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M006 - Conflict Avoidance, Management and

Di t R l ti P d Dispute Resolution Procedures


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
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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
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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.
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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.
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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.
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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
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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
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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.
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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