Conflict Avoidance Flashcards
What is a conflict of interest?
Situation where there may be an actual, perceived or potential risk that professional judgement of an RICS-regulated firm or member could be compromised by undertaking an assignment
3 types – party conflict, own conflict + confidential information conflict
What is a party conflict?
When a duty to one client conflicts with a duty to another client in the same or related assignment
What is an own conflict?
When a duty to a client conflicts with the interests of the RICS member or their firm
What is a confidential information conflict?
When a duty to provide information to one client conflicts with a duty to keep that information confidential for another client
What RICS guidance relates to conflict of interests?
RICS Professional Standard Conflicts of Interest, 2017 (previously a professional statement but reissued in 2023 as a professional standard)
What does the RICS Rules of Conduct say about avoiding conflicts of interest?
Sets out an overarching obligation for both RICS-regulated firms + members to always act with integrity + avoid conflicts of interest + any actions or situations that are inconsistent with their professional obligations
Tell me about a conflict of interest check you have carried out
Carried out a COI check as part of a valuation instruction
Sent an email to offices affected + also checked on our database
No positive responses were identified
What would you do if you identified a perceived/actual conflict of interest?
Notify all parties in writing
Would put mitigation measures in place, e.g. information barriers, to manage conflict, only if both parties provide written consent
If no consent, would decline the second instruction
What is dual agency?
When agent has contractual agency relationships with both seller + buyer at same time
What is the practice of dual agency?
As a general rule, the practice of dual agency must not be undertaken under any circumstances
Can you tell me about any recent RICS guidance relating to dual agency/double dipping?
RICS Professional Standard Conflicts of interest – UK commercial property market investment agency, 2017
This prohibits the practice of dual agency in the UK commercial property investment market
Prohibition applies to both RICS regulated firms + RICS members working within non-RICS regulated firms
Explain the RICS conflict avoidance pledge
Initiative aimed at promoting proactive conflict management in construction industry
By signing the pledge, organisations commit to collaborative working, early intervention + conflict avoidance mechanisms
Pledge aims to reduce financial + relational costs associated with disputes in construction projects
What RICS guidance relates to conflicts of interest for dispute resolvers?
RICS Professional Standard Conflicts of Interest for Members Acting as Dispute Resolvers, 2nd edn, 2020
What is a COI defined as within the RICS Professional Standard Conflicts of Interest for Members Acting as Dispute Resolvers, 2nd edn, 2020?
An involvement between dispute resolver and one of parties, one of the parties’ representatives or the subject matter of dispute, or any other circumstances that raises justifiable doubts of bias or apparent bias
Tell me about the RICS guidance note on conflicts of interest for members acting as dispute resolvers 2020?
Professional Standard covers the appointment of surveyors as arbitrators, independent experts, mediators, adjudicators + other dispute resolvers
Aim of standard is to provide advice on dealing with possible COI for surveyors who are appointed to resolve disputes
Also helps all parties involved in a dispute to understand the main principles + considerations + to be aware of when an involvement may develop into a COI
What is a conflict?
Disagreement between parties
When do disputes arise in your role?
If invoices are not paid on time
If construction is delayed or the work is not completed to expectations
Lack of communication between tenants and contractors when they are carrying out works to tenanted properties
Unpaid rent
How can you avoid a conflict?
Early warning signs – look out for signs, e.g. communication breakdowns, late payments or excessive notices
Risk management – anticipate issues + potential disputes
Partnering techniques
Clear + robust client briefings
Client management
Maintain thorough records + regular updates
Ensure proper + clear contract documentation
What are the early warning signs in relation to dispute avoidance?
Identifying early symptoms of problems
E.g. communication breakdowns or late payments
What is partnering or alliancing?
Cooperative approach between parties which encourages trust + teamwork
Allows parties to pursue mutual goals + objectives
Assists in avoidance of disputes
How can partnering help to avoid disputes?
Identifies potential risks + manage sources of conflict at the outset
How can good record keeping avoid a conflict?
Provides written audit trail – evidence of what was agreed upon
Provides evidence of who is responsible for what, making it easier to hold parties accountable
How can good client management reduce conflict?
Helps build trust + relationships between parties
Promotes clear + transparent communication
Ensures regular updates are provided
Allows potential issues to be identified earlier + solved quicker
Give examples of good payment practices
Checking the invoice shows the correct amount
Ensuring invoices are clear + detailed, including due dates, amounts + payment methods
Paying invoices on time
Keeping track of payments received + due
What are the benefits of clear contract documentation?
Reduces misunderstandings (by defining clear terms + conditions)
Mitigates risks
Enhances transparency + trust between parties
Improves efficiency + decision making
In case of disputes, serves as evidence, making it easier to resolve
Why is good project or instruction management important?
Ensures projects are completed on time by setting deadlines
Keeps projects within budget by monitoring expenses + resource allocation
Identifies potential risks early + helps implement strategies to solve
How do reporting and proactivity reduce conflict?
Reporting – Increases transparency + keeps everyone informed about progress, issues + changes
Proactivity – helps detect early warning signs of conflict, e.g. breakdown in communication
What are the differences between conflict avoidance and dispute resolution?
Conflict avoidance – involves taking steps to prevent conflicts from arising in the first place
Conflict management – involves actively addressing + handling conflicts
How can you manage conflict?
Avoid aggressive behaviour
Investigate + find out facts
Don’t jump to conclusions
Understand each party’s position
What are the three pillars of dispute resolution?
Negotiation
Mediation or conciliation
An adjudicative process, i.e. litigation, arbitration, expert determination, adjudication
Who introduced these terms?
Professor Green of Bolton University
Talk me through how you would negotiate something?
- Do research beforehand + be prepared
- Understand client’s position + where may have flexibility
- Try anticipate other party’s views + understand where we can meet an agreement
- Outline what we agree on + don’t agree on in negotiation
- Explain our position but have some things reserved
- Try understand other party’s position
- Identify key issues where we aren’t agreeing + try find way round it
How do you prepare for a negotiation?
- Agree client’s objectives + negotiating strategy before negotiations
- Clarify client’s fall back or BATNA
- Decide what points you can concede on + which are non-negotiable
- Prepare evidence to support argument
- Mentally prepare + practice
What are the options of you cannot reach an agreement in negotiating a case?
Mediation
Arbitration
Adjudication
Litigation
What is ADR?
Alternative Dispute Resolution
Procedures to resolve conflicts between parties without resorting to litigation
Name some methods of ADR
Negotiation
Mediation
Conciliation
Adjudication
Arbitration
What are the benefits of ADR?
- Cheaper than litigation
- Quicker than litigation
- Flexible + informal process
- Can be confidential
- Can involve specialists/experts rather than lay judges
- Greater opportunity for negotiation
What is the role of RICS in dispute resolution?
RICS Dispute Resolution Services (DRS) provides range of ADR services, e.g. mediation, arbitration, adjudication + expert determination
Can apply for any DRS service on the RICS website
What is litigation?
The process of taking a dispute to law of court
Can be used where ADR fails to produce a solution as a last resort
What governs litigation in the Courts?
Civil Procedure Rules
Explain the role of CPRs
Civil Procedure Rules
Set of rules that governs litigation in courts
Designed to ensure that civil cases are handled justly, efficiently + at a proportionate cost
Can litigation be settled out of Court?
Yes – to avoid further costs based on risks of proceeding to judgement
What is the TCC?
Technology + Construction Court
Part of High Court that deals with construction related litigation
What are the issues with litigation?
Public process – no confidentiality
Costly
Strict procedures
Lay judges may not have expertise in property
What would you recommend if someone wanted to go straight to litigation?
Would encourage negotiation in the first instance + then mediation if that did not solve the issue
If mediation was unsuccessful, I would encourage the parties to go through arbitration
What is mediation?
Confidential process where a neutral party facilitates negotiations between the parties
Explain the process of mediation
- Mediator chosen by mutual agreement
- Process takes place on neutral ground
- Parties kept in separate rooms
- Mediator ‘shuttles’ between parties + consults each party in turn
- Process is led by mediator
What are the advantages of mediation?
- Can improve communication + negotiation
- Helps maintain good relationships
- Informal, confidential, voluntary, flexible
- Cost-effective
- Has potential to reach resolution within days if parties are cooperative
Is mediation legally binding?
No
Can be binding if a contract is produced out of the agreement
Can mediation procedures be disclosed to Court?
No – they are undertaken on a without prejudice basis
What is conciliation?
Confidential process where a neutral party facilitates negotiations between the parties and expresses their opinion on the dispute
What is the difference between mediation + conciliation?
Mediation involves a neutral third-party facilitating discussion without suggesting solutions
Conciliation involves a neutral third party who actively suggests solutions + offers advice
What is adjudication?
Dispute resolution procedure used to provide an interim binding decision
In construction – legally mandated process under Housing Grants, Construction + Regeneration Act 1996 that allows parties to a construction contract in UK to resolve disputes quickly + cost effectively. Process takes approximately 28 days + involves an independent adjudicator who is an expert on the subject matter + makes a binding decision on dispute that must be adhered to
What is the adjudication process?
Notification of Adjudication from one party to another
From receipt of notification, parties have up to 7 days to appoint adjudicator
Adjudicator will review parties’ cases + make their decision within 28 days (can be extended to 42 days)
Does not have the power to award costs, unless parties agree to grant them this power
Which Act governs adjudication (construction)?
Housing Grants, Construction + Regeneration Act 1996 (the Construction Act)
What is the relevant timeframe for adjudication (construction)?
28-42 days
Under JCT how long does an adjudicator have to make their award?
28 days, although this can be extended up to 42 days
What legislation introduced statutory adjudication?
Housing Grants, Construction + Regeneration Act 1996 (Construction Act 1996)
What happens after an adjudication interim decision is made?
Refer dispute to another process, e.g. litigation, arbitration or mutual agreement
What is adjudication often described as?
Pay first, argue later mechanism
What is the aim of adjudication?
Preserve cashflow during construction
What type of claim is adjudication appropriate to use for?
- Interim payments
- Delay + disruption of works
- Extensions of time for completion of works
- Final account
- Breach of contract
- Termination of contract
- Professional negligence
When would a surveyor be most likely to act as an adjudicator?
In construction disputes
Explain the various adjudication services provided by RICS
Construction Adjudication – for disputes in construction industry. Offers fast, cost-effective resolutions for complex issues
Low Value Adjudication – for smaller disputes where claim is less than £100,000 + does not involve multiple issues, offering simplified solution. More cost-effective than arbitration, ideal for urgent disputes where maintaining cash flow + project momentum is crucial
Summary Adjudication – good for resolving straightforward disputes where claim is below £20,000 quickly
Homeowner Adjudication – provides reliable service for resolving disputes between homeowners + contractors
Explain the impact of the Housing Grants Construction and Regeneration Act 1996 (Construction Act) on dispute resolution and construction contracts
Act introduced right to refer disputes to adjudication at anytime, providing a quicker + more cost-effective method for resolving disputes compared to litigation
What is the difference between adjudication + arbitration?
Adjudication is designed for quicker resolution (usually 28 days) – ideal for construction disputes requiring immediate action
Arbitration involves a longer, more detailed process – suitable for more complex disputes requiring thorough examination
What is arbitration?
Form of ADR involving an independent third party making a final + binding decision on a dispute
What Act is arbitration governed by?
Arbitration Act 1996
What is the process of arbitration?
Arbitrator is appointed in a quasi-judicial role in accordance with Arbitration Act 1996
Receives written or verbal evidence at a hearing from parties’ representatives (acting as expert witnesses)
Makes legally binding decision + has power to award all costs
Can surveyors act as arbitrators?
Yes, having passed their Chartered Institute of Arbitrators Exams
How do you become an arbitrator?
Complete 18-month RICS Diploma in arbitration, or comparable qualification approved by RICS
Does an Arbitrator have a duty to investigate all relevant evidence?
No – they act on evidence submitted by the parties, but can draw attention to matters the parties may not be aware of
Can a lease require an Arbitrator’s costs to be split 50:50?
No – an Arbitrator always has full discretion to Award costs
Can you appeal an Arbitration Award?
Yes – limited grounds of appeal under grounds S67-69 within 28 days of the Award being published
Under what grounds can you appeal an Arbitration Award?
Point of law
Serious irregularity
Outside jurisdiction
What are the advantages of arbitration?
Fast + confidential
Cheaper than litigation (but still fairly expensive)
Give an example of when arbitration may be used
Rent reviews
Construction disputes
What arbitration services do the RICS offer?
Fast Track Arbitration Service (Construction + Engineering Arbitration Service) – for disputes with value of £100,000 or less. Award published within 6 months
Select Arbitration Service (Construction + Engineering Arbitration Service) – for high-value complex disputes. Award published within 12 months
Rural Rent + Agriculture Arbitration – landlords must notify tenant 12 months before term date. If no agreement reached after negotiations, arbitrator can be appointed. Will charge for maximum 3 days’ work
Commercial Rent Review Appointment Service – landlords must notify tenant of intention to review rent 12 months before term date. If no agreement reached after negotiations, either party can apply for arbitrator. Has 6 months to reach decision from date of appointment
What are the timescales around arbitration?
Depends on case itself + service of arbitration
Fast-track arbitration service – award published within 6 months
Select arbitration service – award published within 12 months
Commercial Rent Review Appointment Service – RICS appoints arbitrator within a few weeks; decision usually within 6 months from appointment
Rural Rent + Agriculture Arbitration – Decision published within 20 working days after final submissions or hearing; costs shared equally, typically £1000/day for 3 days
Is there a fee to apply to arbitration?
£425 for construction + commercial rent review arbitration services
£195 for rural rent review arbitration services
How do you apply for an arbitrator?
Can submit a DRS form on the RICS website
DRS1 – commercial rent review appointment service
DRS2 – construction + engineering arbitration
DRS3 – rural rent + agriculture disputes
How many years post qualifying can you become an arbitrator?
10 years
What is expert determination?
Relates to role of a third-party during ADR proceedings
Provides expert opinions on disputes
How is an independent expert appointed?
Often appointed by parties or President of RICS (via RICS Dispute Resolution Service)
What is the difference between an arbitrator and an independent expert?
Arbitrator – acts on evidence submitted by parties. Award must be between that contended by the parties. Cannot make award without receiving evidence from at least one of parties. Governed by Arbitration Act 1996. Has power to award costs. Limited right of appeal but restricted to point of law or challenge in the event of lack of jurisdiction or serious irregularity
Independent expert – relies on own investigations + initiatives to arrive at own opinion/decision, which may be outside that contended by the parties. No legislation – relies on contract within the parties. Has no power to award costs unless lease, contract or parties allows it. No right of appeal but parties can sue for negligence
Which Act is Expert Determination governed by?
None – its purely governed by contract
Does an Expert have a duty to investigate all relevant evidence
Yes
Do the parties have to submit their own expert witness representations to an Expert?
No – unless the parties agree otherwise
Does an Expert have power to determine costs?
Maybe – if the lease directs or the parties agree
Can you sue an Expert for negligence?
Yes – can sue for damages/loss, but the Court won’t interfere with the determination
Is a decision by expert determination legally binding?
No
What are the advantages of expert determination?
Cheaper than litigation or arbitration
Fast process
Is there any RICS guidance on expert determination?
RICS Guidance Note on Independent Expert Determination, 2016
When acting as an Expert Witness, who is your duty towards?
The Court or other dispute resolution panel
How do your responsibilities as a surveyor change when acting as an expert witness? Is there any RICS guidance on this?
You would have a duty to the Court rather than your client
RICS Practice Statement + Guidance Note ‘Surveyors acting as expert witnesses’ (4th edn), April 2014, amended Feb 2023. Effective in April 2014
Do you act as an Expert Witness in negotiations?
No – you act as a negotiator/advisor
Can an Expert Witness’ fee basis be performance-based/condition?
No
What is the difference between an independent expert and expert witness?
Independent expert – relates to role of 3rd party during ADR proceedings
Expert witness – role that surveyor (representing client either landlord or tenant) may act during 3rd party proceedings
What is an advocate?
Represents client in third party proceedings or court
Has a duty to court or tribunal to act properly + fairly but also has a duty to client’s best interest
To whom does the advocate owe a duty?
Their client but still has a duty to the tribunal or court to act properly + fairly
Is there any RICS guidance for advocates?
RICS Professional Statement ‘Surveyors Acting As Advocates’, (3rd edn), February 2017
What is the difference between acting as an expert witness + advocate ?
Expert witness – has a duty to the court. Obliged to put forward genuine opinion
Advocate – Has a duty to their client + tribunal/court to act fairly. Able to put forward arguments + conclusions with which they do not necessarily agree
What is PACT?
Professional Arbitration on Court Terms
For commercial lease renewal disputes, run by RICS
Involves third-party arbitrator or expert
Offers viable alternative to court where parties cannot agree on key lease terms, e.g. term, rent, service charge, etc.
Can you tell me about PACT in relation to lease renewals?
It is a process where the determination of all/some of lease terms of a renewal lease (with consent of both parties) is delegated to an independent third party who will act as an arbitrator or independent expert
What is a Dispute Review or Recommendation Board (DRB)?
Panel of experts established at beginning of construction project to help prevent + resolve disputes as they arise
Makes recommendations rather than binding decisions
How does the DRB process work?
Three dispute board members are appointed at start of project
They become familiar with project by reviewing documentation + regularly visiting site during course of works
If a dispute arises that cannot be resolved through negotiation, either party can submit dispute to DRB (informal process)
DRB holds a hearing where both parties present sides of dispute. After considering sides, DRB makes a non-binding recommendation on how to resolve the issue
If DRBs recommendation is not accepted, parties can proceed to arbitration or litigation for a binding resolution
How does the DAB process work?
DAB is established + members are chosen at start of project
They become familiar with project by reviewing documentation + regularly visiting site during course of works
When dispute arises, referred to DAB (quicker + less formal than court proceedings)
DAB holds a hearing where both parties present sides of dispute. After considering sides, DAB makes a binding decision (decision is binding unless it is overturned by arbitration or litigation)
What is a Dispute Adjudication Board (DAB)?
Panel of experts selected by parties to resolve disputes that arise during construction project
Makes binding decision about any dispute referred to it
Which dispute resolution procedures lead to a binding decision?
Adjudication
Arbitration
Litigation
What RICS guidance are you aware of relating to dispute resolution, ADR or roles in dispute resolution?
RICS Professional Standard ‘Surveyors acting as arbitrators in construction disputes’ (2nd edn), originally published in April 2017 as a guidance note but was reissued in April 2023 as a professional standard
RICS Professional Standard ‘Surveyors acting as adjudicators in the construction industry’ (4th edn), originally published in April 2017 as a guidance note but was reissued in April 2023 as a professional standard
RICS Professional Standard ‘Independent Expert Determination’, December 2016
RICS Practice Statement + Guidance Note ‘Surveyors acting as expert witnesses’ (4th edn), April 2014, amended Feb 2023
RICS Professional Statement ‘Surveyors Acting As Advocates’, (3rd edn), February 2017
What is a calderbank offer?
Private + confidential offer made by one party to other party which is intended to settle a dispute
Must be a genuine offer + capable of being accepted
If offer is not accepted it cannot be revealed to an independent dispute resolver, e.g. arbitrator, until arbitrator has made decision
What is a Part 36 offer?
Settlement offer made in accordance with Part 36 of Civil Procedure Rules in England + Wales
Can be made any time during litigation, including before proceedings start
Must be made in writing, states that it is made pursuant to Part 36 of Civil Procedure Rules in England + Wales + specify period (at least 21 days) for acceptance + detail offer’s scope
Similar to private + confidential Calderbank offer to settle a dispute
What is the difference between a part 36 offer and a calderbank offer?
Calderbank offer – more informal + more flexible. Fewer rules + more options for amending, withdrawing + setting time limits
Part 36 must be in a specific format + in writing
What is a memorandum of understanding?
Non-binding agreement that states each party’s intention to do something, e.g. enter into a business transaction
Used to help parties move towards more formal, contractually binding relations
Can help to avoid conflicts + enable negotiations
What tribunals are you aware of?
First-Tier Tribunal – for disputes between landlords + tenants, e.g. assessments of fair rents + market rents, variation to leases, etc.
Valuation Tribunal – determines appeals against business-rating assessments brought by ratepayers for commercial premises + appeals against council tax banding brought by residential homeowners/taxpayers
Upper Tribunal (Lands Chamber) – formerly known as Lands Tribunal. Used to determine disputes concerning values of damages in land compensation + CPOs, etc.
