DISPUTE RESOLUTION

By

Upali Fernando
(Chartered Quantity Surveyor, Independent Adjudicator/
Arbitrator, Cost Engineer & Chartered Builder)

WHAT IS DISPUTE

Arguments lead to Disagreements

Disagreements lead to
Controversies
Controversies lead to Disputes
between the parties

WHAT IS RESOLUTION

Act of settling the arose Disputes

WHO ARE PARTIES TO THE

CONSTRUCTION CONTRACTS
MAIN CONSTRUCTION CONTRACT
Only The Employer and The Contractor are
parties to the Contract
Note
1.The Engineer is not a party to the Contract.
The Engineer is appointed by the
Employer to administer the Contract impartially.
The Employer is liable for the Engineers faults
vicariously.
2.Vicarious Liability
Master is liable for the servants faults.

SUBCONTRACT
Only the Contractor and Nominated/Domestic
Subcontractors are parties to the Contract.
SUPPLY CONTRACT
Only the Contractor/ or Employer and
Nominated / Domestic Supplier are parties to
the contract.
CONSULTANCY CONTRACT
Only the Employer and the Consultant/the
Engineer are parties to the contract.

FACTORS RELATED TO DISPUTES

Clauses related to the Conditions of

Contract
Technical issues
Parties involved
Biased decisions
Project Conditions
Third Party
Organizational Behavior
Cultural Problems
Magnitude

ADVERSARIAL DISPUTE RESOLUTION

In Litigation , arbitration, adjudication ,DAB
, Minitral are the parties are concern to win
their own arguments by skill and ability
lies in the arguing and scoring points over
each other.
Generally , these conducts are very little
subjective to amicable settlement.

NON-ADVERSARIAL DISPUTE RESOLUTION

Settle the dispute cordially and

amicably.
Parties may try to settle their dispute
even sacrificing some of their
entitlements for the settlement.
(Mediation ,Conciliation , etc.)

LITIGATION- (Adversarial)
Ultimate legal method for settling controversies or disputes
between and among persons, organizations, and the State.
In litigation process, a case (called suit or lawsuit) is brought
before a court of law suitably empowered (having the
jurisdiction) to hear the case, by the parties involved (the
litigants) for resolution (the judgement).
.

ALTERNATE DISPUTE RESOLUTION

(ADR)
ARBITRATION-(Adversarial)

This is one of the Alternate Dispute

Resolution (ADR) method . The
determination of a dispute by one or more
independent third parties (the arbitrators)
rather than by a court .
Arbitrators are appointed by the parties in
accordance with the arbitration clauses of
the relevant conditions of contract . The

ARBITRATION (contd)
The following chart explain the way of commencing arbitration as
indicated in the FIDIC red book

Dispu
te
Exists

Yes

no

Ask for E's

Determination- Cl.44.5

time ?

Determines no

yes

Agreeable
no

Yes

Resolved

Ask for
E's decision
Cl.67.1

84 days

70
days

56
days

If notice of intention to
commence Arbitration
is not given within 70 days
then the Engineer's
Decision becomes final
and
binding on the parties

E gives
yes
satisfied
decision

no

no

Give notice of intention to

commence Arbitration

attempt

amicable

settlement

Attempted
yes
satisfied

no

no

Finally settle under the

rules of
arbitration

yes

Resolved

yes

Resolved

ARBITRATION (CONTD)
Clause 2.3
Any communication given by the Engineers
representative to the contractorshall have the
same effect as though it had been given by the Engineer .
Provided that:
a).
b)If the Contractor questions any communication of the
Engineer s Representative he may refer the matter to the
Engineer who shall confirm , reverse or vary the contents
of such communication

ARBITRATION (CONTD)
Clause 67.1
If a dispute of any kind whatsoever arises
between the Employer and the
Contractor..including any dispute as to
any opinion , instruction ,determination , certificate or
valuation of the Engineer ,t he matter in dispute shall ,in
the first place be referred in writing to the Engineer with
a copy to the other party . Such reference shall
state that it is made pursuant to this clause. No
later than the eighty fourth day after the day on
which he received such reference the Engineer shall
give notice of his decision to the Employer and to the
Contractor. Such decision shall state that it is made
pursuant to this clause.
.

ALTERNATE DISPUTE RESOLUTION(CONTD)

ARBITRATION (Contd)
Clause 67.1 (contd)
If either the Employer or the Contractor be dissatisfied with any decision of the
Engineer ,or if the Engineer fails to give notice of his decision on or before the
eighty fourth day,then either the Employer or the Contractor
may,on or before the seventieth day give notice to the other party
with a copy for information to the Engineer,of his intention to commence
arbitrationno arbitrationmay be commenced unless such
notice is given.
If the Engineer has given notice of his decision ..and no notice of
intention to commence arbitration..has been given..on or
before the seventieth day .the said decision shall become final
and binding upon the Employer and the Contractor.

ARBITRATION (contd.)
Clause 67.2
Where notice of intention to commence arbitration as to a dispute
has been given..the parties shall attempt to settle
such dispute amicably before the commencement of arbitration .
Provided that unless the parties otherwise agree
,arbitration may be commenced on or after the fifty sixth day
.even if no attempt at amicable settlement thereof has
been made
Clause 67.3
Any dispute in respect of which:
a)the decision ,if any of the Engineer has not become final and
binding pursuant to Sub-Clause 67.1,and
b)amicable settlement has not been reached within the period
stated in Sub-Clause 67.2,
Shall be finally settled..under the Rules of Conciliation and
Arbitration of the International Chamber of Commerce by one or
more arbitrators appointed under such Rules

Procedure in Arbitration

a)Appoint according to prior arrangement

i) Institutional Arbitration agreement
Use institutional procedures/monitoring
ii) Ad-hoc arbitration agreement
Based on the parties agreement
b) Forward issue to Arbitrator
c) Exchange information/evidence
d) Proceed with the hearing according to the suitable metho
chosen by the Arbitrator as follows:
(i) Full-Process
* Fairly resemble Litigation model and procedure and
used for major
disputes
(ii)Documents-only
* Reach decision based on documents only. Mainly to

LAW RELATED TO ARBITRATION

Refer

Arbitration Act 1996 (United Kingdom)

Construction Industry Model Arbitration Rules (CIMAR)
Institute of Civil Engineers arbitration procedure 2006
Arbitration Act 1995 (Sri Lanka)
Arbitration Act 2001(Sri Lanka)
FIDIC conditions
JCT conditions
NEC conditions
ICTAD condition
Related Texts and Webs

ADJUDICATION-(Adversarial)
Adjudication is an Alternative Dispute
Resolution(ADR) process within the
construction industry has taken off with many
disputes now being resolved using the
Adjudication process as set out in the standard
forms of contract, sub-contract and consultant
agreements. 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)
.The Adjudicator must generally decide the
dispute in less than 42 days. Dispute shall be
adjudicated by a recognized Dispute Adjudications Board

Procedure in adjudication
*Notice of reference to for adjudication to the
other party in dispute
*Appointing/invoking the adjudication to prior
agreement
*Submission of the written claim
*Giving the defending party a chance to answer
the complaint
Obtaining evidence/submission
*Once heard the parties to the dispute
Adjudicator will issue the decision (after
performing site visit If necessary)

DAB (Dispute Adjudication

Board)
Is a job site Dispute Adjudication process,
typically comprising three independent
and an impartial persons selected by the
contracting parites.

Procedure in DAB
Similar to Adjudication.

A COMPARISON OF DISPUTE
RESOLUTION BOARDS AND
ADJUDICATION
The construction industry has always
had a special need for mechanisms to
resolve construction project disputes
promptly. The two newest and most
promising devices for providing real
time dispute resolution on construction
projects are the Dispute Resolution Board,
developed in the United States, and the
adjudication process, developed in
England.

1. Over one hundred years ago the construction

industries in both the United States and the United
Kingdom, because of the need to keep construction
projects moving, and because of the vast potential
for disputes and conflict on projects, developed a
two-step process for resolving disputes at the
project site: whenever a problem arose that the
parties could not immediately resolve they would
call on the project architect or engineer to make an
objective ruling on the issue. If that ruling did not
resolve the problem, the parties could then refer the
issue to a relatively informal ad hoc arbitration
process whereby an arbitrator promptly held a
hearing and issued a binding decision. These two
processes were designed to enable the parties to
put problems behind them and move forward with
the project.

2. Although the combination of these traditional

job site dispute resolution methods served
the construction industry reasonably well for
several generations, unfortunately during the
past 30 years they have ceased to be as
effective as they once were. The
architect/engineer (A/E) decisions are no
longer given the weight that have
traditionally been accorded to them; and
prompt, informal ad hoc arbitrations to
resolve discrete disputes are now practically
unheard of. Instead, arbitrations today tend to
be massive post-project proceedings that
involve a host of disputes that have.

ALTERNATE DISPUTE RESOLUTION (Contd)

MINITRIAL-(Adversarial)
The minitrial is an Alternative Dispute Resolution
(ADR) procedure that is used by businesses and the
federal government to resolve legal issues without
incurring the expense and delay associated with court
litigation. The mini-trial does not result in a formal
adjudication but is a vehicle for the parties to arrive at
a solution through a structured settlement process.

Procedure in Minitrial
As per the organizational
procedures

MEDIATION (Non-adversarial)
This is an Alternate Dispute Resolution (ADR)method in which
an independent third party (mediator) assists the parties involved
in a dispute or negotiation to achieve a mutually acceptable
resolution of the points of conflict .The mediator who may be a
lawyer or a specially trained non-lawyer ,has no decision-making
powers and cannot force the parties to accept a settlement.
Mediation is widely used in all sorts of disputes, ranging from
divorces to civil lawsuits to very complex public policy problems to
international conflicts. Many disputes that have not responded to
an initial attempt at negotiation can still be settled through
mediation. Mediation is of particular importance in long-running,
deep-rooted conflicts, as this type of conflict is rarely resolved
without such outside assistance. Even if the full range of
grievances cannot be resolved, mediation is often useful for
dealing with particular limited aspects of the wider conflict.

Procedure in Mediation

There is no hard and fast procedure for this method.

Ad-hoc procedures may adopt after negotiating
with the parties

Conciliation- (Non-adversarial)
Conciliation is an Alternative Dispute Resolution (ADR)
process whereby the parties to a dispute (including future interest
disputes) agree to utilize the services of a conciliator, who then
meets with the parties separately in an attempt to resolve their
differences. He does this by lowering tensions, improving
communications, interpreting issues, providing technical
assistance, exploring potential solutions and bringing about a
negotiated settlement.
Procedure of peaceful settlement of international disputes . The
matter of dispute is referred to a standing or ad-hoc commission
of conciliation ,appointed with the parties agreement. The
eventual report is expected to contain concrete proposal for a
settlement , which , however , the parties are under no legal
obligation to accept.

Procedure in Conciliation
There is no hard and fast procedure for
this method.
Ad-hoc procedures may adopt after
negotiating with the parties

QUANTITY SURVEYORS ROLE IN ALTERNATIVE

DISPUTE RESOLUTION PROCESS
Quantity Surveyor is the Cost and Contract specialist in Construction Industry.
His expertise and capabilities in Contract Administration , Construction
Cost , Construction Technology , Contract and Construction Law, Conditions
of Contract , Arbitration Acts, Project Management etc. , He is suitable and entitle
to perform any of the following roles in Alternative Dispute Resolution processes.
He can be:
a) an Arbitrator or Adjudicator or a member of arbitration tribunal,
b) a member of DAB,
c) a Consiliator or Mediater,
b) an expert witness in a Alternative Dispute Resolution process,
e) representing a party,
f) advice the Arbitrator , Adjudicator, tribunal or board
g) an independent expert to the dispute

ANY QUESTIONS

THANK YOU