During a construction project, there are often complications. Generally, claims arising from a construction contract relate to an extension of time, additional work or variations, a claim for payment, poor workmanship or liquidated damages.
Most queries we receive through the FIS Legal Helpline relate to disputes of this nature and this article provides a brief introduction to the dispute resolution procedures that are available.
The main dispute resolution procedures are adjudication, arbitration, litigation and a type of alternative dispute resolution (ADR) known as mediation.
Adjudication is a statutory right that cannot be contracted out of. It is often seen as a quick and cost-effective means of resolving disputes and is generally considered to be successful in achieving its aim of maintaining cash flow during the course of construction projects. It is appropriate for disputes relating to delay and disruption, extension of time claims and final account disputes. It is often included or referred to in construction contracts.
Litigation is the term used to describe proceedings in Court to enforce or defend a legal right. It can be settled by agreement between the parties before the trial but it usually involves applications being made at Court and Court hearings. Litigation can be lengthy, which can make it an expensive option.
Arbitration is an alternative to litigation.
All parties must agree to submit the dispute to arbitration and the rights and obligations of the parties arise from the arbitration agreement itself. Arbitration proceedings are confidential and the parties have the choice of where the arbitration takes place. The decision of an arbitral tribunal is final and binding.
Mediation is a form of ADR where the parties agree to appoint an impartial mediator to help resolve the dispute by facilitating discussions. This process is voluntary and is held on a ‘without prejudice’ basis so it cannot be referred to openly. If the parties reach a settlement, that is written down and the settlement agreement can be enforced in Court.
This note is just a very brief overview. If a dispute arises, you should obtain legal advice to understand your options and responsibilities. FIS members can call Bond Dickinson on the Legal Helpline (0191 230 8860), or email firstname.lastname@example.org