Options for dispute resolution
To help develop this article, click 'Edit this article' above.
Contents |
[edit] Negotiation
Before any of the more formal procedures are initiated, there may be a period of negotiation where the parties attempt to resolve their differences themselves. This might be the best solution to the problem.
[edit] Mediation
However; if negotiation fails, the parties may submit the dispute to mediation – a popular form of alternative dispute resolution. JCT Standard Building Contract SBC11 clause 9.1 requires each party to give serious consideration to a request by the other to use mediation. It is not compulsory for parties to use mediation, however English courts strongly encourage it and have introduced cost sanctions against parties that refuse to resolve a dispute through mediation where it would have been clearly in its interest to attempt to do so.
Usually the mediator is appointed jointly by the parties. Mediation typically lasts for 1 day. The mediator does not take sides, make decisions or judgements. He/she will talk to each party in private, and will not reveal anything to the other party. The mediator will seek to establish common ground and encourage the parties to reach an agreement. The advantage of this method is that the parties can maintain a functioning long-term business relationship.
NB Where a construction contract is made with a residential occupier, it had been held that an adjudication clause is potentially an unusual and onerous provision which if it had not been individually negotiated, may be invalidated by the Unfair Terms in Consumer Contracts Regulations 1999.
[edit] Adjudication
If mediation also fails, then under the Housing Grants, Construction and Regeneration Act 1996, parties to the construction contract have a right to adjudication, designed to produce a decision that is binding unless the dispute is subsequently resolved in arbitration or litigation, or settled by agreement. Under SCB11, the adjudicator may either be named in the contract or nominated by the nominating body identified in the contract. The adjudicator must consider any information properly submitted by the parties and reach a decision within 28 days of receipt of the referral notice. During this process, if a party fails to comply with any direction of the adjudicator, the latter may draw whatever inferences he or she feels justified. And if either party refuses to comply with the adjudication decision, the other may seek to enforce it through the courts.
[edit] Arbitration / litigation
If the parties are unsatisfied with the adjudication, they may refer the dispute to either arbitration or litigation depending on what is agreed in the contract. The default of SBC 11 is litigation. Arbitration and litigation have many similarities – in both cases the outcome is final and binding.
Under the Arbitration Act, the arbitrator is empowered (provided that parties agree) to grant a range of remedies similar to those obtainable in court. The advantages of arbitration include privacy – arbitration can be kept private whereas litigation is open to public and press. Secondly, the arbitration process is consensual and parties have slightly more autonomy.
The advantages of litigation include the ability to include multiple parties in the case to avoid duplication of hearings and potentially conflicting outcomes. Moreover; disputes heard in court can invoke two very powerful legal remedies – summary judgement and interim payment.
It should be noted that even where parties have selected arbitration under their contract, it is still open for them to elect litigation once a dispute develops. However, the other party may ask the court to stay the proceedings on the grounds that the arbitration agreement already exists.
[edit] Find out more
[edit] Related articles on Designing Buildings Wiki
- Adjudication.
- Alternative dispute resolution.
- Alternative Dispute Resolution legislation.
- Arbitration.
- Arbitration Act.
- Breach of contract.
- Causes of construction disputes.
- Conciliation.
- Contract claims.
- Dispute resolution boards.
- Housing Grants, Construction and Regeneration Act.
- Pay now argue later.
- Pendulum arbitration.
- Mediation.
- Scheme for Construction Contracts.
- The Housing Grants, Construction and Regeneration Act.
- Scheme for Construction Contracts.
Featured articles and news
Recharging Electrical Skills in Wales
Step by step collaborative solutions.
Ireland budget announcement 2025
CIOB responds with positivity, criticism and clarity.
The continued ISG fall out, where to go?
Support for ISG contractors, companies and employees.
New HES national centre for traditional building retrofit
Announced as HES publishes survey results which reveal strong support for retrofit.
Retrofit of Buildings, a CIOB Technical Publication
Expected to become one of the largest activities in the global construction industry.
Scope determination appeals and the Building Safety Act
Process explained following release of appeals guidance.
The ECA industry focus video channel
Keeping update with the industry session by session.
Over 25 recorded informations sessions freely available.
AT Awards 2024 ceremony East London October 25th.
Revisiting the AT community at the 2023 awards evening.
The Community Housing Fund and built affordable homes
CLTN reviews the impact of the Fund and calls for extension.
The grading system of the Regulator for Social Housing
A background, an explanation and ten recent enforcements.
Construction, repair and maintenance. Book review.
Putting new life into a city with a 1900 year history.
BSRIA Briefing 2024: Sustainable Futures speakers
Redefining Retrofit for Net Zero Living 22 Nov.
Wall of support for post-Grenfell regulation of electricians
Call for a shake-up of the construction industry highlighted on radio.
Digital sustainability through future AEC tools
Bringing together industry and academia to meet challenges.