Conflict avoidance, management and dispute resolution procedures Flashcards
What is your first step in resolving a dispute?
- Define a source of the dispute (get more information about what cause the problem) in order to resolve the dispute amongst the parties involved.
- Seek Third party to resolve the dispute
- Review the contract
- Try to use mediation or negotiation first
How does Arbitration differ to Adjudication?
Arbitration:
- 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.
- Arbitrators have the power to ascertain facts rather than just listen to submissions, and to order costs.
- Arbitrations are typically conducted by either one or three arbitrator(s), referred to in each case as the “tribunal”. The tribunal is the equivalent of a judge (or panel of judges) in a court action.
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.
Are both or either of these options final and binding? (Arbitration and Adjudication)
The arbitrator’s decision, known as an award, is legally binding and can be enforced through the courts.
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.
How much do these costs? (Arbitration and Adjudication)
There is no set rate for an adjudicator, with a range of hourly rates being charged, but the cost of the adjudication will very much depend on the size, nature and complexity of the dispute. Adjudicator’s fee may vary from £250 to £1,000 per hour.
Arbitration fees are higher as they include registration/administration fee, the fees of the Arbitral Tribunal, case administrators, counsel (as per London Court of International Arbitration’s ) and also it takes longer so consequently fee are cover over longer period of time.
Who pays for the dispute resolution procedures?
Adjudication - The parties will be jointly and severally liable to pay the adjudicator a reasonable amount in respect of fees for work reasonably undertaken and expenses reasonably incurred by him.
NEC Suite of Contract: The Parties are free to agree with the Adjudicator that he should decide apportionment. If Option W1, or they don’t agree, the Parties pay in equal shares. If Option W2 is used, the Adjudicator must decide (clause 3.2)
Arbitration - The default position is that each party will pay one half of the total costs of the arbitrator/arbitration. Each will be responsible for their own legal costs.
Mediation - The usual practice is for both /all parties who are in dispute to pay equally towards the mediation fee.
Who would decide who the mediator would be in mediation?
Parties are free to choose their mediator. As per RICS guidance on Mediation - Parties should choose a mediator who is experienced in the sort of dispute with which they are dealing, and an effective way of finding one is often by personal recommendation
How has your reading of the RICS guidance note on CA and DR assisted you in your role?
By reading RICS Professional guidance on Conflict avoidance and dispute resolution in construction, I understand the the principles of conflict avoidance process and I was able to implement them into my work before the issue arose. This included good payment practice, record keeping and regular reporting and proactivity.
In addition, I was aware of different dispute resolution techniques (negotiation, mediation, expert determination, adjudication, arbitration, litigation, dispute boards and I was able to advice which of them would be applicable to our contract.
What did you include in the preparation of documents for a potential adjudication on the Project Winchester scheme?
I produce a report summarizing the issue. The disagreement was regarding the value implemented as a CE through PMI. Therefore this included the evidence of relevant communication issues to and from the Contractor, references to relevant clauses within the contract allowing the PMI, basis of the PMI assessment relevant calculation and supporting documentations (benchmarking, cost analysis).
What was the ADR process on this contract? (Project Winchester)
- Dispute resolution option W2 was incorporated into the contract on Project Winchester, which means that the Adjudication was a form of dispute resolution. The adjudication nominating body stated within Contract Data Part one was the RICS.
- the process of adjudication was detailed in Clause W2.3
What were the timescales if an adjudication was presented to your client?
In line with the NEC3 contract and the Construction Act:
- before a Party refers dispute to the Adjudicator, they gives a notice of adjudication to the other Party with a brief description of the dispute and the decision which they wish adjudicator to make
- if the adjudicator is named in the contract data, the part sends a copy of the notice of adjudication to the Adjudicator when it is issued. the adjudicator notify the parties within 3 day whether or not he or she is able to decide the dispute (NEC contract)
- Within 7 days of the Notice of Adjudication the Adjudicator should be appointed and the Referral Notice Served by the Referring Party the Referral Notice should include the outline of the Referring party’s case with supporting evidence and documentation.
- Within 7 days of the Referral Notice (can be extended to 14 days) the Responding party must serve their response including supporting documentation and evidence.
- The adjudicator may request further documents , site visit or oral hearing in order to make a decision
- The adjudicator decision must be given within 28 days of the Referral Notice and it binding unless it is challenged by litigation or arbitration.
What was your advice on the NSN Project adjudication regarding entitlement?
- In accordance with the Contract, Consultants were entitled to two sets of rates: one where working at the office provided by the Employer (lower rate) and at the office not provided by the Employer (higher rate).
- The dispute arose when due to Covid pandemic the Consultants were not longer able to work from the Employer’s Office and were working from Home instead. The framework agreement specifically described the office not provided by the Employer as the consultant’s head office and not a home office.
- It was also mentioned that the rate when working at the office not provided by the Client was higher due to additional ongoing cost (electricity , desk, office rent) that the consultant would incur when working from the Head Office.
- Whilst when working from home there was no evidence of any additional cost incurred by the consultant. Specifically, as cost of setting up the home office due covid pandemic and additional equipment required was already covered by another CE.
- Therefore, my advice was that although the contract did not specified what rates should be used when working from home, there was no evidence provided that the Consultant incur any additional cost due to working from home. Also, the only reason why the Consultant could not work from the Client office was the government restriction.
- The Client decided to conduct negotiation with the Consultant and agreed on ‘middle rate’ when working from home during the pandemic.
How did you ascertain the requirements to provide that
evidence? (NSN Project)
I was involved in discussions regard the issue with the Consultant based on which I produce a report which included relevant framework and contract clauses as an evidence. In addition, I include the pervious CE issued to cover the cost of setting up the home offices for the Consultant’s employees and its assumptions.
What is the RICS guidance on Conflict avoidance and dispute resolution in construction?
- This guidance note summarises what is meant by conflict avoidance and dispute resolution.
- It identifies the key issues that all surveyors should understand in respect of these distinct substantive areas and dispute avoidance processes.
What is Scott Schedule?
A Scott schedule is essentially a table with inputs from both the claimant and respondent. Typically the claimant will set out their argument first, then the schedule is passed to the respondent to set out their response. This requires a degree of collaboration between the parties.
In the event that the dispute reaches the courts, the final column in the schedule is provided for the judge to give their decision against each item.
What are the most common forms of dispute resolutions in construction?
- Negotiation
- Mediation
- Expert determination
- Adjudication
