Last edited 10 Jan 2018

Dispute resolution

Construction projects are usually long-term transactions with high uncertainty and complexity, and it is impossible to resolve every detail and foresee every contingency at the outset. As a result, situations often arise that result in disputes between the parties to the contract.

The likelihood of disputes arising can be reduced by:

Where disputes do occur, the parties to the contract should first attempt to resolve them amongst themselves, as this is likely to be the fastest and least expensive solution, allowing the project to continue without disruption and maintaining good working relationships.

Where this is not possible, it may be necessary to seek a third party to resolve the dispute.

However, taking disputes to the Courts can be expensive, complex, adversarial and time consuming. This may not be appropriate on construction projects, where a quick resolution may be needed so that the works can proceed and where it is important that the parties to the contract maintain a good working relationship.

As a result, construction contracts usually include provisions for the resolution of disputes by agreed alternative dispute resolution procedures (ADR). These are typically less formal than court proceedings and should be faster, less expensive and less times consuming, allowing the parties to maintain a good relationship.

Construction contracts are also subject to statutory schemes such as the Housing Grants, Construction and Regeneration Act, which impose ADR in the absence of appropriate contractual terms.

ADR typically involves procedures such as mediation, adjudication, arbitration, or a combination. Large or complex projects may have additional tiered dispute resolution procedures with obligations to negotiate in good faith, dispute resolution boards, steering committees and partnering meetings. For more information see: Alternative dispute resolution.

Where court action is necessary, the Technology and Construction Court (TCC) is a specialist court, which deals principally with technology and construction disputes. However, in many cases, there will be a compulsory Pre-Action Protocol to encourage the frank and early exchange of information about the prospective claim and any defence to it. This can enable the parties to avoid full court proceedings by agreeing a settlement before commencement. It also supports the efficient management of proceedings where full court proceedings cannot be avoided.

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