Dispute resolution technique

Engineering and Construction
Law and Contracts
Chapter 18 Contract Dispute Resolution
Techniques
Associate Professor
Dr. Rafiq Muhammad Choudhry
BSc(Civil-Honor), MSc(CEM), PhD(MSE), Post-Doctorate (CEM), MIE(Pak), PE
Email: rafiq.choudhry-scee@nust.edu.pk / choudhry03@gmail.com
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

CHAPTER EIGHTEEN - CONTRACT DISPUTE
RESOLUTION TECHNIQUES
The traditional dispute resolution process with
alternative dispute resolution techniques added to it
is shown below

Associate Professor and Head, Department of Construction Engineering and Management 2

 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
proceedings
2) electronic signatures in global and
national commerce act
3) 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



 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.



 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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