Legal Update
The Benefits of Alternative Dispute Resolution By Nicola Webster, Associate Solicitor
Resolving disputes, particularly in the construction industry can be costly both in relation to time and money. Court action is one route parties may take to resolve an issue but alternative methods of dispute resolution are usually preferable for all parties. The construction industry has for a long time led the way in its adoption of alternative forms of dispute resolution to resolve disputes without recourse to the courts. Parties to a construction contract have a statutory right at any time to refer a dispute between the parties to adjudication. If a construction contract exists, then the parties to it cannot opt out of the statutory right to refer disputes to adjudication and, therefore, any other forms of alternative dispute resolution (ADR) are either voluntary or contractually agreed between the parties. Although traditional methods of dispute resolution like adjudication and arbitration are common in the construction industry, other forms of early intervention dispute resolution are available and are set out in the Guide to Conflict Avoidance and Dispute Resolution for the Construction and Engineering Industry prepared by the Conflict Avoidance Coalition Steering Group. Early intervention techniques include, Conflict Avoidance Panels, Early Neutral Evaluation, Project Based Dispute Boards, and Evaluative Mediation.
Conflict Avoidance Panels (CAP) Parties to a contract may opt to include a clause allowing either party to refer a potential or actual disagreement to a CAP. A CAP often consists of one to three members and each will have relevant expertise. The CAP's role is to facilitate communication between the parties and make recommendations on how the issues between them could be resolved. The CAP's recommendations are not binding but the hope is that where there is likely to be a continuing relationship between the parties, the CAP’s recommendations will be followed. One key advantage of a CAP is that because they operate during the course of the contract they resolve disputes at an early stage before they are allowed to escalate. Early Neutral Evaluation (ENE) ENE is a process by which an independent evaluator is appointed to give the parties to a dispute an early indication as to the likely outcome of their case if the matter were to proceed to court or arbitration – the purpose of which is to give the parties a base from which to negotiate settlement of the dispute. ENE is often particularly helpful if one party is seriously contemplating issuing court proceedings or other escalation of their dispute. Project Based Dispute Boards Dispute Boards tend to be project specific whereby the parties will generally agree
the identity of the board’s members (which is generally made up of three members although it can vary) at the outset of the construction project. Consideration will be given to identifying impartial individuals with relevant expertise. As the board is appointed at the outset, they will, therefore, be familiar with the project and have foresight of potential problems. There are different types of Dispute Boards, including Dispute Adjudication Boards, Dispute Conciliation Boards, and Dispute Review Boards (amongst others). Evaluative Mediation (EM) Unlike ordinary mediation, in EM, the mediator assesses the respective strengths and weaknesses of the parties’ cases in order to assist with facilitating an agreement to settle between them. Similarly to a standard mediation, the parties remain in control of the process meaning that they do not have to make any agreement they do not wish to make but the hope is that by receiving an objective analysis of their case, the parties will use this information to assist them in reaching a decision on settlement. If you would like to know more about ADR please visit girlings.com or call and ask for Nicola Webster, a specialist lawyer in commercial dispute resolution.
For further information, please contact Nicola Webster Associate Solicitor Tel: 01233 667 340 Email: nicolawebster@girlings.com
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