Construction Disputes Resolution

+44 (0) 1932 856463


Dispute Resolution

This page briefly describes the following Dispute Resolution Methods: Negotiation, Mediation, Conciliation, Dispute Boards, Construction Adjudication, Litigation and Arbitration.

Negotiation is usually the quickest and cheapest method of resolving disputes. This involves the parties to the dispute holding private discussions, either alone or with advisers present, in the hope of reaching an agreement that resolves the dispute. The weakness of this method is that resolution cannot be guaranteed, particularly if the party in the stronger bargaining position adopts an uncompromising hard line approach. Faced with this problem, my advise to the party in the weaker bargaining position is to adopt a principled approach, whereby the stronger party is asked to justify, with reference to the bargain originally made, the position he is now adopting. The dispute may of course be about what the original bargain was, which could make matters very difficult to resolve by negotiation.

Mediation is most probably the next quickest and cheapest method of resolving disputes. This is a voluntary process that needs the consent of both parties enable it to take place. In this method an impartial Mediator, who needs to be accepted by both parties, attempts to get them to agree to a compromise solution that is acceptable to them both. The method usually involves the parties having separate private discussions with the Mediator in the strictest confidence, to acquaint the Mediator with any undisclosed needs and interests that each party may have, and which may enable the Mediator to identify with the parties a number of options that may satisfy their needs and interests, and hence resolve the dispute. The strength of this method is that the parties' final agreement need not necessarily reflect their strict legal entitlements, but may nonetheless be acceptable to them both as a means of putting their dispute behind them and preserving their commercial relationship. The weakness of the method is that resolution cannot be guaranteed, particularly if one of the parties has no interest in coming to a voluntary compromise, in which case one of the methods that delegates the decision making to an independent third party is likely to be more appropriate.

Conciliation is very similar to Mediation, except that if the parties fail to agree a solution, the Conciliator will make a non-binding Recommendation after the conciliation meeting has concluded as to how he thinks the dispute ought to be resolved. Depending on the terms of the Conciliation Agreement, the Conciliator's Recommendation my become final and binding on the parties if neither of them formally rejects it within a specified time frame.

Dispute Boards combine the benefits of dispute avoidance with a facility for dispute resolution if the parties cannot agree. On grounds of cost, Dispute Boards are generally only used on very expensive projects of many years duration. With this method, three individuals usually, but occasionally only one, highly experienced in the relevant conditions of contract and the work being undertaken, are appointed at the start of the project to follow its progress and assist the parties to nip in the bud any disputes that may be developing. If a dispute nonetheless develops, and is referred to the Board for a ruling, the Board will give either a non-binding Recommendation, as is the usual practice in the United States of America, or a binding Decision, as is usual in the rest of the World. Non-binding Recommendations in America are more often than not accepted by the party responsible to pay. Where they are not, a disgruntled working party may still refer the dispute to the final and binding tier of the dispute resolution process provided for within the contact. Binding Decisions of Dispute Boards are required to be complied with without delay. However, having done so, a disgruntled paying party may also refer the dispute afresh to the final and binding tier of the dispute resolution process provided for within the contract, in the hope that the final and binding decision will suit him better, which it rarely does.

Construction Adjudication as practiced within the UK and elsewhere in the world following legislative intervention is arguably the most economic method of ensuring that a binding resolution of a dispute is achieved. Its economy is achieved by limiting the time in which the Adjudicator, to whom the parties have delegated the task of deciding between them, may make his Decision. In this method the parties make sequential written submissions to the Adjudicator and he decides on the merits between them either on a documents only basis or after hold in a meeting with the parties and their witnesses, as best suits the needs of the case. This delegation of the task of deciding the case to the Adjudicator means an uncooperative party cannot frustrated the procurement of a binding resolution of the dispute. However, although binding, which means it must be complied with until revised in some other way, as due to the limited time in which it is required to be made, the Adjudicator's Decision is usually not final. Thus a party dissatisfied with the Adjudicator's Decision has the right to refer the dispute afresh to the final and binding dispute resolution procedure agreed within their contract. This final and binding procedure may by agreement be either arbitration or litigation, or in default of agreement it will be litigation within the national courts.

Litigation is the State-sponsored method of disputes resolution, which is every citizen's right. It involves trial in pubic by judges drawn exclusively from the legal profession. Trials are conducted in accordance with a voluminous set of rules, known in England and Wales for instance as the Civil Procedure. Unless appearing as a litigant in person, which is generally not recommended, a party needs to be represented in court by a barrister and a solicitor, which contributes to the cost. A failure to defend an action in court usually results in the Claimant obtaining judgement in default, whether or not such a result is merited on the facts.

Arbitration is an alternative to litigation where the parties agree to arbitration. Such agreement to arbitrate any disputes arising usually needs to be in writing, as is the case in England, Wales and Northern Ireland under the Arbitration Act 1996, in Scotland under the Arbitration (Scotland) Act 2010 and in the Republic of Ireland under the Arbitration Act 2010. Such written agreements oust the jurisdiction of the national courts to decide the substantive issues in dispute, although the national courts still retain a supervisory role in respect of procedure and the enforcement of the arbitrator's Award.

Arbitration differs from litigation in that there is no requirement for parties to employ barristers and solicitors, although they frequently do in high value cases. In arbitration the parties are free to choose their tribunal on the basis of appropriate technical expertise in the subject matter of the dispute, if the parties so desire, and can agree the composition of the tribunal. Arbitration proceedings are held in private, which many participants see as a benefit over the publicity that litigation sometimes attracts. Also, within the usually limited procedural constraints of national Arbitration Acts, the parties and the tribunal are generally at liberty to adopt bespoke procedures that best meet the needs of their case. Arbitration also has the potential to be quicker and less costly than litigation. However, achieving this rather depends on the pro-activity and diligence of the tribunal, and the avoidance of procedures that merely mimic litigation. In international disputes, arbitration awards have a distinct advantage over national court judgements, in that they are enforceable internationally, at least in theory, if not always in practice, in the national courts of any country that is a signatory to the New York Convention 1958, which currently encompasses virtually all countries of the commercially developed world.