with the local public authority, considering the importance of maintaining a positive image

Time, cost, and resource management:

• Analyze the costs, time, and resources associated with mediation and potential formal dispute resolution methods

Legal implications and precedent:

• Consider the potential legal implications and precedents that may arise from the dispute resolution process

In this scenario, the contractor should first attempt to resolve the issue through open communication and negotiation with the public authority and the architect. If unsuccessful, the contractor must follow the contract’s dispute resolution procedure and engage in mediation, as required. Throughout the process, it is essential to gather evidence supporting the quality of the work and consider involving an independent expert to assess the work quality. Additionally, the contractor should be mindful of the potential impact on their reputation and relationship with the local public authority.

Question 44

Worked example 4

• You are a small subcontractor
• The main contractor is withholding £180,000 for no good reason at all
• Your company cannot withstand this loss of cashflow
• How would you proceed?
• What factors would you consider?

Answer 44

Communication and negotiation:

• Attempt to resolve the issue amicably through open communication and negotiation with the main contractor, explaining the financial impact on your company

Legal advice:

• Consult a legal professional to understand your rights and options under the contract and relevant laws

Speed and efficiency:

• Consider dispute resolution methods that are fast and efficient, such as negotiation, mediation, or statutory adjudication, to resolve the dispute and recover the withheld funds as quickly as possible

Cost and resource management:

• Analyze the costs, time, and resources associated with different dispute resolution methods, keeping in mind the company’s financial constraints

Impact on business relationships:

• Evaluate the potential impact on the business relationship with the main contractor and other stakeholders, considering the importance of maintaining good working relationships

Enforcement and recoverability:

• Assess the likelihood of successfully recovering the withheld funds through various dispute resolution methods and the enforceability of any decision or settlement reached

In this scenario, the subcontractor should first attempt to resolve the issue amicably through open communication and negotiation with the main contractor. If unsuccessful, the subcontractor should consult a legal professional to understand their rights and options. Given the financial constraints, it would be wise to consider fast and efficient dispute resolution methods, such as negotiation, mediation, or statutory adjudication. Throughout the process, the subcontractor should be mindful of the potential impact on their business relationships and carefully analyze the costs, time, and resources associated with different dispute resolution methods. Finally, the subcontractor should assess the likelihood of successfully recovering the withheld funds and the enforceability of any decision or settlement reached.

Question 45

Worked example 5

• You have employed a main contractor to build an office
• There is a dispute over the amount of usable space
• The contract contains no dispute provisions
• How would you proceed?
• What factors would you consider?

Answer 45

Communication and negotiation:

• Initiate open communication and negotiation with the main contractor to resolve the dispute amicably, aiming for a mutually beneficial outcome

Expert opinions and advice:

• Seek the opinion of a relevant expert (e.g., architect or surveyor) to evaluate the usable space and provide guidance on the matter
• Consult a legal professional to understand your rights and options under the contract and relevant laws

Speed and efficiency:

• Consider dispute resolution methods that are fast and efficient, such as negotiation, mediation, or expert determination, to resolve the dispute and minimize any delays in the project

Cost and resource management:

• Analyze the costs, time, and resources associated with different dispute resolution methods, taking into account the potential impact on the project’s budget and timeline

Impact on business relationships:

• Evaluate the potential impact on the business relationship with the main contractor and other stakeholders, considering the importance of maintaining good working relationships throughout the project

Finality and enforceability:

• Assess the likelihood of reaching a final and enforceable outcome through various dispute resolution methods, and the ease of implementing any decision or settlement reached

In this scenario, the first step should be to initiate open communication and negotiation with the main contractor to resolve the dispute amicably. Seeking expert opinions from an architect or surveyor, as well as legal advice, can help guide the process. Speed and efficiency are essential in minimizing project delays, so consider dispute resolution methods like negotiation, mediation, or expert determination. It’s crucial to analyze the costs, time, and resources associated with different methods and evaluate the potential impact on business relationships. Finally, assess the likelihood of reaching a final and enforceable outcome and the ease of implementing any decision or settlement reached.