Building and engineering disputes are generally acknowledged to be difficult to deal with.When projects do go wrong,they really do go wrong.They are amongst the most complex and expensive actions to pursue in litigation and/or in arbitration.This is often due to the combination of complex technical issues,voluminous documents,the detailed and technical evidence involved,the extensive number of parties involved and the substantial sums that can be at stake in cases of this nature.
Alternative Forms of Dispute Resolution (ADR)is an attractive and effective technique for resolving building and engineering disputes as it is seen by many as a form of resolution that can be speedy, efficient and cost effective.ADR is generally considered to be beneficial as it:
● Gives parties greater participation and control over resolution of disputes as against the court process.
● Can enhance communication between parties.
● Can preserve business relationships between the parties which would otherwise fail.
● Is private rather than in open court.
● Is non-binding on the parties until a settlement is agreed.
● Aims to settle the dispute and can be available at any stage of a dispute.
Disadvantages include that a settlement cannot be guaranteed as either party may decide to walk away from the process at any time. Additionally,openness between the parties may be needed to achieve any form of settlement and this may be unacceptable to the parties involved.
ADR covers a range of consensual dispute resolution methods from mediation to mini-trials.Set out below is a summary of the most common techniques:
Mediation
This is effectively a method of assisted negotiation aimed at achieving a negotiated settlement which is acceptable to both parties.A third party,a neutral mediator,assists the parties in their
negotiations by:
●Discussing the issues with the parties on a confidential basis in both open and private sessions.
● Assisting the parties to understand the strengths and weaknesses in their positions.
● Identifying avenues for settlement which often involve issues and options outside the issues disputed.
The success of this method is very much dependent on the open minded and commercial attitudes of the parties.Additionally,it is important that an appropriate mediator is jointly appointed by the parties. The personality of the mediator together with their expertise at dispute resolution can be very important to the chances of achieving a successful outcome to the parties.
Early Neutral Evaluation(ENE)
This involves the use of a third party neutral expert to give a nonbinding opinion on technical or legal issues which are likely to assist the parties in settling their dispute.
Mini-trial
This is a non-binding without prejudice process in which each party presents its case to a tribunal consisting of the Managing Director (or other senior board member)for each party plus a Third Party that is also neutral to the project and the parties (the Third Party Neutral).The procedure to be adopted by the parties that make a presentation will either be proposed by the Third Party Neutral or agreed by the parties.Following the presentation,the Managing Directors and the Third Party Neutral retire to evaluate the parties’ prospects with a view to settlement.
Adjudication
This was introduced by the Housing Grants,Construction and Regeneration Act 1996 as a method of resolving disputes in the construction and engineering industries.It applies to contracts concerning the construction and engineering industry amongst others and concerns contracts entered into after 1 May 1998.It aims to achieve fairer and more effective payment provisions in construction contracts and a quicker and cheaper means of resolving disputes.An adjudicator,appointed by the parties,agrees a timetable for resolution of the dispute with the parties.The adjudicator’s decision is binding unless and until it is superseded by a court of arbitral award.The non-judicial processes are becoming increasingly cluttered with legal pitfalls that can be fatal to the adjudication process itself.Recent decisions in the High Court and Court of Appeal mean that an ill-considered response or referral document could have dire consequences for the author.
The referral and response documents need to be prepared in accordance with the rules to ensure that party’s claims succeed or fail because of their merit and not because of a technical mistake in a document.In practice the adjudication procedure can be very fair but equally unfair.
Expert Determination
Expert determination is helpful when settling technical disputes of fact that can usefully be addressed with specialist knowledge.
An expert in the subject matter of the dispute,who is neutral to the parties,provides a decision that is binding.
The process is as formal or informal as the parties require.A qualified expert is appointed jointly by the parties.If the parties are unable to agree on whom to appoint,then they may request that a third party organisation selects the expert.For building and engineering disputes,RIBA and ACE may be approached to provide details of an appropriate expert.The procedure to be followed is then agreed by the parties.Failing this,the expert will determine the steps to be adopted in the attempt to reach a settlement.
Standard practice is for the parties to provide the expert with an agreed statement of facts.This will set out the issues that the expert is asked to address.The parties then provide the expert with written submissions that could include documents in support of their case.The written submissions are provided to the other party in the dispute and in turn a response is issued addressing the issues raised.Clarification of specific issues may be requested by the expert to assist the expert in making a decision.A decision once made is binding on the parties with no requirement for the expert to give reasons.Given this,the expertise of the expert is of paramount importance.
A number of bodies that specialise in the ADR methods outlined here provide services ranging from administrative functions(such as a project coordinator or other necessary facilities such as room hire) to experts or other professionals that can be engaged to assist you in resolving any disputes you may have.Whilst the general rule is that ADR aims to save costs and time as you can often deal with the dispute without assistance,there are a number of instances when additional assistance will be required in order to save costs and difficulties in the future.
