Conflict Avoidance & ADR Flashcards
What are the different forms of dispute resolution? (3 pillars)
Negotiation - natural fact finding, expert appraisal
Mediation - conciliation, neutral 3rd party
Adjudicator - Litigation, Arbitration, Expert Determination, Adjudication, Dispute Review Boards
What does the RICS Black Book say on the process of conflict avoidance?
- Good management
- Clear contract documents - identify risks early
- Partnering and alliancing - building co-operative team
- Good project management - proactive on time, money, risk
- Good client management - client objectives
- Good construction management - understand project & programme
- Good design team management - plan information flow
- Good payment practice - cash flow / valuations
- Record keeping - site activity diary
- Regular reporting and proactivity
What are the minimum requirements of a QS on conflict avoidance?
- Seek clarity on documents
- Identify works within expertise to be brought to client’s attention
- Manage professionally the day to day conflicts / disagreements
- Recognise escalation of disputes and keep the client informed
- Understand outline the range of dispute resolution techniques available and when they apply under contracts
- Recognise when specialist assistance is required
Can you strike out dispute resolution processes from a contract?
Adjudication must apply in accordance with the Construction Act / Scheme for Construction Contracts. Arbitration does not have to be selected, but if it isn’t then litigation will automatically apply.
What ADR procedures are in contracts you have used?
Mediation is mentioned within JCT contracts recommending that the parties give consideration to mediation if a dispute is to arise that cannot be resolved by negotiation. Others are adjudication and arbitration.
If there was no adjudication included within a contract, what would you do?
The Scheme for Construction Contracts would apply, therefore the parties would still have a right to refer a dispute to adjudication.
What timings are associated with Adjudication?
- Notice of Adjudication - refer within 7 days
- Adjudicator appointed within 7 days of notice
- Decision given within 28 days of referral
- Extension (if agreed by referring party) to maximum of 14 days
What can you tell me about adjudication?
- The single greatest factor to have influenced dispute resolution in the UK construction industry
- New proceedings in the Technology and Construction Court have reduced dramatically since the Construction Act made adjudication widely available
- Quickest of the formal dispute resolution procedures and relatively inexpensive compared to arbitration or litigation
- The agreed adjudicator under JCT contracts is named in the contract particulars, or the nominating body that will select one is chosen i.e. RIBA / RICS
- The process is commenced by a notice of intention to adjudicate being served, which defines the nature of the dispute -an adjudicator is then appointed
- Adjudicators are required to reach a decision within 28 days of referral (though this is rarely achieved and it is regularly extended!!)
- Each party has to bear their legal costs regardless of the result -adjudicator decides who pays their fees
- Power to settle rest with adjudicator
- Decision is binding and enforced by courts
What is a pre-action protocol?
- Parties to a construction dispute should comply with the Pre-Action Protocol for Construction and Engineering Disputes before commencing proceedings.
- Courts will expect the parties to have done so.
- A letter of claim should be issued to the other party summarising the facts, the basis upon which a claim is made, what relief they are seeking etc.
- The objective is to make appropriate attempts to resolve disputes before commencing proceedings and to consider the use of an appropriate form of ADR to do so.
- Woolf reforms introduced pre-action protocols in an attempt to reduce litigation.
- Process as per adjudication. Any new issues a response is due within 14 days
Is adjudication binding?
Yes - enforced by Technology and Construction Court
May be reviewed by arbitration / litigation
How is adjudication dealt with under a JCT contract?
JCT refers to the Scheme for Construction Contracts for adjudication.
What are the benefits of using alternative dispute resolution instead of going through legal proceedings?
- Saves time and cost for both parties
- Maintains business relationships
- Confidentiality can be maintained
What is litigation?
- A dispute is resolved in formal court proceedings
- The quite have the right to call witnesses, summon evidence and third parties into proceedings
- Decisions made by judge
- Judge awards responsibility of costs
What ADR techniques are available under a JCT contract?
-Mediation
- adjudication
- Arbitration
What ADR techniques are available under a NEC contract?
- Adjudication then review by tribunal if dissatisfied
- Tribunal may be a court or an arbitration
What is adjudication?
An adjudicator is appointed as per the contract terms – nominating body or appointed adjudicator – to review both parties cases and make a decision
No legal submissions or examinations of evidence
Less expensive than adjudication / litigation
- Powers limited to the confines of the contract
- Outcomes must be enforced by court proceedings if appealed
What clause is it in the contract?
JCT - 9.2
NEC - Option W2
If not in the contract then Scheme for Construction Contract applies
Who is liable to pay adjudicator’s fees?
It is up to the parties
- The adjudicator does not have the power to award costs unless both parties grant him this power
What are ANB’s?
Adjudicator Nominating Bodies
Appointed bodies that can be called upon for the appointment of an adjudicator where no-one is named within the contract
What is mediation?
Mediation is a voluntary procedure involving the appointment of a third party mediator to help facilitate negotiations between the party
- Aim is to help parties reach an amicable agreement between themselves
- Process is not binding until it is a signed agreement
What is arbitration?
- The use of an arbitrator to settle disputes
- A private judicial determination of a dispute by an independent third party
- decision is binding
- Arbitration Act provides immunity for the arbitrator and requires the tribunal to be acted upon fairly and impartially
What is the process of arbitration?
The appointed arbitration body is notified
- They appoint an arbitrator
- A hearing will be held where by both parties present their case
- Arbitrator bases their decision on what is fair and just
- Not bound by precedents
- Appeal can only be done in the case of corruption, bias or if the arbitrator has exceeded their power
What must be included within adjudication notice?
Must be given by writing and needs to note the nature of the dispute, contract and parties of the contract
Must be flexible i.e. not tied to a specific amount of compensation
Has to be a single dispute under a single contract unless otherwise agreed.
What are Dispute Resolution Boards?
- Sits between avoidance and dispute resolution
- Dispute Review Boards - 3 members, appointed at the start of the project and visit regularly on site. Where issues arise, asked for non-binding decisions
- Dispute Adjudication Boards - Similar pattern but make formal binding decisions
What is the difference between arbitration and litigation?
- Arbitration - remains private, arbitrator
- Litigation - through courts, better for multi-party disputes, judge
What is negotiation?
- A way of conferring to reach a compromise or an agreement
2 approaches:
- Competitive - make an offer that is very low, usually much less than they would in fact accept. Slowly raise what they accept
- Principled -separate people from the problem, assess interest, remain objective and assess what position would be if failed to reach negotiated settlement
What are dispute de-escalation clauses?
- In contracts to help crystallise the dispute and set timescales for notices
- Courts don’t enforce an agreement to mediate / negotiate
- Courts will enforce contractual timetable for holding negotiations / ADR
Which processes lead to final decisions?
- Litigation
- Arbitration
- Expert determination
- Mediation - signed agreements for that dispute only
What is conciliation?
Conciliation is a voluntary procedure involving the appointment of a third party conciliator who will:
o facilitate negotiations
o create a (non-binding) settlement proposal
- Parties cannot object to the appointed conciliator
- Similar to mediation - difference is that should negotiations breakdown, the conciliator will prepare a recommendation for how the dispute should be resolved. If neither party objects within 1 month, it becomes a binding decision
In your experience, what are some common causes of disputes?
- Errors and conflicting information in tender documentation
- Poorly defined change control procedures
- Contract errors
- Delays to payments
- Lack of knowledge / understanding of contractual obligations
What are the stipulation of arbitration?
- Must be written in to the contract
- Parties must agree to
- Arbitration Act 1996 applies
What are the Adjudicator rights?
- Right to revise decisions
- Right to obtain information
- Right to issue directions
- Right to immunity
- Must be fair & cost effective
What is included in a Notice of Dispute?
- Writing
- Nature
- Contract reference to
- Flexible - must not stipulate a specific commercial amount for example
- Single cause relating to a single contract
- Dispute must have crystallised e.g. can only raise a notice of dispute once a pay notice / pay less notice has been issued
What is expert determination?
In expert determination an independent third party who is an expert in the subject matter is appointed by both parties to decide the dispute
- the expert’s decision is binding
- expert determinators are less bound by case law
- Inquisitional with the parties assistance
- Usually quicker / less expensive than court proceedings
- Best suited to specific technical issues
What would be the most appropriate route for a client to use?
- Negotiation will be the cheapest option
- Arbitration will be a binding decision made privately, choose own judge, arbitrator decides on costs and default position is loser pays both parties costs. Can be appealed in court in extreme circumstances
- Litigation will give a final binding decision
