dispute resolution technique

Engineering and Construction Law and Contracts

Chapter 18 Contract Dispute Resolution Techniques

Associate Professor

Dr. Rafiq Muhammad ChoudhryBSc(Civil-Honor), MSc(CEM), PhD(MSE), Post-Doctorate (CEM), MIE(Pak), PE

Email: [email protected] / [email protected]

Head, Department of Construction Engineering and Management-NIT

School of Civil and Environmental Engineering (SCEE)

National University of Sciences and Technology (NUST)

Sector H-12, Islamabad

mailto:[email protected]

mailto:[email protected]

Dr. Rafiq Muhammad ChoudhryAssociate Professor and Head, Department of Construction Engineering and Management 2

CHAPTER EIGHTEEN - CONTRACT DISPUTE RESOLUTION TECHNIQUES

The traditional dispute resolution process with alternative dispute resolution techniques added to it

is shown below



Contract Claims Occur at any stage in the execution of

construction contracts Typical causes of claims

Differing site conditions Delays Design errors or changes Interpretation differences Acceleration or suspension of work Construction failures Additional work Deleted work

If differences are not settled one of the parties files a change order or a claim



Information and Communication Technology (ICT) and the Electronic Marketplace Complicates dispute resolution process due to

the technologies not having been addressed yet by the legal system and contractual practices

Three legal ICT issues:1) admissibility of emails in court proceedings2) electronic signatures in global and national commerce act3) the Elegal European commission research



Building Information Modeling Provides capability of creating three

dimensional models and four dimensional schedules

Allows for quantity take offs to be completed by the program

Allows for integrated project delivery using collaborative agreements such as concensusdocs



Contract Negotiations Requires both parties to compromise to settle a

claim In construction 90% to 95% of construction claims

are settled through negotiations (right up to court dates)

Negotiators try to persuade opposing parties to relinquish one or several claims if awarded another large claim

Requires bargaining with opposing party Saves time and money if claims are settled using

negotiations



Negotiators - Traits Required Preparation and planning skill Knowledge of subject matter Ability to understand the true interests of the

firm Ability to think clearly and rapidly under

pressure Ability to express thoughts verbally Good listening skills



Negotiators - Traits Required: Patience Ability to persuade others Ability to understand others Ability to control emotions Ability to maintain flexibility



Contract Mediation Inserts a neutral third party into the negotiating

process to help reach a settlement Used to help control losses and damages Preserve relationships, clarify issues, and secure

agreements Used to augment negotiations



Arbitration Either binding or nonbinding If nonbinding either party could sue if not

satisfied with the results of arbitration Federal arbitration act applies in contracts for

interstate commerce American arbitration association provides

guidelines (see Appendix J)



Arbitration Neutral third party or several people are hired to

evaluate evidence, listen to arguments of both parties, and provide a decision and settlement award

Arbitrators are from the American arbitration association or state or local arbitration associations

Arbitrator may not have any type of affiliation with the owner or the contractor

Parties to arbitration provide arbitrator with construction contract, drawings, and other documents



Advantages of Arbitration: Less time than litigation Less expensive than litigation Lawyers not required Private proceedings - helps preserve

reputations Location, time, and arbitrators all selected by

disputing parties not the court system Rules of evidence do not apply Do not follow precedent law



Advantages of Arbitration: At the conclusion of the arbitration proceedings

the decision has to be made in thirty days (4 months)

No punitive damages If award is not paid the party files a petition with

the courts If no response to the petition within ten days it

becomes a judgment Sureties are not bound by arbitration awards Have to file a separate lawsuit against the surety



Litigation One party sues another in the court system Reasons not to use litigation

The results of lawsuits become part of the public record, which could be viewed by anyone, and this could be damaging to the reputation of a firm or produce unwanted publicity in newspapers, on television, or on the internet.

The cost of litigation could be prohibitive since there are filing fees, court costs, and legal fees.

Lawsuits could take years before they reach the court docket. Lawsuits are tried in courtrooms where it is difficult to

demonstrate engineering or construction concepts without being able to see the actual items being described in court cases.



Litigation Reasons not to use litigation:

Court proceedings require that cases follow rules of evidence where items may only be introduced as evidence if they are first introduced during the testimony of witnesses.

Cases are argued based on precedent law and this requires the investigation of previous legal cases in order to locate similar cases that could be used to argue the merits of the current case and this requires that cases focus on legal not technical issues.

The decisions rendered by the court could be appealed if one of the parties is able to prove that the trial was not conducted properly.

Disputants risk settlements that might include damages in addition to actual losses.



Dispute Review Boards Board members are hired at the beginning of

projects Could be resident at construction job sites Hold weekly meetings to settle claims Construction dispute review manual explains

DRB process Used on government public works projects



Alternative Dispute Resolution Techniques: Mediation/arbitration - mediator switches role to

be arbitrator if no agreement is reached during mediation

Early neutral evaluation - mediator provides an evaluation on the merits of the case to each party

Minitrials - actual proceedings presented to company executives with authority to authorize settlements



Alternative Dispute Resolution Techniques: Rent a judge - hire a lawyer or former judge to

arbitrate a case Court annexed arbitration – Dispute resolution

procedure that is available within the court system. both sides present case to lawyers, the decision is not binding, and the case could still be heard in court. If both parties have not waived the appeal process.



Alternative Dispute Resolution Techniques: Summary jury trial –are used while disputants are

waiting for their case to be tried in the court system; they are considered to be Mock trails.

Trial presented to a jury before the real trial and the results are presented to the judge who presides over negotiations in his or her chambers

Both parties know how the case might be settled by a jury and this knowledge is used by the judge to influence the disputants to settle the case during negotiations.


Thank You

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