CONTRACTUAL DISPUTES

&
METHOD OF RESOLUTION
Disputes
•formal disagreement between two parties or more
than two parties

Causes of Disputes
1. The contract conditions
2.The design deficiency.
3.The construction process.
4.The consumer reaction.
5. Time
1. The contract conditions
•Failure to account the cost

•The lack of perfection in the contract documents

•The psychology of people in construction

2. The design deficiency.

• Risks.

•Defective plans
3. The construction process.

4. The consumer reaction.

•The public owner.

•Warranties.

5. Time
Method of Dispute Resolution

1. Adjudication

2.Expert Determination

3.Litigation

4.Mediation

5.Arbitration
Adjudication
•neutral third party will give a decision on a dispute
•pay first, argue later’ way for parties to resolve their
disputes.

Advantages
•neutral person who is not involved in the day to day
running of the construction contract.
•quick process, which is designed to ensure that cash flow
is maintained during the construction process.
•less expensive than court proceedings

Disadvantages
•The dispute needs to have been aired between the parties
before adjudication can be commenced.
•The adjudicator’s powers are limited.
Expert Determination
•often used to resolve issues or disputes of a specialist nature
•used when there is a valuation dispute

Advantages
•It is an economic way of finally resolving valuation disputes.
•less expensive and a quicker and a less formal method of
dispute resolution

Disadvantages
•use of experts is much less tied to legal processes and
therefore it is more difficult to challenge the decision of an
expert.
•expert’s report cannot generally be enforced without further
court or arbitration proceedings.
Litigation
•most common forms of resolving disputes within the
construction industry

Advantages
•The claim process will be managed by a judge throughout.
•Complex issues can be dealt with.
•The parties will obtain a binding and enforceable decision

Disadvantages
•It is often a slow process.
•likely to be the most expensive way of resolving a dispute.
Mediation
•commonly used within the construction industry to
resolve disputes

Advantages
•It can help maintain a business relationship.
•relatively quick, with mediations usually lasting 1-2
days.
•usually considerably less costly than litigation.

Disadvantages
•If the parties do not come to an agreement, the dispute
will remain unresolved and the cost of mediation will
have been wasted.
Arbitration
•parties will agree to refer the dispute to a third party
•Disputes are resolved on the basis of material facts,
documents and relevant principles of law.

Advantages
•Like mediation, arbitration is a confidential process.
•Parties can agree on an arbitrator who has relevant
experience in the matter.
•Compared to court proceedings, it is a relatively quick
process.
•It is highly flexible compared to court proceedings.

Disadvantages
•There are limited appeal rights available during
arbitration.
•Costs can be similar to litigation at court.
FIDIC contract document

•form of contract contains a tiered dispute revolution

provision (clause 20).

•no notice of dissatisfaction has been served by a party,

the decision of the DAB is said to be ‘final and binding’
and the decision can be enforced summarily through
arbitration (clause 20.7).

•decision of the DAB is said to be ‘binding’ but it’s not

‘final’, since the underlying dispute may still be referred
to arbitration for final determination (clause20.6).
JCT Contracts

•The SBC11 Clause 9.1 requires the parties to seek to

resolve any dispute or difference arising through
mediation, when JCT Standard Building Contract
documents are used.

•Under SCB11, the adjudicator may either e named in a

contract or nominated by the nominating body
identified in the contract. The adjudicator may consider
any information properly submitted by the parties and
reach a decision within 28 days of receipt of the referral
notice
THANK YOU