Conflict Avoidance And Dispute Resolution

Question 1

What is dispute resolution?

Answer 1

Actions to resolve contractual disagreements between parties.

Question 2

Name some different forms of ADR?

Answer 2

Mediation
Conciliation
Negotiation

Question 3

What are the three formal forms of dispute resolution?

Answer 3

Arbitration
Litigation
Adjudication

Question 4

What would you consider to select a form of dispute resolution?

Answer 4

The cost in proportion to the claim
The timescales involved
The impact on business relationships and reputation

Question 5

What is Conciliation?

Answer 5

Dispute resolution similar to mediation.
Independent party to aid an agreement.
Conciliator has no authority to seek evidence or call witnesses.
Conciliators do not make decisions.
Messenger – shuttle diplomacy

Question 6

What is Mediation?

Answer 6

ADR form of bringing in separate impartial third party to mediate and guide a
decision which optimises the parties’ needs.
Mediation encourages coming together and agreeing.

Question 7

What is the different between mediation and conciliation?

Answer 7

The mediator is a neutral party who help parties to rebuild business relationships and
help them to work out a solution that is mutually agreeable. There parties are directly
engaged in the discussions. It is non binding and parties can revert to arbitration or
litigation at any time.
Conciliation has the same aims than mediation but the processes are different. The
conciliator is usually a figure of authority that the parties have turned to for guidance.
The conciliator makes suggestions and the parties make the final decisions.

Question 8

What is negotiation?

Answer 8

Parties may through an informal private or facilitated negotiation process agree to
settle the dispute either at a high level or in detail and agree to be bound by this
settlement

Question 9

What is adjudication?

Answer 9

UK statutory dispute resolution procedure
Relatively quick process from submission of referral
Binding until dispute determined by litigation or arbitration
Seen as simplified arbitration process.

Question 10

What enforces the requirement for a building contract to contain
provisions for adjudication?

Answer 10

The Housing grants, Construction and Regeneration Act 1996. (so called
Construction Act)

Question 11

What if a building contract does not contain provisions for

adjudication?

Answer 11

Parties have the statutory right to adjudication assuming the contract qualifies under
the construction act.
The Scheme for construction contracts will apply in its entirely

Question 12

Tell me about arbitration

Answer 12

Arbitration is a procedure for the resolution of disputes which is under the control of
the parties.
Certain conditions must be met: a genuine dispute or difference between the parties
(award must be capable of enforcement). Binding agreement to submit to arbitration
in contract. Private.
Three available procedures: Documents only (30 days), short hearing (30 days) and
full procedure (long).

Question 13

Can you explain in detail the difference between arbitration and
litigation procedures?

Answer 13

Arbitration: procedures governed by Arbitration Act 1996
In order to arbitrate there must be an agreement by both parties.
Parties have a wide degree of discretion as to way proceedings conducted.
Procedure similar to litigation with formal submission by parties, expert evidence,
hearings and decision by arbitrator
Advantages are that it is a private process, parties have flexibility, arbitration awards
generally easier to enforce
3 types: short hearing (1 month), documents only (1 month) and full procedure.
Litigation: Presentation of arguments in court.
Public process following Civil Procedure Rules
Advantages: Parties do not pay for court or judge, process can deal with multi-party
disputes, civil procedure rules aim for accessibility, speed and efficiency.

Question 14

Name some conflict avoidance processes?

Answer 14

• Good Management (Pro-active not reactive)
• Clear Documents and Communication
• Partnering (faster team working)
• Good Payment Practice
• Record Keeping
• Regular Reporting

Question 15

What is Negotiation?

Answer 15

(Parties resolve the dispute themselves)
o Low cost
o Quick
o Non-adversarial (keep relationships)
o Non-binding (can be if agreed)

Question 16

What is Mediation?

Answer 16

(Parties agree on independent neutral third party)
o Formal
o Power to settle remains with the parties
o Can be binding

Question 17

What is Expert Determination?

Answer 17

(Parties agree by contract that a 3rd party will make
binding decision)
o Not possible to appeal decision
o Binding

Question 18

What is Adjudication?

Answer 18

(Parties agree by contract to appoint a 3rd party adjudicator)
(JCT)
o Party issues notice of dispute
o Adjudicator appointed in 7 days
o Adjudicator has 28 days to issue decision
o Introduced under ‘Housing Grants, Construction & Regeneration Act
1996
o Can be overturned by Arbitration of Litigation
o Binding and enforceable in the TCC (technology and Construction
Court)

Question 19

What is Arbitration?

Answer 19

(3rd party arbitrator or panel)
o The contract between disputing parties must contain written agreement
to arbitrate
o Covered by the Arbitration Act 1996
o Binding and enforceable through courts

Question 20

What is Litigation?

Answer 20

(Courts)
o Legal action in court
o Governed by 'Civil Procedure Rules 1998'
o Not confidential
o Lengthy and costly
o Can be appealed

Question 21

What is dispute resolution?

Answer 21

Actions to resolve contractual disagreements between parties.

Question 22

What are the three formal forms of dispute resolution?

Answer 22

Arbitration
Litigation
Adjudication

Question 23

Name some different forms of ADR?

Answer 23

Mediation
Conciliation
Negotiation

Question 24

What would you consider to select a form of dispute resolution?

Answer 24

The cost in proportion to the claim
The timescales involved
The impact on business relationships and reputation

Question 25

What is Conciliation?

Answer 25

Dispute resolution similar to mediation.
Independent party to aid an agreement.
Conciliator has no authority to seek evidence or call witnesses.
Conciliators do not make decisions.
Messenger – shuttle diplomacy

Question 26

What is Mediation?

Answer 26

ADR form of bringing in separate impartial third party to mediate and guide a
decision which optimises the parties’ needs.
Mediation encourages coming together and agreeing.

Question 27

What is the different between mediation and conciliation?

Answer 27

The mediator is a neutral party who help parties to rebuild business relationships and
help them to work out a solution that is mutually agreeable. There parties are directly
engaged in the discussions. It is non binding and parties can revert to arbitration or
litigation at any time.
Conciliation has the same aims than mediation but the processes are different. The
conciliator is usually a figure of authority that the parties have turned to for guidance.
The conciliator makes suggestions and the parties make the final decisions.

Question 28

What is negotiation?

Answer 28

Parties may through an informal private or facilitated negotiation process agree to
settle the dispute either at a high level or in detail and agree to be bound by this
settlement

Question 29

What could indicate the success of a negotiation on a final account?

Answer 29

Both parties come away happy, both parties feel that negotiations were handled in a
fair and reasonable manner and costs are agreed within cost report budgets.

Question 30

What is adjudication?

Answer 30

UK statutory dispute resolution procedure
Relatively quick process from submission of referral
Binding until dispute determined by litigation or arbitration
Seen as simplified arbitration process.

Question 31

What enforces the requirement for a building contract to contain
provisions for adjudication?

Answer 31

The Housing grants, Construction and Regeneration Act 1996. (so called
Construction Act)

Question 32

Tell me about arbitration

Answer 32

Arbitration is a procedure for the resolution of disputes which is under the control of
the parties.
Certain conditions must be met: a genuine dispute or difference between the parties
(award must be capable of enforcement). Binding agreement to submit to arbitration
in contract. Private.
Three available procedures: Documents only (30 days), short hearing (30 days) and
full procedure (long).

Question 33

Can you explain in detail the difference between arbitration and
litigation procedures?

Answer 33

Arbitration: procedures governed by Arbitration Act 1996
In order to arbitrate there must be an agreement by both parties.
Parties have a wide degree of discretion as to way proceedings conducted.
Procedure similar to litigation with formal submission by parties, expert evidence,
hearings and decision by arbitrator
Advantages are that it is a private process, parties have flexibility, arbitration awards
generally easier to enforce
3 types: short hearing (1 month), documents only (1 month) and full procedure.
Litigation: Presentation of arguments in court.
Public process following Civil Procedure Rules
Advantages: Parties do not pay for court or judge, process can deal with multi-party
disputes, civil procedure rules aim for accessibility, speed and efficiency.

Question 34

Give me some examples of the requirements of the Housing Grants and Construction Regeneration Act.

Answer 34

intended to ensure that payments are made promptly throughout the supply chain and that disputes are resolved swiftly.

Provisions of the act include:
The right to be paid in interim, periodic or stage payments.
The right to be informed of the amount due, or any amounts to be withheld.
The right to suspend performance for non-payment.
The right to adjudication.
Disallowing pay when paid clauses.

Question 35

What does the Housing Grants and Construction Regeneration Act require in terms of certifying contractor’s requests for payment and invoices etc?

Answer 35

The dates for payments must be set out in the contract.
The client (or specified person) must issue a payment notice within five days of the date for payment, even if no amount is due. Alternatively, if the contract allows, the contractor may make an application for payment, which is treated as if it is the payment notice.
The client (or specified person) must issue a pay less notice (previously a withholding notice) if they intend to pay less than the amount set out in the payment notice, setting out the basis for its calculation.
The notified sum is payable by the final date for payment.
If the client (or specified person) fails to issue a payment notice, the contractor may issue a default payment notice. The final date for payment is extended by the period between when the client should have issued a payment notice and when the contractor issued the default payment notice. If the client does not issue a pay less notice, they must pay the amount in the default payment notice.
Pay when certified clauses are no longer allowed, and the release of retention cannot be prevented by conditions within another contract. So for example work contractors on a management contract project must have half of their retention released when their part of the works reach practical completion, not when the project as a whole reaches practical completion. This also applies to trade contractors on construction management contracts.
There are also changes to the right to suspend work for non-payment or to suspend part of the works and to claim costs and expenses incurred and extension of time resulting from the suspension.

Question 36

You state that the contracts you use should specify the preferred method of ADR – what method is specified in the contracts you use and what are the benefits of this method?

Answer 36

JCT MW = Arbitration

Arbitration, a form of alternative dispute resolution (ADR), is a way to resolve disputes outside the judiciary courts. The dispute will be decided by one or more persons (the ‘arbitrators’, ‘arbiters’ or ‘arbitral tribunal’), which renders the ‘arbitration award’. An arbitration decision or award is legally binding on both sides and enforceable in the courts, unless all parties stipulate that the arbitration process and decision are non-binding

Question 37

What is the difference between arbitration and adjudication?

Answer 37

Arbitration is a procedure in which both sides agree to let an impartial third party, the arbitrator, decide the case. The arbitrator may be a lawyer, or may be an expert in the field of the dispute, or in some cases, an arbitration panel. The arbitrator’s decision, known as an award, is legally binding and can be enforced through the courts. Normally, there is no appeal, however there are exceptions in which appeals may be accepted.

In adjudication, the decision is the responsibility of a third party adjudicator selected by the parties to the dispute. Adjudication decisions are binding unless and until they are revised by subsequent arbitration or litigation after practical completion, or by agreement between the parties (hence the term ‘pay now argue later’). There is no right of appeal and limited right to resist enforcement. Generally, adjudicators do not have the power to award costs (other than their own fees and expenses). Adjudication must adhere to strict timescales and typically takes up to 28 days.

Question 38

What is the conflict avoidance pledge CAP you mention?

Answer 38

Five of the UK’s leading professional bodies for construction and
engineering have joined together to help the industry reduce the costs
of conflict, and deliver major infrastructure and property development
projects on time and on budget.

Question 39

What is a dispute management board?

Answer 39

Dispute Boards are designed to avoid conflict and, if disputes do arise, deal with them quickly and effectively. The purpose of a Dispute Board is to save money, ensure the project is delivered on time and on budget, and to help to maintain relationships

Question 40

Advantages of using dispute boards?

Answer 40

• Confidentiality – Any disputes and decisions will remain confidential.
• Expertise – Members of the Dispute Board will have been selected for their knowledge and expertise before a dispute has arisen.
• Flexibility – Parties can agree the procedure in advance and can agree any changes to it during the course of the project.
• Prevention of Disputes – The existence of the Dispute Board can prevent disputes escalating because Parties are reluctant to be seen making frivolous claims. This is an incentive for the Parties to reach a negotiated settlement between them.
• Relationships – Dispute Boards can help to preserve relationships, as the process is consensual and all Parties are invested in the process.
• Understanding – The Dispute Board will gain a good working knowledge of the project as they will undertake regular site visits and create a relationship with team members. When a dispute arises, the Board will have a much better understand than a Tribunal, for example, which would only be appointed after a dispute has arisen.

Question 41

What is the RICS dispute resolution service?

Answer 41

RICS Dispute Resolution Service (DRS) is the world’s oldest and largest provider of alternative dispute resolution (ADR) services in the land, property and construction industries. Over the last four decades, DRS has appointed dispute resolvers in nearly a quarter of a million cases. Internationally, DRS resolves around $2 billion US dollars’ worth of disputes every year – keeping these cases out of the courts.

Question 42

What dispute resolution is detailed in the JCT MW contract?

Answer 42

Adjudication

However, negotiation and mediation should be considered first.

Question 43

What is included in the RICS conflict avoidance and dispute resolution guidance Note?

Answer 43

Conflict avoidance processes
Three pillars of dispute resolution
Dispute resolution techniques
ADR
Standard form contracts
Conflict Avoidance
Dispute Resolution Procedures
Dispute Escalation Clauses
Interim Valuations and Claims

Question 44

Name some conflict avoidance processes?

Answer 44

Good Management
Clear Contract Documentation
Partnering and Alliancing
Good Payment Practice
Record Keeping
Regular reporting and proactivity

Question 45

What are the three pillars of dispute resolution?

Answer 45

1 negotiation – the problem-solving efforts of the
parties themselves
2 mediation or conciliation – a third-party
intervention does not lead to a binding decision
being imposed on the parties; and
3 an adjudicative process – the final outcome is
determined by a third party who does impose a
binding decision on the parties.

Question 46

What is Negotiation?

Answer 46

The process whereby the parties work
out between them how to resolve any issues that
have arisen. Power to settle the dispute rests with
the parties.

Question 47

What is Mediation and Conciliation

Answer 47

The parties agree on
an independent, third-party neutral system to
facilitate discussions between them, with the goal
of reaching a settlement. The power to settle
remains with the parties, but the process is led by
the mediator.

Question 48

What is Expert Determination?

Answer 48

The parties agreed by a
contract that a third party will make a binding
decision on them. The terms are therefore governed
by the contract. In most cases the decision of an
expert will be final, and it will not be possible to
appeal that decision. This means that the decision
of an expert finally determines the dispute without
further recourse.

Question 49

What is Adjudication?

Answer 49

Adjudication under section 108 of
the Housing Grants, Construction and Regeneration
Act 1996 (HGRCA) was introduced in May 1998.
The Local Democracy, Economic Development and
Construction Act 2009 and the updated Scheme
will revise some aspects of the adjudication
process. It has been widely used in the
construction industry and applies not only to
building contracts but also to professional
appointments.
If the Act applies to a contract then
either party may request the appointment of an adjudicator to be made within seven days of
serving a Notice of Dispute, and the adjudicator
has 28 days from issue of the Referral within which
to issue a decision. That decision will bind the
parties and in most cases be readily enforceable in
the Technology and Construction Court (TCC). The
TCC is the part of the High Court that deals with
construction related litigation.

Question 50

What is Arbitration?

Answer 50

For arbitration to apply, the contract
between the parties must contain a written
agreement to arbitrate. Where it applies the parties
might choose to refer to or incorporate an
arbitration procedure, such as the Construction
Industry Model Arbitration Rules. Alternatively, the
arbitration can simply be covered by the applicable
legislation, such as the Arbitration Act 1996. Many
jurisdictions around the world contain legislation
dealing with arbitration, often based upon the
United Nations Commission on International Trade
Law (UNCITRAL) Model Arbitration Law.

Question 51

What is Litigation?

Answer 51

The courts have inherent jurisdiction to
hear a dispute in respect of just about anything. In
the absence of any other procedure, the parties will
have a right to refer their matter to an appropriate
court. The procedure is governed by the Civil
Procedure Rules, and the nature, complexity and
value of the dispute will determine which court will
hear a particular dispute. Courts have the widest
jurisdiction and in addition to determining disputes
and declarations, they can also issue Charging
Orders, summon witnesses and involve the third
parties in the dispute as necessary

Question 52

What are dispute boards?

Answer 52

dispute boards sit
somewhere between avoidance and dispute
resolution. Their genesis is in Dispute Review or
Recommendation Boards (DRBs). Three dispute
board members are appointed at the start of a
project. They become familiar with the project by
reviewing some of the project documentation and also regularly visiting the site during the course of
the works. If and as issues arise they can be asked
for their non-binding recommendation. This may
relate to general disagreements or disputes. Often
their recommendations are used to resolve disputes
between the parties, thus avoiding formal disputes.
Dispute Adjudication Boards (DABs), on the other
hand, follow a very similar pattern but they make
formal written decisions which bind the parties in
respect of any disputes that arise. There is
therefore a clear distinction between a DRB and
DAB. Generically they are called DBs. There is one
variation on the theme and that is a combined
dispute board which was developed by the
International Chamber of Commerce (ICC). The
ICC’s Combined Dispute Board (CDB) procedure
provides for recommendations or decisions. The
parties may request the dispute board to deliver
either a recommendation or a binding decision. If
the parties cannot agree then a dispute board can
decide whether simply to issue a non-binding
recommendation or a written binding decision.

Question 53

What are Alternative Dispute Resolutions? ADR

Answer 53

ADR predominantly
means alternative dispute resolution, and refers to
processes which are alternatives to the traditional
binding dispute resolution procedures of litigation
and arbitration. It is alternative in the sense that it
is providing a faster and more economic dispute
resolution procedure. Originally ADR was used to
describe a consensual alternative approach, which
helps to maintain business relationships. More
broad definition could include adjudication,
negotiation or mediation, or indeed some other
form of contractual dispute resolution technique.

The important point is that the appropriate dispute
resolution procedure should aim to resolve the
dispute in an appropriate economic manner, taking
into account the circumstances of the dispute.
Business relationships should be maintained, while
resolving disputes at the lowest cost and within a
sensibly fast timetable.
Confidentiality can be maintained, as indeed should
flexibility in the process. This should lead to a
greater satisfaction with the dispute resolution
procedure for the parties.

Question 54

Is adjudication binding?

Answer 54

Adjudication decisions are binding unless and until they are revised by subsequent arbitration or litigation after practical completion, or by agreement between the parties (hence the term ‘pay now argue later’). There is no right of appeal and limited right to resist enforcement. Generally, adjudicators do not have the power to award costs (other than their own fees and expenses). Adjudication must adhere to strict timescales and typically takes up to 28 days.