Conflict Avoidance, Management & Dispute Resolution

Question 1

What is the cause of most Disputes?

Answer 1

• Changes (changes to scope of the works)
• Time related (delays to the project)
• Payment (late payment or not as agreed)

Question 2

How can a Conflict be avoided?

Answer 2

• Having clear communication
• Having robust employer requirements and design information
• Ensuring that all parties complete their obligations
• Maintaining and managing expectations

Question 3

Can you talk me through the different methods of Dispute Resolution?

Answer 3

• Negotiation
• Mediation
• Arbitration
• Adjudication
• Litigation

Question 4

Which of those offer a legally binding decision?

Answer 4

• Arbitration
• Litigation

Question 5

Do you know which of those Dispute Resolution methods are stated in the JCT Contracts?

Answer 5

D&B
- Mediation
- Adjudication
- Arbitration

Question 6

Do the RICS offer any kind of service to help avoid conflicts?

Answer 6

Yes, the Conflict Avoidance Process (CAP)

Question 7

Litigation is rarely used. Do you know why?

Answer 7

It is expensive & public.

Question 8

How does risk management reduce conflict / dispute?

Answer 8

• Risk management helps reduce conflict by actively managing risk before they become an issue. It puts in place mitigation measures to reduce the likelihood and impact of a risk happening.

Question 9

What is conflict avoidance?

Answer 9

• Conflict avoidance is the process of taking steps or implementing measures to prevent a dispute or conflict arising.

Question 10

Can the RICS help regarding dispute resolution?

Answer 10

• The RICS conflict avoidance process (CAP) is a contractual mechanism, which helps parties to avoid getting into pro-longed and damaging disputes. It is used to resolve conflicts early and protect reputation.
• CAP enables someone (a professional CAP advisor) who is a third party neutral (could be appointed by RICS) to come in and give the parties their knowledge, advice and recommendation.
• Non-binding – but parties can use the recommendation as a basis to arrive at a settlement.

Question 11

What is the CAP process?

Answer 11

• The parties to the contract identify an issue which has the potential to grow into a dispute and agree to seek out the intervention of CAP to help resolve it
• One or both parties request the appointment of a suitably experienced or qualified CAP member by the RICS ((and will complete a Dispute Resolution Service (DRS) application form))
• Within 5 days of appointment, the CAP member will contact the parties to set out how they will proceed / what information they require
• CAP member will aim to complete the full process within 28 days of appointment

Question 12

How much does the CAP process cost?

Answer 12

• Average cost of £12k per dispute / query
• Compared to between £50k-£500k for adjudication

Question 13

What is the RICS Conflict Avoidance Pledge?

Answer 13

• The RICS conflict avoidance pledge is a promise or commitment that a number of organisations have signed up to.
• By signing the pledge, the organisations are showing that they are committed to avoiding conflicts and to facilitate the early resolution of potential disputes.

Question 14

What is a dispute resolution?

Answer 14

• Dispute resolution is a term that refers to several processes that can be used to resolve a conflict, dispute or claim.

Question 15

What are the three pillars of dispute resolution?

Answer 15

• Negotiation
• Mediation
• Adjudication

Question 16

What are the two types of dispute resolution?

Answer 16

• Alternative Dispute Resolution
• Orthodox dispute resolution

Question 17

What is negotiation?

Answer 17

• Negotiations are informal discussions between parties on the core issues of the dispute with a view to resolving them on agreed terms.
• Relies upon the parties finding common ground, make compromises

Question 18

What are the two main approaches to negotiation?

Answer 18

• Competitive = One party aims to get the best deal possible
• Collaborative = Seeks a win-win situation

Question 19

What is mediation?

Answer 19

• Mediation is a process whereby the parties agree on and appoint an independent, neutral, third party to facilitate discussions between them

Question 20

What guidance is there on mediation?

Answer 20

• The JCT publish guidance on Mediation
• RICS Dispute Resolution Guidance Note

Question 21

What is conciliation?

Answer 21

• Conciliation is a similar process to mediation, a natural and independent conciliator is appointed to facilitate a settlement between the parties
• Conciliators plays a relatively active and direct role in the actual resolution of a dispute. They will advise the parties on certain solutions by making proposals for settlement
• Conciliator prepares a “Recommendation” which sets out their solutions to the dispute if either party disagrees.

From this, the recommendation imitates adjudication, then the final recommendation is final and binding

Question 22

What is adjudication?

Answer 22

• Adjudication is a dispute resolution process whereby an adjudicator is appointed to review evidence submitted by disputing parties to come to a decision and determine the outcome of the dispute.
• The Housing Grants Construction and Regeneration Act 1996 made it mandatory for adjudication to apply to every construction contract
• The decision is binding

Question 23

What changes to adjudication did the LDEDCA 2009 make?

Answer 23

• Adjudication clauses must be in writing, otherwise the Scheme for Construction contracts applies (Part 1 = adjudication, part 2 = payment)
• It is no longer allowable to define within a contract who should bear the cost of adjudication. Parties should share the cost of the adjudicator’s fees, and the expenses associated with the process in equal proportions.
• However, an adjudicator can determine that a party is liable to contribute to his fees and expenses in unequal proportions.
• Slip rule – Adjudicators have the right to correct errors in their decisions within 5 days of delivering that decision.

Question 24

What are the timescales for adjudication?

Answer 24

• Notice of Adjudication - Referring party sets out key information such as the details of the party, the contract, the nature of the dispute and the remedy sought.
• Appoint the adjudicator (within 7 days of the Notice)
• Referral notice (within 7 days of the Notice) = Setting out the referring party’s case together with supporting evidence and documentation.
• Response (within 7 days of the Referral notice) - this can be extended to 14 days = Responding party responds together with supporting evidence and documentation

Decision
o The adjudicator must give their decision within 28 days of the Referral notice
o Can be extended by 14 days with the agreement of the referring party
o The decision is binding unless it is challenged by litigation or arbitration.

Question 25

What is arbitration?

Answer 25

* Arbitration is a process whereby formal disputes are determined in private by an independent appointed arbitrator * Its an alternative to litigation * For it to apply, it must be written into the contract between the parties.

Question 26

What are the different arbitration procedures that can be done?

Answer 26

* Documents only (30 days) * Short hearings (30 days) * Full procedure (long)

Question 27

What is the Technology and Construction Court (TCC)?

Answer 27

* The technology and construction court handles disputes about buildings, engineering, and surveying. * The TCC does not normally handle cases with a value of less than £250k unless there is a good reason

Question 28

What is litigation?

Answer 28

Litigation is the process of taking legal action to resolve disputes or enforce rights through the court system.