There are many forms of dispute resolution (also referred to as Alternative Dispute Resolution or ‘ADR’) for parties to resolve their disputes outside of the court system. When parties to a construction contract are unable to resolve their differences by negotiation they may agree upon mediation or arbitration, but it more likely that one or other party will refer the matter to adjudication under the Construction Contracts Act.
The roles in dispute resolution
Not every difference of opinion is a dispute. However when parties to a construction contract cannot resolve their differences they may choose to engage a dispute resolution practitioner to assist the parties (e.g. mediation) , to provide a non-binding recommendation, or to provide a binding decision (e.g. adjudication or arbitration).
Other roles involved in dispute resolution include:
- Witnesses – the people involved in the dispute, or in events relating to the dispute, who provide evidence, the form of which depends on the selected process.
- Advocates – the parties may engage legal counsel or other experienced person to advocate their position or represent them in the proceedings.
- Expert witnesses – expert reports are primarily to assist the decision maker and the parties to understand complex technical or contractual issues. Their opinion should be based on given facts, their expertise and professional judgment.
Features of dispute resolution processes
The features and benefits of an effective dispute resolution process include:
- Processes are usually well-defined and flexible
- The parties control the process to the extent that they have agreed or is allowed by the relevant statute
- The parties in dispute engage with each other, rather than through their lawyers or representatives
- Focus on the dispute, not legal niceties and procedural objections
- Process is ‘outcome oriented’
- Focus on keeping costs low and speed of resolution
- Process is managed by a person who acts neutrally but firmly, in the interests of the parties and their right to natural justice
- Confidentiality may be preserved.
Whether these features appeal to disputing parties will depend on many factors including the selected ADR process, the nature of the dispute, the perceived strength or weakness of each party’s position, and any ongoing relationship between disputing parties.
What parties expect
Compared with litigation, parties to a dispute may reasonably expect the following benefits from a dispute resolution process:
- Improved prospect of settlement
- Improved satisfaction with the outcome or process
- Reduced time
- Reduced costs
- Increased compliance where an outcome has been agreed (e.g. in mediation), or where the parties have agreed upon a decision-maker (arbitration, adjudication)
- The potential to reduce or limit (and possibly repair) damage to business and other relationships (e.g. mediation).
Which dispute resolution process is the most suitable?
Disputing parties’ reasons for choosing a particular dispute resolution process vary: a realistic alternative to litigation, an attempt to explore settlement options before or after litigation commences, a desire to maintain confidentiality, or to preserve an ongoing business relationship, speed, cost or otherwise.
The choice of process may depend upon the parties’ willingness to participate, their desire to resolve the dispute, whether they can agree on a dispute resolution practitioner, the relative strengths and weaknesses of their positions, any ongoing relationships, and many other factors.
The parties (or in the case of adjudication, the referring party) select the process and the dispute resolution practitioner, who should lead the parties through the process with a firm hand, keeping time tight and cost as low as practicable, taking into account the extent to which the parties have or may agree upon process options.
Options for dispute resolution
Peter practices in the following dispute resolution processes
- Adjudication (Construction Contracts Act 2002 – for construction disputes only)
- Mediation for a construction and commercial disputes
- Arbitration (under the Arbitration Act 1996)
- Expert Determination
- Dispute Resolution Board