lec 6 - dispute resolution
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Lec 6 - Dispute ResolutionTRANSCRIPT
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Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
IN THE NAME OF ALLAH, THE
BENEFICENT, THE MERCIFUL
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METHODS OF DISPUTE RESOLUTION ANDCLAIM MANAGEMNT
Associate Professor
Dr. Rafiq Muhammad Choudhry
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
BSc(Civil-Honor), MSc(CEM), PhD(CEM), Post-Doctorate (CEM), MIE(Pak), PEEmail: [email protected]/ [email protected]
Head, Department of Construction Engineering and Management-NIT
School of Civil and Environmental Engineering (SCEE)
National University of Sciences and Technology (NUST)Sector H-12, Islamabad
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FIVE PRINCIPLES OF CONTRACTADMINISTRATION
There are five basic rules of contract interpretation
that are quite important in construction contracts. 1. The Document Must Be Read as a Whole.
Every provision of the document is presumed to have meaning.
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
superfluous.
2. The Document Will Be Construed against the Drafter.
A contract may be subject to more than one reasonable
interpretation, with a court is facing the burden of choosing.
In such a situation, the document is interpreted in favor of
the party that did notdraft the document.
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FIVE PRINCIPLES OF CONTRACTADMINISTRATION
There are five basic rules of contract interpretation
that are quite important in construction contracts. 3. The Document Supersedes All Previous Discussions. The rule is that the document speaks for itself.
When it does nots eak for itself or is so inarticulate no one
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
knows what it means, oral testimony is permitted to determinethe intended meaning of the parties.
4. Specific Terms Govern over General Terms.
A narrowly drafted provision, customized to fit a specific
situation, more accurately reflects the parties' intentions
than a "general provision of the contract.
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FIVE PRINCIPLES OF CONTRACTADMINISTRATION
There are five basic rules of contract interpretation
that are quite important in construction contracts. 5. The Document Must Be Read in the Context of theTrade.
If a word or hrase has a commonl acce ted meanin in
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
the construction industry, that meaning must be appliedwhen reading and interpreting construction contracts.
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CLAIMS AND DISPUTES The term claim applies to the differences that are
developed during the life of the contract.
When claims or disputes arise, the owner and
engineer must pay careful attention to the
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
procedures set forth in the contract documents forthe handling of claims and disputes.
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Most construction contracts reflect that the contractor
will make claims, for example progress payment claims
and claims for extension of time.
Most claims do not ive rise to dis utes. Mere failure
CLAIMS AND DISPUTES
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
to pay a claim does not necessarily mean that there is adispute. A dispute arises when one party makes a claim
against the other and the other party disputes liability
either expressly or by conduct.
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About:
Certification Valuations
Instructions
Dispute
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
Determination
Opinion
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MECHANISMS TO RESOLVE
CONTRACTUAL DISPUTES
Traditional Methods Negotiation
Arbitration
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
Litigation
Alternative Dispute Resolution (ADR)
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In litigation the parties take their disputes to
Courts of Law for their resolution.Litigation is a lengthy process (time consuming)
At times it becomes an endless rocess.
LITIGATION
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
Judgment by Court of original jurisdiction isfollowed by a series of appeals/reviews/ revisions
in the hierarchy of Courts of Appeal
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LITIGATION METHOD FOR DISPUTE RESOLUTION
Litigation
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
Figure: Construction Claims Resolution Alternatives - LITIGATION.
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MECHANISMS TO RESOLVE
CONTRACTUAL DISPUTES
Alternative Dispute Resolution (ADR)
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
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ALTERNATIVE DISPUTE RESOLUTION (ADR)
Process and Technique that fall outside the Judicial
process followed by Courts.- ADR is generally classified into following sub-types:- Negotiation
- Mediation
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
- Conciliation- Arbitration
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ALTERNATIVE METHODS FOR DISPUTE
RESOLUTION - NEGOTIATION
Negotiation
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
Figure: Construction Claims Resolution Alternatives - NEGOTIATION.
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Participation is voluntary
No third party is involved to facilitate the resolution
process.
Mediation
NEGOTIATION
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
Arbitration Third party is involved
Conciliation
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A form of settlement negotiation facilitated by a
neutral third party and non-binding resolution
An act of bringing two parties in dispute closer
MEDIATION
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
toget er towar agreement t roug a ternat vedispute resolution (ADR), a dialogue in which a
neutral third party, the mediator, using appropriate
techniques, assists two or more parties to help them
negotiate an agreement on a matter of common
interest.
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ALTERNATIVE METHODS FOR DISPUTE
RESOLUTION - MEDIATION
Mediation
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
Figure: Construction Claims Resolution Alternatives - MEDIATION.
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An alternative dispute resolution (ADR), process
whereby the parties to a dispute agree to utilize the
services of conciliator who meets with the parties in
an attempt to resolve their differences
CONCILIATION
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
Main goal is to conciliate by seeking concessions
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Conciliation is an ADR process whereby the
parties to a dispute agree to utilize the services
of a conciliator, who then meets with the partiesseparately in an attempt to resolve their
differences.
CONCILIATION
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
He/She does this by lowering tensions, improvingcommunications, interpreting issues, providing
technical assistance, exploring potential solutions
and bringing about a negotiated settlement.
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PEC Rules of Conciliation (Rule 1 to Rule 21)
Professional Engineer
PEC may recommend names
One or odd number
Costs are borne b the arties
CONCILIATION
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
Payment within 30 days
Completed with 90 days, if not extended
Either party have option to go to arbitration or litigation
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Conciliation differs from mediation in that the
main goal is to conciliate, most of the time by
seeking concessions. In mediation, the mediatortries to guide the discussion in a way that
optimizes parties needs, takes feelings into
Conciliation and Mediation
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
account and reframes representations.
In conciliation the parties seldom, if ever, actually
face each other across the table in the presenceof the conciliator.
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Conciliation differs from arbitration in that the
conciliation process, in and of itself, has no legal
standing, and the conciliator usually has no authority
to seek evidence or call witnesses, usually writes no
Conciliation and Arbitration
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
, .
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NOTICE OF DISPUTE ENGINEER DECISION
AMICABLE SETTLEMENT
DISPUTE SETTLEMENT UNDER FIDIC - 1992
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
ARBITRATION
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DISPUTE ADJUDICATION BOARD (DAB) FIDIC
1999
DAB & DRB
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
DISPUTE REVIEW BOARD (DRB)
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ARBITRATION
A legal technique for the resolution of disputesoutside the court where in the parties to a dispute
refer it to one or more persons by whose decision
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
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ALTERNATIVE METHODS FOR DISPUTE
RESOLUTION - ARBITRATION
Arbitration.
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
Figure: Construction Claims Resolution Alternatives - ARBITRATION.
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An ancient practice
Under English law, the first law on arbitration wasthe Arbitration Act,1697.
HISTORY OF ARBITRATION
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
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ARBITRATIONS UNDER VARIOUS LAWS &
PROCEEDURAL RULES
PEC Rules of Arbitration (Rule 1 to Rule 41)
Professional Engineer
One or 3 arbitrators
Hear witnesses and hold meetings, documentary or oral
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
,
Award within 6 months.
ARBITRATION UNDER LOCAL LAW
INTERNATIONAL ARBITRATION
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Any dispute shall be finally settled under
the provisions of the Arbitration Act, 1940 as
amended thereof for the time being in force.
MODEL ARBITRATION CLAUSE LOCAL ARBITRATION
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
The said arbitrator/s shall have full power to openup, review and revise any decision, opinion,
instruction, determination, certificate or valuation of
the Engineer related to the dispute.
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Any dispute .. shall be finally settled, unless
otherwise specified in the Contract, under the Rules
of Conciliation and Arbitration of the International
Chamber of Commerce by one or more arbitrators
MODEL CLAUSE FOREIGN ARBITRATION
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
.
The said arbitrator/s shall have full power to open up,
review and revise any decision, opinion, instruction,
determination, certificate or valuation of the Engineer
related to the dispute.
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ARBITRATION
UNDER ARBITRATION ACT, 1940
ARBITRATION PROCEEDINGS
CIVIL COURT ACTIONS UNDER ARBITRATION
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
ACT, 1940
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Popular Arbitration Procedures followed in
Pakistan
No particular arbitration procedure has beenprescribed by the Arbitration Act, 1940. In the
absence of a standardized arbitration procedure,
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
any one of the following two procedures with the
consent of parties:
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(i) Reliance on Documentary Evidence
Reference of Dispute (Statement of Claim) filed bythe Claimant > Written Reply (Statement of
Defense) filed by Respondent > Rejoinder filed by
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
ram ng o ssues ocumen su m a yboth parties > Written Submittal > Arguments > Award.
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Reference of Dispute (Statement of Claim) filed by
the Claimant > Written Reply (Statement of Defense)
filed by Respondent > Rejoinder filed by Claimant >
Framing of Issues > Examination of Claimant and
(ii) Reliance on Oral Evidence:
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
Award.
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a) Filing of Award in the Court:At the request
of any party to the arbitration agreement or any
person claiming under such party or if so directed
by the Court the arbitrator (s) umpire shall cause
1. COURT ACTIONS UNDER ARBITRATION ACT, 1940
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
e awar or a s gne copy o o e e n e
Court. Together with the award any depositions
or documents which may have been taken and
proved before them are also filed in the Court
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Once the arbitration award has been filed in the
Court for making it rule of the Court, the Court
issues Notice of Filing of Award in the Court.
This notice is served upon all the parties to the
2. COURT ACTIONS UNDER ARBITRATION ACT, 1940
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
ar ra on awar . ny par y w ng o e
objections against the award for setting it aside or
wishing that the award be corrected or remitted
back to the arbitrator for reconsideration can do
so within the prescribed period of limitation
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3. COURT ACTIONS
UNDER ARBITRATION ACT, 1940
Where the Court sees no cause to remit the awardor any of the matters referred to arbitration for
reconsideration or to set aside the award, the Court
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
award, and upon the judgment so pronounced a
decree follows and no appeal lies from such decree
except on the ground that it is in excess of or not
otherwise in accordance with the award.
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The Court passes such judgement after
the time for making an application to setaside the award has expired.
4. COURT ACTIONS UNDER ARBITRATION ACT, 1940
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
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Appointment of arbitrator
Removal of arbitrator
Setting aside the Award
Enlargement of time for making the award
5. COURT ACTIONS UNDER ARBITRATION ACT, 1940
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
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ARBITRATION OR LITIGATION?
Almost all construction contracts include provisions
for binding arbitration of future disputes.
Parties to the construction process often gain a falsesense of security from having an arbitration clause in
their contracts.
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
n er ot ar trat on an t gat on, t e part es are
asking an outside party to resolve their disputes.
Common sense dictates that the quickest, most
economical way is for the parties to resolve the
dispute themselves, without intervention of others.
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ARBITRATION OR LITIGATION?
Arbitrary Arbitrators
Arbitrators are normally not bound by rules of law.
For example, as an owner you may have insisted that
contracts include a clause providing the contractor shall
not be entitled to any damages for delay.
Though courts have held such clauses as enforceable, there
Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
is nothing to prevent an arbitrator from ignoring the clause
and awarding the contractor damages for such delays.
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Dr. Rafiq Muhammad Choudhry
Head, Department of Construction Engineering & Management, SCEE, NUST
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