i Sorting t all out
In the current climate, it’s all too easy to end up in a dispute with a client or contractor. So what’s the best way to approach a situation and avoid a costly outcome to the blame game? Martin Wade explains the essentials every contractor should know
D
uring these tough economic times, finding yourself in dispute with a client, contractor or sub- contractor is not uncommon. It could result from a complex contractor situation, disagreements over
contractual responsibilities, payments issues or a host of other reasons. Here, we address some of the key issues any operator
in the construction industry should be aware of when it comes to dealing with disputes. It can be tricky to avoid or work through issues, but being aware of the fundamentals should help you steer clear of costly mistakes – and get the best result possible when the blame game begins...
Is there a dispute?
Before considering dispute resolution, ask yourself whether there is actually a dispute. This is important because usually if there is no dispute, there is no right of action. If challenged, the courts will determine whether a dispute exists and there is case law on the point. Two questions to ask: ‘Has the negotiation process
reached an impasse and is there something to be decided?’ And: ‘Has “reasonable time” elapsed to permit one party the time to crystallise its position?’
How do you resolve a dispute?
Having established there is a dispute, what to do now? There are four main ways to resolve construction disputes: arbitration, adjudication, litigation and mediation.
Arbitration
JCT Forms of Contract, the most common suite of contracts for building work in the UK, includes arbitration as the
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ECA Today Summer 2010
preferred dispute resolution procedure and, if selected by the parties at the time of signing the contract, will apply without the right to litigate. If no express agreement is included to use arbitration, then litigation will probably be an option. The award of an arbitrator is fi nal and binding with
no right of appeal, except on a point of law. Even when arbitration has been selected, there is always the statutory right to adjudicate (recognised by JCT), which will also usually apply even if not mentioned in non-standard contracts or purchase orders.
About the author
Martin Wade
Martin Wade is the head of the ECA Commercial Contracts and Legal Department.
Adjudication
Adjudication is intended to resolve disputes quickly, as they occur, although an adjudicator’s decision is not binding on the parties unless they have expressly agreed it will be. The successful party has the right to seek enforcement of an adjudicator’s decision by the courts and either party can also choose to refer the whole dispute back to litigation.
Litigation
Litigation is a court action and there is the opportunity to appeal against the judgment to the Court of Appeal and then to the Supreme Court (previously to the House of Lords).
Mediation
Mediation, promoted by JCT and encouraged by the courts, occurs before the formal process of either arbitration or litigation is commenced. It is where two parties come together through an impartial
mediator (facilitator) and look to resolve their differences dispassionately, often by common sense rather than points of principle. The parties have to reach their own agreement
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