Dispute Resolution Construction Contracts

A construction contract is a mutual or legally enforceable agreement between two parties based on written policies and criteria. There are one or more property owners and one or more contractors participating. The owner, often referred to as the ’employer’ or the ‘client,’ has full authority to decide what type of contract should be used for a specific development to be built and to set the legally-binding terms and conditions in a contractual agreement. A construction contract is an important document because it outlines the scope of work, risks, duties, and legal rights of both the contractor and the owner. Disputes can often arise in construction contracts and in this article, dispute resolution  construction contracts, we take a look at the process involved and the options available to you in resolving any conflicts.

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Free Initial Telephone Discussion

For a free initial discussion with a member of our New Enquiries Team, get in touch with us today. We are experienced in dealing with all the legal aspects of dispute resolution in construction contracts, and once instructed, we will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help ensure you are on the best possible footing from the start and also avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or click here to make a free enquiry and a member of the team will get back to you.

Alternative Dispute Resolution (ADR)

Alternative Dispute Resolution (ADR) is the preferred way of resolving conflicts outside of court in the construction business. ADR methods include Adjudication, Mediation, Arbitration, and Conciliation, which are more expedient and economical than court proceedings.

Disputes frequently happen between Main Contractors, Subcontractors, and Building Employers when additional work or alterations are required, the work is delayed, or the project’s expenses increase, all of which can result in a claim by one of the parties. ADR is frequently employed to address payment-related disputes, including interim payments, pay less notices, payment notices, default payments, final accounts, and retention difficulties. In addition, it is utilised for construction delays, claims for an extension of time, loss and expenditure, repudiatory breach of contract, contract termination, flaws, practical completion, unfinished work, design failure, changes, and frequently liquidated damages, bankruptcy, or insolvency.

What are the benefits of alternative dispute resolution?

The optimal technique of alternative dispute resolution for settling a construction dispute will rely on the nature of the disagreement and the construction contract in play. There are various advantages to employing ADR instead of court processes to resolve your construction dispute.

Cost

ADR reduces your costs because you do not need a Construction Solicitor, Barrister, or Construction Lawyer as there are no time-consuming and expensive court processes. Through the “Pre-Action Protocol for Construction and Engineering Disputes,” the courts frequently require the use of ADR as a preliminary step (PAP).

With litigation and court processes, often only a portion of costs are recoverable, and the unrecoverable court costs (about 75% of the total) might potentially outweigh your claim and spiral out of hand.

Speed

Unlike court proceedings, which can be long, ADR can swiftly resolve disagreements. The dominant technique of alternative dispute resolution in the construction sector is adjudication, which can often resolve a dispute within 28 days after its initiation.

Confidentiality

ADR is a private process between disputing parties that, unlike litigation, is not available to the public. This facilitates the maintenance of connections among General Contractors, Subcontractors, and Building Owners and makes the process simpler.

There are a number of methods in resolving a dispute in construction and they include the following:

Adjudication

Adjudication is a contractual or statutory procedure for the expeditious resolution of a dispute in the interim. It is handled by a third-party arbitrator appointed by the conflicting parties who is impartial. Typically, adjudication is subject to a fixed timeline, and only provided documentation may be relied upon. An adjudicator may assume an inquisitorial role, which may involve initiating an investigation into the facts and the legislation.

Until they are overturned through arbitration or litigation, adjudication decisions are final. There is no appeal right, and the right to resist enforcement is limited. Legal fees are granted at the arbitrator’s discretion, unless the contract specifies otherwise. Based on the judgments and written materials received from both parties, the complete procedure can take up to 28 days, and the decisions are binding. If the parties to a construction contract cannot agree on a method for adjudication, the law will impose one.

Section 108 of the Housing Grants, Construction, and Regeneration Act must be complied with throughout the adjudication of contracts. Either the adjudicator is stated in the contract or picked by a nominating body, which is normally indicated in the contract.

If the parties cannot agree on Housing Grants, Construction, and Regeneration Act-compliant procedures, the Act applies the Scheme for Construction Contracts standards.

Mediation

In mediation, a neutral third party assists disputing parties in settling their differences using effective communication and negotiation techniques. This is a participatory, structured, and dynamic approach. All mediation participants are strongly encouraged to fully engage in the process. Mediation is a “party-centred” strategy since it focuses primarily on the needs, rights, and interests of the parties.

Among the most essential factors of mediation are:

• The mediator is an impartial third party.
• Typically, engagement is optional on both sides.
• Compliance with the final agreement is often high because the parties collaborated to find a solution that is mutually acceptable.
• The expenses are substantially less than alternative settlement tactics.

A further benefit is the preservation of the parties’ relationship. The concept of “good faith” plays a role in the resolution of disputes using this technique, which is legally binding only with the permission of both parties.

Arbitration

Arbitration is a private, contractual dispute resolution procedure. It specifies that disputes will be handled by a neutral arbitrator or arbitration panel selected by the disputing parties. Disputes are resolved using pertinent facts, documents, and legal principles.

The arbitration procedure is administered by an appointed arbitrator in accordance with any applicable contractual stipulations and the statutory regulatory framework established by the courts. There are few opportunities for appeal, and the successful side is usually awarded legal fees.

Advantages:

• The proceedings are private, but not necessarily confidential.
• The parties are able to agree on a knowledgeable arbitrator.
• The arbitrators’ decision can be enforced like a court judgement.

Disadvantages

• The parties must pay for both the arbitrator and the venue.
• If a party fails to comply with the arbitrator’s instructions, the arbitrator has limited powers of compulsion or punishment, which can significantly slow down the proceedings.
• Limited rights of appeal.

Conciliation

Conciliation is a method of alternative dispute resolution (ADR) in which a neutral third party (the conciliator) guides negotiations towards a mutually acceptable outcome.

It is comparable to mediation, but there are important distinctions. The major difference between conciliation and mediation is the role of the conciliator. A mediator may strive to find common ground without claiming responsibility for formulating or providing settlement suggestions, or they may play a much more active and direct role in expressing their opinion and developing settlement alternatives.

A conciliator will review each party’s case, make an evaluation of their individual merits, and recommend settlement alternatives. The parties are then responsible for deciding whether or not to accept the conciliator’s ideas, as the conciliator will not compel them to do so.

Conciliation has both advantages and disadvantages.

Advantages

• Conciliation is most often used as a preventative method for resolving disputes, whereas the assistance of a mediator or arbitrator is commonly sought when a conflict is ongoing and it seems likely that it will end up in court. Typically, a conciliator is chosen when the likelihood of a conflict is high.
• The conciliation procedure is conducted in strict confidence and without prejudice, so that if no settlement is reached, the reasons for failure are kept between the parties.

Disadvantages

The fundamental disadvantage of conciliation is that parties must recognise the authority of the conciliator and desire a settlement for it to be effective. If any of the parties involved do not approach the procedure with the proper mindset, it may be a waste of time and resources.

How we can help

We have a proven track-record of dealing with construction contracts and dispute resolution. Not only does our construction department have extensive legal experience and knowledge of construction law but we also have the benefit of chartered surveying experts. The nature of construction disputes often involves potentially complex areas of law. We will guide you through the process and ensure all checks are carried out swiftly and efficiently and we firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.

How to Contact Our Construction Solicitors

It is important for you to be well informed about the issues and possible implications of construction contracts and dispute resolution. However, expert legal support is crucial in terms of ensuring a positive outcome to your case.

To speak to our Construction solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.

Authored by Ben Posted in Construction, News Tagged as

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