NEGOTIATION

 

Negotiation is the preferred way to settle disputes. The cost can be low, the process is simple and it should definitely be quicker than using litigation or other types of ADR. Both parties remain in control of the problem and are not reliant on third party opinion. It could be the case, however, that a stronger party can push a weaker party into accepting a decision.

 

Negotiation is only appropriate and likely to be successful if the parties want it to succeed.

​

ADJUDICATION

​

Adjudication was recommended as the process to be used for all construction contract disputes in the Latham Report.39 Adjudication is gaining popularity internationally. It is the most widely used form of dispute resolution in the United Kingdom construction industry.   The Housing Grants, Construction and Regeneration Act 1996 (‘HGCRA 96’)40 was introduced to aid confidence of payment in construction contracts. The Construction Act introduced a quick, easy and cheap provisional answer to disputes. Adjudication can also be utilised after a contract has been determined.

​

Lord Denning famously stated in Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd, ‘There must be a cash flow in the building trade. It is the life blood of the enterprise’. Adjudication has been an outstanding success in redressing the balance of power between the payer and payee since it provides a quick, easy and cheap solution for disputes.

​

ARBITRATION

​

The use of Arbitration in England is claimed to be as old as legal history. It has certainly been recognised in common law since the start of the seventeenth century. The first statute governing arbitration was the Arbitration Act 1697 and there have been several enactments since.  This process is currently regulated in the UK by the Arbitration Act 1996.

​

Arbitration is to a dispute resolution mechanism whose outcome is legally binding and the decision is enforceable with res judicata effect (once a dispute has been decided upon, the same parties cannot attempt to raise the issue again by or during further proceedings).   Only litigation has such universal enforceability.

 

Both parties can choose their arbitrator based on previous expertise. The process is confidential between the parties and the arbitrator.  Arbitration is flexible and the hearing can be held anywhere at any chosen time. Provided that the award is made in accordance with the relevant statute, it can be enforced in the same manner as a judgement.

 

There are several processes to arbitration and therefore takes longer than other available mechanisms.

 

Arbitration, along with litigation, can be the most expensive method of resolving a dispute.

​

DISPUTE REVIEW BOARDS

 

Dispute resolution boards are often used on large, multinational projects. They act to solve disputes throughout the construction project as and when they occur. They can act quickly since they are appointed at the start of a project (the team is usually specified in the contract documentation) and can work with the parties to maintain relationships.

 

Dispute Review Boards received major attention and support in international construction in 1995 when the World Bank, the largest financing agency in the world, adopted a certain dispute resolution procedure provision. The first edition of standard bidding documents for the procurement of civil engineering works insisted on the use of a Dispute Review Board to resolve disputes between the employer and contractor.

 

This method can enhance both parties behaviour and encourage an employer to address claims seriously and deter a contractor from pursuing spurious claims which will never succeed.

 

The FIDIC forms of contract contain a Dispute Adjudication Board procedure which enables a decision to be enforceable in recognised jurisdictions.

​