#041 Conflict avoidance, management and dispute resolution procedures 🥊
Updated: Jun 26, 2022
Hello friends 👋🏼
This week we are covering the Conflict avoidance, management and dispute resolution procedures competency.
I would highly advise you to go through the candidate guide and the QS pathway guide to understand the basic requirements.
There is also an RICS black book for this competency - use this link to get there! I have used the black book to identify the key bits of information required for level 1 and I have separated them under the headings below. It’s a really well developed black book and useful for building your knowledge on this topic.
DISCLAIMER: The following is not an exhaustive set of notes, but it's an attempt to help those who, like me at the beginning, did not know where to start! Please feel free to let me know if I have said anything incorrect or out of date!
So what is Level 1 Conflict avoidance, management and dispute resolution procedures competency all about?
The RICS note that to demonstrate competence at Level 1, you need to demonstrate your ability to:
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 pathway.
Techniques for conflict avoidance, management and resolution, in particular by the appropriate selection of procurement routes and use of processes such as partnering
Interestingly, the RICS black book is silent on this bullet point, but here’s a link to a journal paper I found on this topic!
How various forms of contract deal with dispute avoidance and their provisions for resolving disputes
In the JCT contracts, there is an express reference to adjudication in the Articles of Agreement, together with a further express reference to arbitration or legal proceedings. In respect of adjudication, either party may refer a dispute to adjudication under the applicable clauses of the relevant JCT contract. The procedural rules are those of the Scheme for Construction Contracts.
The parties can either then select arbitration at the outset of the works, or court proceedings. The benefits of arbitration are that the dispute will remain private, however, an employer might choose court proceedings litigation on the basis that it will be easier in court to bring a claim for defects, as those claims are often multi-party. Multi-party disputes are not so easily dealt with in arbitration. Finally, most JCT contracts provide that the parties could, by agreement, seek to resolve any dispute or difference through mediation. The JCT produces a helpful guide for mediation.
The NEC3 provides an adjudication procedure for use in the UK when the HGCRA applies. The final dispute resolution procedure is a ‘review by the tribunal’. If either party is dissatisfied with the adjudicator’s decision then they may refer that dispute to the tribunal. The tribunal may be a court or arbitration.
If the parties are to refer their dispute to arbitration, then they need to make it clear in the contract data that arbitration applies. In addition, the parties will also have to identify an arbitration procedure, the place where the arbitration is to be held and the default method for appointing an arbitrator.
Legal and statutory requirements for the resolution of disputes in construction contracts
Pre-Latham Report the resolution of disputes was done in the courts which were detrimental to the finances of small contractors who did not have the funding capital to take on large employers in a legal battle. To avoid this, construction contracts (in the UK) have a base level of protection called the ‘Scheme’ which requires adjudication to be used in the first instance. See below.
Conflict management and dispute resolution procedures within the construction process including negotiation, mediation and conciliation, adjudication, arbitration, independent expert determination and litigation.
According to the RICS Conflict Avoidance black book, there are three pillars of dispute resolution:
Negotiation - referring to the problem-solving efforts of the parties
Mediation or Conciliation - a third-party intervention which does not lead to a binding decision
Adjudication - final outcome is determined by a third party who does impose a binding decision on the parties. If the Construction Act applies to a contract then either party may request the appointment of an adjudicator to be made within seven days of serving a Notice of Dispute, and the adjudicator has 28 days from the issue of the Referral within which to issue a decision. That decision will bind the parties and in most cases be readily enforceable in the Technology and Construction Court (TCC). The TCC is the part of the High Court that deals with construction-related litigation.
Under the banner of Adjudication there are further techniques:
Expert Determination: The parties agreed by a contract that a third party will make a binding decision on them. The terms are therefore governed by the contract. In most cases, the decision of an expert will be final, and it will not be possible to appeal that decision. This means that the decision of an expert finally determines the dispute without further recourse.
Arbitration: For arbitration to apply, the contract between the parties must contain a written agreement to arbitrate. Where it applies the parties might choose to refer to or incorporate an arbitration procedure, such as the Construction Industry Model Arbitration Rules. Alternatively, the arbitration can simply be covered by the applicable legislation, such as the Arbitration Act 1996. Many jurisdictions around the world contain legislation dealing with arbitration, often based upon the United Nations Commission on International Trade Law (UNCITRAL) Model Arbitration Law.
Litigation: The courts have inherent jurisdiction to hear a dispute in respect of just about anything. In the absence of any other procedure, the parties will have a right to refer their matter to an appropriate court. The procedure is governed by the Civil Procedure Rules, and the nature, complexity and value of the dispute will determine which court will hear a particular dispute. Courts have the widest jurisdiction and in addition to determining disputes and declarations, they can also issue Charging Orders, summon witnesses and involve the third parties in the dispute as necessary.
Dispute Boards: Interestingly, dispute boards sit somewhere between avoidance and dispute resolution. Their genesis is in Dispute Review or Recommendation Boards (DRBs). Three dispute board members are appointed at the start of a project. They become familiar with the project by reviewing some of the project documentation and also regularly visiting the site during the course of the work. If and as issues arise they can be asked for their non-binding recommendation. This may relate to general disagreements or disputes. Often their recommendations are used to resolve disputes between the parties, thus avoiding formal disputes
That’s it for this post folks! As always if you have queries please give me a shout.