Conflict Avoidance, Management and Dispute Resolution Procedures

Question 1

Name some different forms of alternative dispute resolution?

Answer 1

Mediation, Conciliation and Negotiation

Question 1

What is dispute resolution?

Answer 1

Actions and processes taken to resolve contractual disagreements between parties.

Question 2

Name some formal methods of dispute resolution?  

Answer 2

• Arbitration
• Litigation
• Adjudication  

Question 3

What is conflict avoidance, and can you give me some examples of conflict avoidance procedures?  

Answer 3

There is conflict avoidance process (CAP) – a government-endorsed procedure that can be written into contracts to help parties resolve disagreements.

Conflict avoidance – is methods to help parties resolve disagreements before they escalate to a dispute.

Conflict avoidance techniques include – good management, clear contract documentation, partnering and alliance, record keeping, regular reporting and proactivity, clear communication between all parties.

Question 4

Name some conflict avoidance processes. Techniques that can be used to avoid conflict.

Answer 4

Good Management. Clear contract documentation. Partnering and alliancing.

Good Project Management. Good Client Management.

Good constructor management (objective, understanding of project, contract and programmes).

Good payment process. Record keeping. Regular reporting and proactivity e.g. minutes, progress reports etc.

Question 5

What is conflict?

Answer 5

• A serious disagreement or argument, typically a protracted one.
• A serious incompatibility between opinions, principles or interests.

Question 6

What would your considerations be prior to selecting a form of dispute resolution?

Answer 6

• Cost of the DR in proportion to the claim being sought
• Timescale involved
• The impact of business relationship and reputation
• Type of contract
• What relevant legal statute’s imply in the country.

Question 7

What is conciliation?

Answer 7

Process similar to mediation and relies on an independent 3rd party to aid reaching an agreement.

The conciliator has no authority to seek evidence or call witnesses and not able to make binding decisions.

Their role is to act primarily as the messenger and to encourage diplomacy.

The conciliator will evaluate the parties’ cases and make recommendations based on their view

Question 8

When would conciliation be used?

Answer 8

Can only take place if both parties agree, whether in the contract or after a dispute arises. Conciliation can be an effective way of reaching agreement over eliminating some of the parties’ more unreasonable requests. 

Question 9

What is the difference between Conciliation and meditation? 

Answer 9

The key difference between mediation and conciliation is that your mediator will facilitate a conversation, whilst a conciliator will intervene in a conversation to offer solutions. The roles are intertwined.  

Question 10

When are the positives and negatives of conciliation?  

Answer 10

+vs
Confidential, flexible, quick and relatively inexpensive.
-vs
The conciliator has no authority to seek evidence or call witnesses and not able to make binding decisions.

Question 11

What is Mediation?

Answer 11

Alternative form of DR and relies on bringing in an impartial 3rd party to mediate and guide a decision.

Mediator tries to encourage a coming together of parties in order to facilitate a decision as opposed to acting only as a messenger which is the key differentiator between mediator and conciliation.

Mediation encourages the coming together of parties and reaching an agreement. 

Question 12

When would mediation be used?

Answer 12

Commonly used for lower value disputes as it is relatively cheap method of ADR and the parties involved usually share the cost.

Question 13

What are the +vs and -vs of mediation? 

Answer 13

+vs Confidential, flexible, quick and relatively inexpensive.
-vs not compulsory. All parties must agree to a resolution as the result is not guaranteed. Can be difficult if either party are withholding information. There is the possibility that information may be given away to the other party during the mediation process that could benefit the other party. 

Question 14

What is negotiation? 

Answer 14

The parties reach an agreement through an informal private or facilitated discussion.

Both parties will agree to settle the dispute either at a high level or in detail and agree to be bound by this settlement.

Question 15

When would negotiation be used?

Answer 15

Negotiation is required at almost every stage of a project, from acquiring land and obtaining planning permission, to making appointments, awarding contracts, negotiating change orders and extensions of time, resolving disputes, and so on. 

Question 16

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

Answer 16

Both parties are satisfied with the outcome and feel that a fair and reasonable compromise was reached.

A partnering approach is adopted with both parties feeling as though their long-term relationships and reputation have been maintained.

Question 17

What is adjudication?

Answer 17

• Statutory form of DRP available in the UK. Relatively simple and efficient method of resolving disputes without engaging in lengthy and expensive court proceedings.
• Relies on an independent 3rd party who considers the claims of both parties.
• A binding decision is made by the adjudicator which can be appealed either through litigation or arbitration.
• Time sensitive with a decision being made within 28 days.
• The Housing Grants, Construction and Regeneration Act 1996 (Construction Act) enforces the requirements for a building contract to contain provisions for adjudication. Adjudication apply to England, Scotland and Wales.

Question 18

When would adjudication be used?

Answer 18

When there is a disagreement

Parties to a construction contract may be able to refer disputes to adjudication, a cheaper and quicker way of resolving issues.

Adjudication is designed to offer a quick cash-flow remedy during the process of a construction project.

Many smaller construction companies are often unable to afford to dedicate the time and money to court proceedings or arbitration. This leaves them without remedy if they have not been paid by (sometimes large) contractors. This is often means adjudication is an appropriate option.

Question 19

What are the +vs and -vs of adjudication?

Answer 19

The referring party is largely in control. Usually it will have spent months preparing its case, for the receiving party to then only have days/ weeks to respond

There is no cross examination or formal evidence

There is no “testing” of evidence

The adjudicator’s decision must be enforced

Question 20

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

Answer 20

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

Question 21

What contracts does adjudication apply to?

Answer 21

It applies to all construction contracts entered into after the act commenced within England, Scotland and Wales.

Question 22

What if a building contract does not contain provisions for adjudication?  

Answer 22

Parties still have the statutory right to adjudication assuming the contract qualifies under the construction act.

Failing the scheme for construction contracts will apply in its entirety.

Question 23

Please explain your understanding of the arbitration process?

Answer 23

• To apply, arbitration must be in the contract.
• Procedure under the control of the parties. Certain conditions must be met, for example a genuine dispute of difference between the parties must have occurred with an award being capable of enforcement.
• A binding agreement must be reached to escalate the matter to arbitration.
• During arbitration, a third party listens to both sides of a legal disagreement. With the documents provided and the oral statements of each person involved, the arbitrator will issue a resolution. Witnesses will sometimes be called in to provide an oral statement.

Question 24

When would Arbitration be used?

Answer 24

Designed to be used to resolve issues without the need to go to court.

Question 25

What are the +vs and -Vs of Arbitration?  

Answer 25

An arbitration hearing can be dealt in just one week, in comparison to a final court hearing, which could take six months or even longer.

Arbitration can be a simpler, faster, more peaceful, and less expensive option than litigation

The proceedings are undertaken in a private setting meaning the reputations of both parties can be preserved to an extent

X If one party feels the decision is erroneous, there is very limited opportunity to correct it. There are many cases in which arbitration can become more expensive than court proceedings. Quality arbitrators can demand substantial fees that would not apply in court

Question 26

Please can you explain the difference between arbitration and litigation procedures?  

Answer 26

Arbitration is a form of dispute resolution which can be used to settle business disputes outside of court. This differs to litigation, which results in the Court imposing a binding judgement on the parties. Litigation is a last resort, as it is more formal, costly and time-consuming than arbitration.

Question 27

What are the different adjudication techniques?

Answer 27

Expert determination
* Arbitration
* Litigation
* Dispute boards

Question 28

What is Expert Determination?

Answer 28

Parties agreed by a contract that a 3rd party will make a binding decision if a dispute arises.

Common when true expertise is required (e.g. technical issues) or valuation issues where liability has already been determined.

Question 29

When is Expert determination used?

Answer 29

Common when true expertise is required (e.g. technical issues) or valuation issues where liability has already been determined.

Question 30

What the +vs and -vs of Expert Determination?

Answer 30

+ Quick and cheap. Useful where the construction act does not apply. Confidential process.

-No statutory back up. Limited grounds for appeal.

Question 31

What is Litigation? 

Answer 31

Taking a dispute to a court of law
When a dispute gets referred to the County Court or the Technology and Construction Court (TCC) if the dispute is under £250,000 court used will always be a County Court.

Question 32

When is Litigation used?

Answer 32

Whilst often seen as the last resort, if alternative dispute resolution procedures fail, or if the situation involves circumstances that alternative dispute resolution cannot deal with (such as multiple parties on some forms of contract), or where a decision needs to be enforced, litigation may still be necessary.

Question 33

What the +vs and -vs of Litigation?  

Answer 33

+ A judge will manage proceedings throughout the process. Useful for complex issues and disputes where there is a lot of money at stake. The decision is binding and enforceable.
- Generally a very slow process, the most dispute resolution method. The proceedings are public and therefore cannot be kept confidential. Last resort.

Question 34

What are dispute boards?

Answer 34

DABs = dispute adjudication board - adjudicate disputes by issuing decisions.

DAB will issue a decision that will be binding unless/until it is overturned by the ultimate dispute resolution forum (usually arbitration).

DRB – dispute review board -  
Dispute boards are designed to avoid conflict and if disputes arise, deal with them effectively. Purpose is to save money, ensure the project is delivered in time and on budget, and help maintain relationship. They usually exist throughout the duration of a contract and can be referred to at any time by any one of the parties for a recommendation for determination of the dispute board.

Question 35

When would dispute boards be used?

Answer 35

Dispute boards are designed to avoid conflict and if disputes arise, deal with them effectively. Purpose is to save money, ensure the project is delivered in time and on budget, and help maintain relationship. They usually exist throughout the duration of a contract and can be referred to at any time by any one of the parties for a recommendation for determination of the dispute board. 

Question 36

What are the +vs of dispute boards.

Answer 36

+vs provide hands on knowledge of every aspect of the project (due to being involved in the project). They know the party, goals and objectives of the project and able to act quickly.

Confidentiality, expertise, flexibility, prevention of disputes, relationships, understanding. 

Question 37

What are the -vs of dispute boards.

Answer 37

Cost of establishing and maintaining the dispute board for the duration of the project.

Binding nature of decision. Depending on the nature of the board, the decision may not be binding on the parties

Question 38

How does NEC use dispute avoidance techniques?

Answer 38

NEC
W1 – a dispute arises must be referred to the senior representative, if this cannot be resolved then referred to the adjudicator.
W2 – as above, however this process is voluntary and either parties can refer a dispute to the adjudicator at any time.
W3 – includes the DAB.  

Question 39

What is Alternative Dispute Resolution?

Answer 39

A range of techniques for resolving disputes without seeking redress from the courts in litigation.

Question 40

What is Centre for Effective Dispute Resolution?

Answer 40

CEDR is the RICS default alternative dispute resolution provider. They provide the following services:

Adjudication: between RICS member firms regarding surveying activities (do not provide adjudication for residential – covered by The Property Ombudsman (TPO) or Property Redress Scheme (PRS) o Arbitration: Independent Arbitration Service o Complaint review: Independent ombudsman assessing complaints when independent redress scheme is sought o Conciliation: accredited CEDR mediator facilitates dialogue 

Question 41

What additional services does RICS Offer?  

Answer 41

RICS can assist in the appointment of;
* Adjudication services
* Rent review services
* Online meditation
* Arbitration services
* Expert witness referral scheme
* Ground rent assessments
* Neighbouring disputes
* PACT, Service charge dispute

Question 42

What is ADR? 

Answer 42

Alternative dispute resolutions, alternative methods of disputing conflict without litigation.

Examples are – adjudication, mediation, arbitration, expert determination/expert witness.

Question 43

What are the advantages of ADR?  

Answer 43

• Less time consuming
• Less expensive
• Greater room for negotiation
• confidential
• Can be dealt with by specialist
• Less formal

Question 44

What is pre-action protocol?

Answer 44

The Pre-Action Protocol for Construction and Engineering Disputes governs parties’ conduct before the issuing proceedings.

The aim is to encourage parties to a dispute to set out their respective cases and exchange sufficient information in order that they understand each other’s position.

In turn, this should allow the parties to try and narrow the issues in dispute, make an informed decision about the potential for settlement or how they might seek to resolve the matter without starting proceedings; for example, through the use of alternative dispute resolution (ADR).

Question 45

What is Expert Witness

Answer 45

RICS expert witnesses are able to assist the court on the matters within their expertise across areas including building surveying, commercial property, compulsory purchase, dilapidations, planning, development, retail and valuation.

Question 46

Have you heard of scott schedule?

Answer 46

Yes I have, soctt schedule’s help to identify the key issues between the parties, and to set out for the judge in a single document a summary of the parties’ rival cases on an item-by-item basis.

Question 47

What is Parterning?

Answer 47

Partnering – Emphasises collaboration within the project team and between the client and the project team.

Partnering is a process which enhances cooperation in contract management with the view to reduce stress, litigation and cost by enhancing communication and sharing goals and interest.

There is an emphasis on trust and good faith. While partnering can lead to fewer disputes, it requires a high level of commitment from all parties involved.

Question 48

What can be done if the parties to a contract cannot agree an adjudication procedure?

Answer 48

Then the scheme will apply. The scheme, also known as ‘Schedule for Construction Contract’ provides fall back where the contractor does not include necessary adjudication process and necessary payment provisions.

Question 49

What can be done if the contract does not include a adequate payment provision?

Answer 49

Then the scheme will apply. The scheme, also known as ‘Schedule for Construction Contract’ provides fall back where the contractor does not include necessary payment provisions.

Contractors have a right to periodic payments for works that last 45 days or more.

If the contract does not specify applicable payment periods then it will be 28 days.

Question 50

What is CAP?

Answer 50

RICS conflict avoidance process

CAP is a government-endorsed procedure that can be written into contracts to help parties involved in construction or engineering projects to resolve disagreements out of court. It encourages parties to resolve problems at the time of the event, to nip them in the bud before they escalate to drawn-out, damaging disputes. CAP can be written into contracts, or it can be utilised on an ad hoc basis by agreement between the parties.

Potential disputes can be nipped in the bud before they escalate, meaning that a working relationship can be maintained and legal costs can be minimised, if not avoided altogether. CAP provides complete flexibility in the processes which can be adopted.

RICS has produced a user guide explaining what CAP is and the 8 step process as well as FAQ.

Question 51

What are some causes of disputes?

Answer 51

Errors and conflicting information within tender documentation

Poorly defined change control procedures

Lack of knowledge/understanding of contractual obligations

Contract errors

Poor contract administration

Poor quality of workmanship

Delays to payments / non payments of claims

Non conformity of contractual obligations.

Question 52

What is TCC

Answer 52

County Court or the Technology and Construction Court (TCC)

It is a court that specialises in construction and technology disputes

Governed by Civil procedures rules

Question 53

What is the difference between arbritration and adjudication?

Answer 53

Arbitration involves the detailed hearing of evidence and witnesses. Arbitration is binding and it can be a much longer and more formal process.

Adjudication involves the quick resolution of disputes between parties where an adjudicator hears the outline of both sides of the argument and makes a fast decision within 28 days. Often the dispute is decided on paper only.
This method allows projects to advance in a much more timely fashion.

Adjudication decisions are only temporarily binding and can be displaced by litigation or arbitration. In practice the parties very often accept the adjudicator’s decision and don’t seek to litigate it.

Adjudication is a statutory right whereas arbritration occurs when there has been a legally binding decision and must be agreed by both parties in order for it to take place.

Question 54

Adjudication timescales

Answer 54

Adjudication is a formal process.
1. Notice of Adjudication written notice of its intention to refer to adjudication.
2. Appoint an adjudicator (within 7 days from service of the notice of adjudication). Parties agree on individual to act as the adjudicator or, if agreement cannot be met then the party who referred the dispute may make an application to an Adjudicator Nominating Body (ANB).
3. Referral Notice – within 7 days of service of the notice of adjudication. This is a document that sets out in detail the case of the party who is referring the dispute to adjudication and referring parties case in details.
4. Adjudicator decision must be made within 28 days of service of the referral notice.
* Nb: party’s defence is up to the adjudicator (not a statutory requirement). Adjudicator will require responding party to serve a response, typically within 7 days of the referral notice, can be extended to 14 days.
* Final and binding decision, providing not challenged by subsequent arbitration or litigation.
* Parties will be jointly and severally liable to pay the adjudicator fees and expenses.

Question 55

What should a notice of adjudication detail?

Answer 55

> The names and addresses of the parties involved in the dispute
Description of the dispute
Details of how the dispute has arisen
The decision that you want the adjudicator to make and the remedy or remedies sought
The adjudicator has no jurisdiction to decide anything not captured in the notice