Conflict Avoidance, Management & Dispute Resolution Procedures Level 1

Question 1

How can you avoid conflict in the first instance?

Answer 1

• clearly state in all tender / contract documents exactly what is required of parties
• ensure continuous effective communication between parties
• put everything in writing to ensure there is always documented evidence should a dispute arise
• Follow company procedures and policy (including QA process)
• Following RICS standards, professional statements and guidance

Question 2

If a conflict occurs, how do you deal with it initially?

Answer 2

• raise the issue with all parties and to try resolve through communication & negotiation
• a face-to-face meeting is usually the best way to find a resolution

Question 3

What could indicate the success of a final account negotiation?

Answer 3

• all parties leave happy
• costs agreed and within client budget
• negotiation resolved in a timely manner

Question 4

What is the most common cause of disputes?

Answer 4

• commercial aspects
• unclear or conflicting specifications / drawings
• teams under pressure (poor or rushed decisions made)
• insufficient detail / consideration given to building contracts prior to signing
• unclear scope of service

Question 5

What do you do if negotiation breaks down & the matter cannot be resolved?

Answer 5

Consider an ADR (alternative dispute resolution)

Question 6

What is ADR?

Answer 6

• Alternative Dispute Resolutions
• these are methods of resolving disputes other than traditional, binding dispute resolution procedures of litigation and arbitration

Question 7

What are the main forms of ADR?

Answer 7

• negotiation
• mediation
• adjudication

Question 8

What are the advantages of ADR generally?

Answer 8

• quicker
• cheaper
• assists in preserving relationships between parties

Question 9

What is the TCC?

Answer 9

• Technology & Construction Court
• handles disputes about buildings, engineering & surveying
• TCC does not usually handle cases with a value of less than £250K, unless there is good reason

Question 10

What is a calderbank offer?

Answer 10

• a private & confidential offer made by one party to another party which is intended to settle a dispute
• it must be a genuine offer, capable of being accepted
• if the offer is not accepted, it cannot be revealed to an independent dispute resolver until the arbitrator has made their decision on the dispute & all thats left to decide is cost of arbitration
• if the arbitrators award is less than the Calderbank offer, the party which refused to accept the offer can be liable for all or most costs

Question 11

What are early warning signs?

Answer 11

• contracting parties can adopt measures that provide early warning as emerging issues, such as reduced communication which could signal potential insolvency
• early warning signs can prove valuable in avoiding conflict arising going forward
• they could be initiated through regular reporting, independent review & open / transparent communications between contracting parties

Question 12

What is the Housing Grants, Construction & Regeneration Act 1996?

Answer 12

• a UK Act of Parliament which mainly mains to ensure payments on construction projects are made promptly and disputes are resolved quickly & effectively

Question 13

What does the HGCRA 1996 stipulate in relation to disputes?

Answer 13

• Sections 108 and 108A
• States that construction contracts must provide for any dispute arising under a construction contract to be decided by an independent adjudicator, at any time

Question 14

What is mediation?

Answer 14

• a form of ADR where parties agree on an independent, third-party neutral system to facilitate discussions between parties to reach settlement
• the power to settle remains with the parties, with the process led by the mediator
• encourages coming together & agreement
• the process can be initiated at any time
• the mediator does not award a winning party
• the process is non-binding

Question 15

What are the 2 main types of mediation?

Answer 15

• Facilitative
• Evaluative

Question 16

What is facilitative mediation?

Answer 16

• mediator encourages meaningful dialogue between parties, ensuring a focus is maintained on achieving a positive outcome
• the mediator assists in highlighting common aims
• the mediator helps each party understand the others position, strengths and weaknesses
• the mediator essentially facilitates the discussion which leads to agreement
• they do not personal assessments or recommendations for settlement

Question 17

What is evaluative mediation?

Answer 17

• involves a mediator who is an expert in the subject matter in dispute & will also do all that a facilitative mediator does
• the mediator also provides evaluations of the parties positions
• the mediator gives an impartial assessment of the likely outcome should it go to court
• the mediator can also provide recommendations for settlement terms

Question 18

What is negotiation?

Answer 18

• a form of ADR where parties work out between them how to resolve their issues
• no 3rd party involvement
• power to settle rests with parties
• negotiation ends when both parties come to an agreement
• suitable for simple matters which are easily resolvable and compromises can be made
• requires co-operation from both parties

Question 19

What is an expert witness?

Answer 19

• a person whose experience & knowledge in a particular field is beyond what is expected of a layman
• makes his / her knowledge available to the court or other bodies to help it understand the issue before it and reach a just & reasoned decision

Question 20

What is expert determination?

Answer 20

• the process by which parties agree to refer their disagreement to an impartial expert 3rd party and then be bound by the decision
• parties can chose who the expert it
• ideal for technical disputes
• generally simpler & cheaper than arbitration or litigation, can be used as a short cut to a binding decision

Question 21

What is the legislation which governs the role of an arbitrator?

Answer 21

Arbitration Act 1996

Question 22

Is there any legislation governing the role of the expert in expert determination?

Answer 22

No

Question 23

During expert determination, what will the decision of the expert be based on?

Answer 23

• their assessment of written / oral evidence submitted by parties (dependent on terms of appointment, they may not have to consider this)
• their personal inquiries & application of their expertise in the subject matter of the dispute

Question 24

What are the advantages of expert determination?

Answer 24

• it’s a confidential procedure which is less adversarial & helps parties maintain a working relationship
• provides a cost & time efficient solution for resolving disputes
• procedures are controlled by the parties rather than court or arbitration rules
• an expert can be appointed who is familiar with the specific technical issues

Question 25

What is adjudication?

Answer 25

• a form of ADR which was developed to allow construction contract disputes to be resolved more quickly & cost-effectively than arbitration or litigation
• its objectives is to provide a fast working solution to an issue (pending outcome of or need for a more formal dispute resolution procedure) so that parties can quickly resume or continue work under the contract

Question 26

How does the adjudication process work in terms of timeframes?

Answer 26

• Following crystallisation of a dispute, either party can serve a notice on the other party of its intention to defer the dispute to adjudication
• Within 7 days of the notice, the referring party must serve the other party it’s Referral (statement of case). If it’s not served in that time, the adjudication will likely be void
• Within the 7-day period, the referring party must secure the appointment of an adjudicator; either a person or nominating body named in the contract
• Following appointment, the adjudicator will set out a timetable, usually permitting the other party to issue a response to the referal
• The adjudicator must make a decision within 28 days of referral

Question 27

Under adjudication, what must the Referral contain?

Answer 27

A detailed explanation of the referring party’s claim in respect of the dispute identified within the notice, along with any supporting documentation

Question 28

Under adjudication, can the decision period of 28 days be extended?

Answer 28

Yes, to 42 days but only by mutual agreement of both parties

Question 29

Is adjudication binding?

Answer 29

The decision will be binding & enforceable in court unless:
- the adjudicator acting outside his or her jurisdiction or
- was biased towards one party

Question 30

Is there an appeal process under adjudication?

Answer 30

No. However, the parties can take the same dispute to litigation (or arbitration if the contract contains an arbitration agreement)

Question 31

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

Answer 31

Adjudication became a legal right in relation to construction contracts in the UK when legislation known as the Construction Act came into force.

Question 32

Who pays for the adjudication?

Answer 32

• Both parties are jointly liable for adjudicators fees
• The adjudicator can usually decide who is to pay the fees & reasonable expenses

Question 33

What is arbitration?

Answer 33

• Arbitration is essentially a lawsuit but without court involvement
• The parties agree (either in contract before a dispute arises or, through a subsequent agreement to avoid a lawsuit) to submit their dispute to arbitration rather than to pursue a lawsuit in court
• The parties’ agreement gives the arbitrator the power to issue a decision as to the parties’ rights & obligations and such decision will be legally binding on all parties

Question 34

What are the advantages of arbitration?

Answer 34

• the process is private, there is not public record of any proceedings, although not necessarily confidential
• speed compared to litigation
• the parties can agree on an arbitrator with relevant expertise in the matter
• the arbitrators award can be enforced as judgement of the court

Question 35

What are the disadvantages of arbitration?

Answer 35

• The parties must bear the costs of both the arbitrator & the venue
• Limited appeal rights
• If the matter is complicated but the amount of money involved is modest, then the arbitrators’ fee mat make arbitration uneconomical

Question 36

What is litigation?

Answer 36

• involves one of the parties commencing a claim in the civil courts
• the courts have inherent jurisdiction to hear a dispute in respect of just about anything
• the nature, complexity & value of the dispute will determine which court will hear a particular dispute

Question 37

What are the advantages of litigation?

Answer 37

• Judges can compel parties to comply with timeframes & have powers of sanctions for non-compliance
• Judges have the power to make orders to provide interim relief to protect a party’s position pending the final judgement
• There are defined rights of appeal in cases where errors of fact or law are made

Question 38

What are the disadvantages of litigation?

Answer 38

• Potentially greater costs if the dispute is not well managed or the other party seeks to delay the proceedings
• Potentially a longer time period to obtain a judgement
• Proceedings are generally conducted in public
• Judgement will be subject to appeal

Question 39

How does JCT contracts deal with disputes?

Answer 39

• usual approach is express reference to adjudication in the Articles of Agreement, together with a further express reference to arbitration or legal proceedings
• with reference to adjudication, either party may refer a dispute to adjudication under the applicable clauses of the relevant JCT contract
• the procedural rules are those of The Scheme
• the parties can either then select arbitration at the outset of the works or court proceedings
• finally, most JCT contracts provide that parties could, by agreement, seek to resolve any dispute or difference through mediation
• The JCT also produces a guide for mediation

Question 40

How does NEC contracts deal with disputes?

Answer 40

• ICE forms provide than any dispute is referred to the engineer under the contract, who then makes a decision which would be binding. If the contractor doesn’t accept the decision, the matter could be referred to arbitration
• ICE contracts have been amended to allow adjudication to be referred to at any time. It’s no longer possible to delay referral to adjudication on the basis parties are awaiting the engineers decision
  -NEC3 provides adjudication procedure for use in the UK with the HGCRA applies. The final dispute resolution procedure is a ‘review by the tribunal’.

Question 41

How do FIDIC contracts deal with disputes?

Answer 41

• provide a dispute escalation provisions
• a written notice commences the procedure by identifying the dispute
• the notice needs to be given as soon as practicable, and not later than 28 days after the contractor became aware or should have become aware of the event or circumstance giving rise to the dispute.
• initially the engineer is to consider a fully detailed claim. This may resolve the dispute either by agreement or certificate paying any additional money
• disputes that are not resolved are then referred to the dispute adjudication board, who has 84 days to make a decision
• if either party is dissatisfied with the decision, they must issue a notice of dissatisfaction within 28 days
• with no notice of dissatisfaction, the decision becomes final & binding
• failure to comply may lead to a referral to arbitration