"Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often the real loser — in fees, and expenses, and waste of time. As a peace-maker the lawyer has a superior opportunity of being a good man. There will still be business enough." – Abraham Lincoln
Parties in construction regulate their relationships through the contractual arrangements into which they have entered. At times, parties come into conflict or disagreement. Having a means by which such differences can be effectively resolved is as important as having a relationship that can work successfully to the mutual benefit of all parties. Thus, it is vital to have considered at the outset how both parties will resolve disputes or differences that may arise. At whatever stage a dispute arises, alternative methods of resolution are always available.
There are numerous business dispute resolution options available to parties to a construction contract. Some are more effective than others depending upon factors such as the nature of the project, the issues in dispute, the stage at which the dispute arises and the relationship between the parties.
Mediation, arbitration, conciliation and expert determination are all growing in popularity. They are all confidential processes and are conducted in private.
Mediation
Mediation is a private, without-prejudice process which involves a neutral third party assisting parties to reach an agreed resolution to the dispute. In essence, mediation is assisted negotiation and the mediator does not decide what the solution should be.
Conciliation
Conciliation is a private, without-prejudice process whereby an independent third party, either appointed by agreement of the parties or through the agreed governing bodies, listens to each party's case and seeks to bring them towards a settlement. Where this is impossible, the conciliator issues a recommendation, which will become binding on the parties if not rejected within a certain, often very tight timeframe.
Arbitration
Arbitration is supported by a statutory framework and is commonly used in construction disputes. The arbitrator effectively sits as a judge and follows procedures akin to those applied by the courts. The arbitrator's decision can be challenged before the courts only in very limited circumstances.
Expert determination
Expert determination differs from arbitration in that no statutory framework has been established to govern it. In the event that both parties make provision for the appointment of an independent expert, this expert will give a decision within a finite period on the issues in dispute. Once the expert has rendered his or her decision, the matter is virtually at an end, since there are few grounds on which a party can appeal an expert's decision to a court. Expert determination is often effective in resolving more technical disputes.
Adjudication
Adjudication has proved to be a positive experience in the United Kingdom as an alternative means of resolving disputes, particularly those arising during the course of the works. There is no reason why parties cannot agree to a procedure akin to adjudication in their contracts, identifying an agreed adjudicator at the outset and setting out the procedure through which disputes are to be referred. Adjudication can allow decisions to be made and can require swift compliance whilst awaiting pending referral of the issue to arbitration or any other forum for dispute resolution.
It should be borne in mind that the most appropriate form of alternative dispute resolution will depend on the role of each party in dispute, the contractual relations being entered into and the nature of the project. The resolutions that are reached may depend on each party's bargaining position.
Here at Lewis Nedas, we are able to assist our clients with alternative methods of resolving disputes and emphasise the importance of viewing litigation as a last resort to determining disagreements especially involving parties to construction agreements. We are currently advising a client, who is the main contractor on a million pound design & build project in relation to a dispute involving a sub-contractor. Should you require advice in respect of a similar matter or issues raised within this article, please contact Mr Jeffrey Lewis or Miss Jasbir Kaur on 0207-387-2032, who would be happy to assist.
