By: Yasas Chandradasa MSc, BSc (QS) Hons, MRICS, MACostE M006 - Conflict Avoidance, Management d i l i d and Dispute Resolution Procedures Description of Competency This competency covers the quantity surveyors involvement with the avoidance, management and resolution of disputes in construction projects. Candidates should be aware of the various processes Candidates should be aware of the various processes and techniques commonly used in the industry. They should have a detailed understanding of how these are applied in practice. (RICS APC Pathway Guide, March 2014 Quantity Surveying and Construction) YC, July 2014 M006 - Conflict Avoidance, Management d i l i d and Dispute Resolution Procedures Mandatory Competency Level 1 Level 1 Demonstrate knowledge and understanding of the techniques for conflict avoidance, conflict management and dispute resolution procedures including for example adjudication and arbitration, appropriate to your APC pathway. Level 2 Provide evidence of practical application in your area of practice having regard to the relevant law. Level 3 Level 3 Provide evidence of the application of the above in the context of advising clients in various circumstances. (RICS APC Pathway Guide, March 2014 Quantity Surveying and Construction) YC, July 2014 M006 - Conflict Avoidance, Management d i l i d and Dispute Resolution Procedures Study Check List y How standard forms of contract deal with conflict avoidance and dispute resolution f Conflict avoidance Partnering Negotiation Negotiation Mediation Conciliation Adjudication Arbitration P ti P t l Pre-action Protocol Litigation Expert Witness YC, July 2014 p Independent Expert Determination (RICS APC Pathway Guide, March 2014 Quantity Surveying and Construction) Conflict Avoidance and Management Conflict Avoidance and Management What is Conflict? 1. A situation which people, group or countries are involved in a serious disagreement or argument, 3. A situation in which there are opposing ideas, opinions feelings or wishes; a situation in which it is difficult to choose (Oxford Advanced Learners Dictionary) Conflict Avoidance in Construction Contract Conflict Avoidance in Construction Contract Pre-Contract Stage Post-Contract Stage YC, July 2014 Conflict Avoidance and Management Conflict Avoidance and Management Pre-Contract Stage g Have a carefully drawn up set of Contract documents at the begging of a project to ensure that there is no or minimum ambiguity. Prepare Tender documents with proper coordination among various trades (architectural, structural, MEP, etc.) U St d d M th d f M t Use Standard Methods of Measurement Allow sufficient time Appoint qualified professionals Chose the correct procurement path Use standard forms of Contracts (CoC) Provide proper answers for tender queries & distribute them to all tenderers Provide Correct information at the right time Carry out proper tender evaluation YC, July 2014 y p p Conflict Avoidance and Management Conflict Avoidance and Management Post-Contract Stage g Administrate the Contract by fully competent Contract Administrators, in accordance with the Contract Agreement . Properly discharge the obligations and the liabilities in timely manner Have a proper knowledge of their rights How standard forms of contract deal with conflict avoidance FIDIC avoidance FIDIC Provide clear definitions and interpretations Clear explanations of the parties rights and obligations Clear explanations of the Engineers duties and authorities Clear explanations of the procedures; e.g. Variation procedure Priority of Contract Document YC, July 2014 Dispute Resolution Procedures Dispute Resolution Procedures What is Dispute? An argument or a disagreement between two people, group or countries (Oxford Advanced Learners Dictionary) Litigation Dispute Resolution Procedures Alternative Dispute Resolution YC, July 2014 Dispute Resolution Procedures Dispute Resolution Procedures Litigation: The process of resolving disputes by filing or answering a complaint through the public court system When to Litigate Where negotiations have proved unsuccessful and there is no right of adjudication (in UK) and/or Arbitration; or Where there is no dispute resolution clause in the contract; or Where there is a litigation clause in the contract Where there is a litigation clause in the contract YC, July 2014 Dispute Resolution Procedures Dispute Resolution Procedures Advantages of Litigation: judgments of the court are readily enforceable; judgments are subject to very limited rights of appeal; the quality of judges is usually very high; the court and judge's time is free (subject to the payment of court fees); an array of interim remedies, such as injunctions, is available to support the process; th i bl t d l il ith thi d ti the process is able to deal easily with third parties; judges are usually full-time and are therefore very experienced. Arbitrators in contrast usually only sit as arbitrators once in a while; legal costs are recoverable from the losing party; legal costs are recoverable from the losing party; claims can be brought against several defendants in the same action; and the processes are detailed, well defined and widely understood. YC, July 2014 Dispute Resolution Procedures Dispute Resolution Procedures Disadvantages of Litigation: proceedings are often time-consuming and complex. The process requires the use of solicitors and/or barristers, and is therefore often expensive; the courts are not able to deviate from the Civil Procedure Rules (CPR). They are relatively inflexible; the process is necessarily adversarial. This often leads to conflict and a destruction of any goodwill between the parties; th t t th bli d th d the courts are open to the public and the press; and the losing party has to pay the costs of the winning party (subject to any offers) thus turning the attention of the parties very quickly form an argument over damages to an argument over who will pay the costs argument over damages to an argument over who will pay the costs. Pre-action Protocol to agree a pre-requisite procedure before commencing the litigation. YC, July 2014 Dispute Resolution Procedures Dispute Resolution Procedures Alternative Dispute Resolution (ADR): ADR is a collective description for methods of resolving disputes without the need to go to court These include: Mediation Common Advantages of ADR Less adversarial Expert Witness Adjudication Arbitration Less adversarial Confidentiality No or less destruction of any goodwill and Arbitration Dispute Boards Expert Determination business relationship between parties (RICS, 2014) Negotiation Conciliation YC, July 2014 Conciliation Dispute Resolution Procedures Dispute Resolution Procedures Negotiation: The principles of negotiation in the context of a dispute are similar to the principles of negotiation in any other context. Each party has expectations and a lower limit (usually expressed in monetary terms). Where the lower limits overlap, it should in theory be possible to negotiate a settlement. However, the situation is rarely this straightforward. (http://www.isurv.com, 2013) Mediation: Mediation is the name given to a confidential process whereby parties to a dispute invite a neutral individual to facilitate negotiations between them with a view to achieving a resolution of their dispute. (http://www.isurv.com, 2013) Conciliation: Similar to mediation but the independent third party (conciliator) gives his/her opinion on the dispute. YC, July 2014 p p Dispute Resolution Procedures Dispute Resolution Procedures Expert Witness : A person who is a specialist in a subject, often technical, who may present his/her expert opinion without having been a witness to any occurrence relating to the lawsuit or criminal case. It is an exception to the rule against giving an opinion in trial, provided that the expert is qualified by evidence of his/her expertise, training and special knowledge. E t D t i ti Expert Determination: An independent expert is appointed jointly by the two parties to give an expert opinion on the matter to be decided. The expert may have regard to evidence submitted or may have a hearing and adopt what they consider to be the most appropriate procedure. The expert's decision is not enforceable directly by the courts and they are liable for action for negligence. (http://www.isurv.com, 2013) Dispute Boards: An independent board evaluates disputes as similar to the DAB in FIDIC 1999 Red Book YC, July 2014 1999 Red Book. Dispute Resolution Procedures Dispute Resolution Procedures Adjudication: Adjudication is a statutory procedure by which any party to a construction contract has a right to have a dispute decided by an adjudicator. It is intended to be quicker and more cost effective adjudicator. It is intended to be quicker and more cost effective than litigation or arbitration. It is normally used to ensure payment (although most types of dispute can be adjudicated), Pay now argue later. The Adjudicator must generally decide the dispute in less than 42 days. days. The decision is binding and is usually upheld by the Courts in the UK. The scope of adjudication is set out in the provisions of the Housing Grants, Construction and Regeneration Act 1996. However, there is no law provision in UAE law. No international enforceability YC, July 2014 No international enforceability Dispute Resolution Procedures Dispute Resolution Procedures Arbitration: Arbitration is a private form of binding dispute resolution, conducted before an impartial tribunal, which emanates from the agreement of the parties but which is regulated and enforced by agreement of the parties but which is regulated and enforced by the state (Latham & Watkins (2014), Guide to International Arbitration) The arbitral tribunal can be made up of legal and/or industry experts chosen by the parties or appointed by a professional body p y p pp y p y that has been requested to do so by the parties. Arbitration is a private and confidential process to a greater degree. It can provide for the quick, practical and economical settlement of cross-border disputes. YC, July 2014 p Dispute Resolution Procedures Dispute Resolution Procedures Advantages of Arbitration: Usually a confidential process; More flexible in terms of procedure than litigation; Allows the parties to choose the tribunal; Can be a neutral forum (for international disputes); Award is final and binding; and Relatively easy to enforce the award internationally. Main factors to be considered when drafting an arbitration clause or agreement; Seat of Arbitration - The Arbitration Act 1996 (UK) defines the seat of the ( ) arbitration as its judicial seat. The seat of the arbitration determines the procedural rules that govern the arbitration Governing Law of Arbitration Agreement Language of Arbitration Number of Arbitrators Scope of Disputes Covered YC, July 2014 Institutional or Ad Hoc Enforcement Dispute Resolution Procedures Dispute Resolution Procedures Arbitration Under UAE Law: Arbitration agreements are currently governed by the UAE Civil Procedure Law No.11 of 1992 (the Civil Procedure Code). Article 203 of the Civil Procedure Code allows parties to provide in their contract or by subsequent agreement that any dispute between them in relation to the contract shall be referred to arbitration for resolution. The same article also makes it mandatory that any such agreement for bit ti t b i iti i d f th bit ti i i t b arbitration must be in writing in order for the arbitration provision to be enforceable. UAE Arbitration Centres; UAE Arbitration Centres; Abu Dhabi Commercial Conciliation and Arbitration Centre ADCCAC Dubai Chamber of Commerce and Industry Conciliation and Arbitration Centre (known as Dubai International Arbitration Centre DIAC) ( ) Dubai International Financial Centre DIFC YC, July 2014 Dispute Resolution Procedures Dispute Resolution Procedures Challenging an Award: The arbitrator's decision is final and binding on both parties (unless they otherwise agree) and can be challenged only on the basis of serious irregularity, lack of jurisdiction, or on a point of law. Where the award is incomplete or contains an error, the correct course of action is to apply to the arbitral tribunal and the tribunal can correct the award or make an additional award as appropriate. New York Convention (also known as New York Arbitration Convention): Th C ti th R iti d E f t f F i A bit l The Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The two basic actions contemplated by the New York Convention are the recognition and enforcement of foreign arbitral awards and the recognition and enforcement of foreign arbitral awards and the referral by a court to arbitration. UAE made entry into force on 19 November 2006. YC, July 2014 Dispute Resolution Procedures in FIDIC Dispute Resolution Procedures in FIDIC How standard forms of contract deal with Dispute Relevant Clauses in FIDIC 87: How standard forms of contract deal with Dispute Resolution Sub-Clause 67.1 Engineers Decision Sub-Clause 67.2 Amicable Settlement Sub-Clause 67.3 Arbitration Relevant Clauses in FIDIC 99: Sub-Clause 3.5 Determinations ..If agreement is not achieved, the Engineer shall make a fair determination in accordance with the Contract, taking due regard of all relevant circumstances Sub-Clause 20.5 Amicable Settlement Sub-Clause 20.6 Arbitration YC, July 2014 Dispute Resolution Procedures in FIDIC Dispute Resolution Procedures in FIDIC How standard forms of contract deal with Dispute Relevant Clauses in FIDIC 99 (cont): How standard forms of contract deal with Dispute Resolution Sub-Clause 20.2 Appointment of the Dispute Adjudication Board Sub-Clause 20.3 Failure to Agree Dispute Adjudication Board Sub-Clause 20.4 Obtaining Dispute Adjudication Boards Decision Sub-Clause 20.7 Failure to Comply with Dispute Adjudication Boards Decision In the event that: ( ) P t f il t l ith thi d i i (c) a Party fails to comply with this decision, then the other Party may, without prejudice to any other rights it may have, refer the failure itself to arbitration under Sub-Clause 20.6 [Arbitration] Sub Clause 20 4 [Obtaining Dispute Adjudication Boards [Arbitration]. Sub-Clause 20.4 [Obtaining Dispute Adjudication Board s Decision] and Sub-Clause 20.5 [Amicable Settlement] shall not apply to this reference. YC, July 2014 Sub-Clause 20.8 Expiry of Dispute Adjudication Boards Appointment M006 - Conflict Avoidance, Management d i l i d and Dispute Resolution Procedures Study Check List y How standard forms of contract deal with conflict avoidance and dispute resolution f Conflict avoidance Partnering Negotiation Negotiation Mediation Conciliation Adjudication Arbitration P ti P t l Pre-action Protocol Litigation Expert Witness YC, July 2014 p Independent Expert Determination (RICS APC Pathway Guide, March 2014 Quantity Surveying and Construction) M006 - Conflict Avoidance, Management d i l i d and Dispute Resolution Procedures Q ti ? Questions ? What is arbitration? What are the things we should write in the contract under the arbitration? How do you deal with the arbitration award in a dispute between a UK contractor and a UAE Employer? Why dispute adjudication board in FIDIC 99 and advantages? Is adjudication used in UAE? Is DAB practicing in UAE? How various forms of contracts deal with conflict avoidance? YC, June 2014 M006 - Conflict Avoidance, Management d i l i d and Dispute Resolution Procedures Many Thanks ! YC, June 2014