M06 - Conflict Avoidance, Management and Dispute Resolution Procedures Flashcards
What is an ADR (Alternative Dispute Resolution)
- A form of dispute resolution that does not involve judicial proceedings
- Action to resolve contractual disagreements between two or more parties
What is Mediation?
- Voluntary procedure
- Parties not obliged to accept terms of agreement
- Mediator appointed
- Mediator negotiates with parties separately to find compromise and settlement
- If in agreement, a civil law contract is drawn up - both parties commit to it
- Refusal to take part looked at negatively by courts
What is Adjudication?
- Both parties have to agree to it
- Adjudicator appointed by Adjudicating body - who is an expert witness
- Advantages are relatively low cost & short resolution time (4-6 weeks)
- Decision made by Adjudicator and is binding, unless revised by arbitration
What is Arbitration?
- Both parties have to agree to it
- 1 or more Arbitrators appointed by the disputing parties
- It is a private procedure, the Arbitrators decision ‘the award’ is private
- Advantages are privacy and the ability to appoint Arbitrator with technical knowledge, as opposed to a judge
- Disadvantages are it can be expensive
- Governed by the Arbitration Act
- Decision is binding, unless revised by litigation, where Arbitrator has acted outside their powers
What is Litigation?
- Formal legal proceedings
- Advantages = Highest powers available to enforce decisions, sanctions etc
- Disadvantages = cost, time, all information open to public, ability to appeal, Judge doesn’t have technical knowhow
- Common for parties to reach settlement before trial
Differences between Adjudication and Arbitration?
- Adjudication = Adjudicator appointed by Nominating Body. Decision is interim as can be escalated to Arbitration
- Arbitration = Arbitrator appointed by disputing parties - Longer timescales
Differences between Arbitration and Litigation?
- Parties appoint the Arbitrator (3rd party) to resolve dispute in private
- Litigation is formal legal proceedings conducted in public = more expensive & time consuming
What are the timescales for an adjudication process?
- Once the dispute is referred, an Adjudicator is appointed within 7 days
- Decision is give within 28 days
- Can be extended by 14 days if agreed by both parties
What are the contractual mechanisms available for dispute resolution under contracts you have been working with (NEC, JCT)?
Mediation, Adjudication, Arbitration
How have you implemented conflict avoidance procedures in contracts you have been involved with?
I have yet to be involved in a formal dispute resolution process, but frequently I am required to settle and agree valuations and final accounts with Contractors which requires negotiation and I do this through effective preparation, communication and behaving ethically
What in your opinion is the cause of most disputes?
Monetary, specification and programme disputes
What act is adjudication based on?
Housing Grants, Construction and Regeneration Act
Under JCT what are the ADR procedures that may be used?
1) Mediation
2) Adjudication
3) Arbitration
What is the default ADR in JCT?
Mediation
What is the default ADR in NEC3?
1st Step - Adjudication
2nd Step - Arbitration or Litigation
What could indicate the success of a negotiation on a final account?
Both parties come away happy, and costs agreed within cost report budgets
Why is adjudication (ADR) required in the contract?
- The Housing Grants, Construction & Regeneration Act 1996 (more commonly known as the Construction Act) stipulates that it should
- All construction contracts to allow for adjudication; Follow proper adjudication procedure
- Any party permitted to refer dispute to adjudication
What if a contract does not have a provision for adjudication?
- The parties have a statutory right to adjudication assuming that the contract qualifies under the Construction Act
- If it doesn’t then the Scheme for Construction Contracts will apply
Can you reject the decision from the adjudication process?
Yes and that party can proceed to whichever out of arbitration or litigation is detailed in the Contract particulars.
Who appoints the adjudicator?
The adjudicator can either be named in the Contract particulars or nominated by the nominating body identified in the Contract particulars such as the RIBA and the RICS.
What styles of conflict avoidance are you aware of?
- Confronting: collaborative, confront issue rather than each other
- Compromising: give and take
- Smoothing; more accommodating than compromising, sacrifices made
- Forcing; force view with no disregard to other view
- Avoiding; postponing, temporary
What is the differences between expert determination & mediation?
- Expert determination is a form of alternative dispute resolution whereby the parties to a contract ask an independent expert to give a binding decision on a dispute. If the clause is drafted properly and it is used in the right circumstances expert determination can provide you with a quicker, cheaper and effective means of settling a dispute.
Why would you choose litigation over arbitration?
- If the other party is not voluntarily participating in the ADR process.
Is adjudication compulsory?
Yes
Do you think adjudication is cost effective?
- It depends on the amount of the claim
- Absolutely, when compared against litigation.
What law guarantees the right to adjudication?
- The Local Democracy, Economic Development and Construction Act 2009
Which high court enforces construction & litigation?
- Technology and Construction Court (TCC)
What does the JCT adopt as the go-to ADR method?
- Serious consideration to Mediation
- Adjudication
- Then Arbitration
What section of JCT focuses on ADR?
- Section 9
- Article 7
How do you avoid conflict?
- Good management
- Being proactive
- Good record keeping
- Partnering
What is mediation?
- Mediation is a completely voluntary and confidential form of Alternative Dispute Resolution (ADR). It is when an impartial person or mediator - trained in dealing with difficult discussions between 2 opposing sides - acts like a referee in a dispute.
- Mediator doesn’t make a ruling, they facilitate communication
What is the difference between mediation & conciliation?
- In mediation, the mediator acts as a facilitator who helps the parties in agreeing. Conversely, in conciliation, the conciliator is more like an interventionist who provides probable solutions to the parties concerned, to settle disputes.
What is adjudication?
- Adjudication is a compulsory dispute resolution mechanism that applies to the UK’s construction industry.
- Consensual agreement
- Legally binding unless undone by arbitration & litigation.
Is adjudication binding?
- Yes, unless un-done by litigation of arbitration
- Adjudication decisions are binding unless and until they are revised by arbitration or litigation.
- Rarely overturned.
What is arbitration?
- Arbitration is an alternative to litigation for resolving construction industry disputes.
- Consensual agreement
- Arbitration Act 1996
Is arbitration legally binding?
- Arbitration is legally binding in the same way as a judgment would be.
What are the timescales of adjudication/arbitration?
- Adjudication: 28 days
- Arbitration: Can take months
Can you extend adjudication?
- Yes, by 14 days if requested by both parties or by the claimant.
In JCT, if no adjudicator is named, who will act as adjudicator?
President or Vice President of:
- Royal Institution of British Architects
- Royal Institution of Chartered Surveyors
- Association of Independent Construction Adjudicators
- Chartered Institute of Arbitrators
In JCT, if no arbitrator is named, who will act as arbitrator?
President or Vice President of:
- Royal Institution of British Architects
- Royal Institution of Chartered Surveyors
- Chartered Institute of Arbitrators
How does NEC deal with resolving disputes?
- Option W1: Used when adjudication is the method of dispute resolution and the United Kingdom Housing Grants, Construction and Regeneration Act 1996 does not apply
- Option W2: Used when adjudication is the method of dispute resolution and the United Kingdom Housing Grants, Construction and Regeneration Act 1996 applies
- Option W3: Used when a Dispute Avoidance Board is the method of dispute resolution and the United Kingdom Housing Grants, Construction and Regeneration Act 1996 does not apply
What is a conflict of interest?
- A situation that has arisen that may affect your professional judgement.
What types of Conflict of Interest are there?
- Party Interest: Acting for another person with competing interest at the same time
- Own Interest: Have obligations or pressures that detract from or affect your relationship with the client
- Confidential Information: Are faced with conflicting duties owed to different clients
How do you declare a conflict of interest?
- Declare it to the client and ensure they are okay with it
- Get them to sign an “Informed Consent” – RICS provide a template
