Construction Dispute Resolution Techniques

The construction industry ranks among the leading industries riddled with disputes and conflicts. Claiming in construction industries has also gone up as a result. To get to the end of these claims, parties in the past had to go through tiresome and frustrating court proceedings.

However, there are new alternative dispute resolution methods aggrieved parties can resort to. These methods are fast and cheaper compared to litigation.

Here are some of the construction dispute resolution techniques used today.

Adjudication

This is a form of dispute resolution whereby a third party, usually neutral, will offer a decision on a certain dispute. Depending on your country, you can seek resolution in a court of law and afterward the winner in the adjudication can enforce the decision.

This decision is binding as long as it’s not litigated or arbitrated in a review process.

The Benefits

• The adjudicator is neutral to both parties. This means the person has no relationship with either party.
• Adjudication is a fast process and thus it ensures there’re no cash flow issues during construction.
• Adjudication is way cheaper than going to court.
• You can still proceed to court, but in most instances, the adjudicator’s decision will resolve the dispute.

The Disadvantages

• The adjudicator has limited powers
• The matter in question has to be brought before the parties involved first, then the adjudication will start afterward.
• You’ll still need a court order to compel the losing party to comply with the adjudication.

Litigation

There exist numerous alternative dispute resolution methods, but the court still ranks as one of the most popular dispute resolution methods. Many countries have an industrial court which deals with construction-related cases where a specialist judge will lead the case.

The Advantages

• The judge will handle all claims throughout the case.
• The decision spelt out by the judge is binding and is also enforceable.
• The court can deal with complicated issues.

The Disadvantages

• Court proceedings can take a long time to conclude.
• It’s also quite expensive to go through court processes.
• The proceedings are held in public, thus there’s no privacy although there are exceptions.

Arbitration

In this process, both parties agree to place the matter before a third party referred to as the arbitrator. The process is guided by basic law principles, documents and material facts. In addition, there’re various acts under the law which ensure a fair process.

Most of the time, arbitration is used for international construction dispute resolution, but it can also be used for domestic purposes.

The Advantages

• The entire process is confidential
• Both parties can agree to place the matter before an experienced arbitrator.
• The process is faster compared to court proceedings.
• It’s also more flexible than litigation.

The Disadvantages

• Both parties will bear the costs involved including paying for the venue and the arbitrator.
• The costs involved can be more or less similar to a court process.
• It’s difficult for an aggrieved party to appeal.
• If one party fails to adhere to the decision, it’s difficult to impose sanctions or even compel them to comply.

Expert Determination

Expert determination is used to determine matters of professional nature, for example, construction. This method ranks as one of the most informal dispute resolution methods. However, most the time, this method is used to resolve valuation issues.

Both parties involved in the dispute will sign a contract which makes the decision issued by the expert binding.

The Benefits

• It offers a cheaper way of dealing with valuation disputes
• Compared to formal methods, expert determination is faster.

The Disadvantages

• Using an expert makes it difficult to challenge their decision since they are more or less led by legal processes.
• Most of the time, you’ll need arbitration or court proceedings for the expert’s decision to be enforced.

Conclusion

There are numerous ways to settle disputes in the construction industry. Therefore, it’s crucial that both parties take a look at the options available in order to select the best alternative dispute resolution which suits the situation.

In addition, it’s vital for the parties to understand the various clauses in the contracts they enter into.

Image source – CDM architects