rics apc - m006 - conflict avoidance

M006 - Conflict Avoidance, Management and Di t R l ti P dDispute Resolution Procedures

By: Yasas Chandradasa MSc, BSc (QS) Hons, MRICS, MACostE

M006 - Conflict Avoidance, Management d i l i dand Dispute Resolution Procedures

Description of Competency This competency covers the quantity surveyors

involvement with the avoidance, management and

resolution of disputes in construction projects.

Candidates should be aware of the various processesCandidates should be aware of the various processes

and techniques commonly used in the industry. They

should have a detailed understanding of how these

are applied in practice.

(RICS APC Pathway Guide, March 2014 Quantity Surveying and Construction)

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Mandatory Competency Level 1

Level 1Demonstrate knowledge and understanding of the techniquesfor conflict avoidance, conflict management and disputeresolution procedures including for example adjudication andarbitration, appropriate to your APC pathway.

Level 2Provide evidence of practical application in your area ofpractice having regard to the relevant law.

Level 3Level 3Provide evidence of the application of the above in the contextof advising clients in various circumstances.

(RICS APC Pathway Guide, March 2014 Quantity Surveying and Construction)

YC, July 2014


Study Check Listy How standard forms of contract deal with conflict avoidance and

dispute resolution

f Conflict avoidance

Partnering

Negotiation Negotiation

Mediation

Conciliation

Adjudication

Arbitration

P ti P t l Pre-action Protocol

Litigation

Expert Witness

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Independent Expert Determination(RICS APC Pathway Guide, March 2014 Quantity Surveying and Construction)

Conflict Avoidance and ManagementConflict Avoidance and Management

What is Conflict?

1. A situation which people, group or countries are involved in a

serious disagreement or argument,

3. A situation in which there are opposing ideas, opinions

feelings or wishes; a situation in which it is difficult to choose

(Oxford Advanced Learners Dictionary)

Conflict Avoidance in Construction ContractConflict Avoidance in Construction Contract

Pre-Contract Stage

Post-Contract Stage

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Pre-Contract StagegHave a carefully drawn up set of Contract documents atthe begging of a project to ensure that there is no orminimum ambiguity.

Prepare Tender documents with proper coordination among various

trades (architectural, structural, MEP, etc.)

U St d d M th d f M t Use Standard Methods of Measurement

Allow sufficient time

Appoint qualified professionals

Chose the correct procurement path

Use standard forms of Contracts (CoC)

Provide proper answers for tender queries & distribute them to all

tenderers

Provide Correct information at the right time

Carry out proper tender evaluation

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Post-Contract StagegAdministrate the Contract by fully competent ContractAdministrators, in accordance with the ContractAgreement .

Properly discharge the obligations and the liabilities in timely manner

Have a proper knowledge of their rights

How standard forms of contract deal with conflict avoidance FIDICavoidance FIDIC

Provide clear definitions and interpretations

Clear explanations of the parties rights and obligations

Clear explanations of the Engineers duties and authorities

Clear explanations of the procedures; e.g. Variation procedure

Priority of Contract Document

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Dispute Resolution ProceduresDispute Resolution Procedures

What is Dispute?

An argument or a disagreement between two people, group or

countries(Oxford Advanced Learners Dictionary)

Litigation

Dispute Resolution Procedures

Alternative Dispute Resolution

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Litigation:

The process of resolving disputes by filing or answering

a complaint through the public court system

When to Litigate Where negotiations have proved unsuccessful and there is no

right of adjudication (in UK) and/or Arbitration; or

Where there is no dispute resolution clause in the contract; or

Where there is a litigation clause in the contract Where there is a litigation clause in the contract

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Advantages of Litigation: judgments of the court are readily enforceable;

judgments are subject to very limited rights of appeal;

the quality of judges is usually very high;

the court and judge's time is free (subject to the payment of court fees);

an array of interim remedies, such as injunctions, is available to support

the process;

th i bl t d l il ith thi d ti the process is able to deal easily with third parties;

judges are usually full-time and are therefore very experienced. Arbitrators

in contrast usually only sit as arbitrators once in a while;

legal costs are recoverable from the losing party; legal costs are recoverable from the losing party;

claims can be brought against several defendants in the same action; and

the processes are detailed, well defined and widely understood.

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Disadvantages of Litigation: proceedings are often time-consuming and complex. The process requires

the use of solicitors and/or barristers, and is therefore often expensive;

the courts are not able to deviate from the Civil Procedure Rules (CPR).

They are relatively inflexible;

the process is necessarily adversarial. This often leads to conflict and a

destruction of any goodwill between the parties;

th t t th bli d th d the courts are open to the public and the press; and

the losing party has to pay the costs of the winning party (subject to any

offers) thus turning the attention of the parties very quickly form an

argument over damages to an argument over who will pay the costsargument over damages to an argument over who will pay the costs.

Pre-action Protocol to agree a pre-requisite procedure before commencing the litigation.

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Alternative Dispute Resolution (ADR):

ADR is a collective description for methods of resolving

disputes without the need to go to court

These include:

MediationCommon Advantages of ADR

Less adversarial Expert Witness Adjudication

Arbitration

Less adversarial Confidentiality No or less destruction of any goodwill and

Arbitration

Dispute Boards

Expert Determination

business relationship between parties

(RICS, 2014)

Negotiation

Conciliation

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Conciliation


Negotiation:

The principles of negotiation in the context of a dispute are similar to the

principles of negotiation in any other context. Each party has expectations

and a lower limit (usually expressed in monetary terms). Where the lower

limits overlap, it should in theory be possible to negotiate a settlement.

However, the situation is rarely this straightforward.

(http://www.isurv.com, 2013)

Mediation:

Mediation is the name given to a confidential process whereby parties to a

dispute invite a neutral individual to facilitate negotiations between them

with a view to achieving a resolution of their dispute.


Conciliation:

Similar to mediation but the independent third party (conciliator) gives

his/her opinion on the dispute.

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Expert Witness :

A person who is a specialist in a subject, often technical, who may present

his/her expert opinion without having been a witness to any occurrence

relating to the lawsuit or criminal case. It is an exception to the rule against

giving an opinion in trial, provided that the expert is qualified by evidence of

his/her expertise, training and special knowledge.

E t D t i tiExpert Determination:

An independent expert is appointed jointly by the two parties to give an

expert opinion on the matter to be decided. The expert may have regard to

evidence submitted or may have a hearing and adopt what they consider to

be the most appropriate procedure. The expert's decision is not enforceable

directly by the courts and they are liable for action for negligence.


Dispute Boards:An independent board evaluates disputes as similar to the DAB in FIDIC1999 Red Book

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1999 Red Book.


Adjudication:

Adjudication is a statutory procedure by which any party to a

construction contract has a right to have a dispute decided by an

adjudicator. It is intended to be quicker and more cost effectiveadjudicator. 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), Pay now argue later.

The Adjudicator must generally decide the dispute in less than 42

days.days.

The decision is binding and is usually upheld by the Courts in the

UK. The scope of adjudication is set out in the provisions of the

Housing Grants, Construction and Regeneration Act 1996.

However, there is no law provision in UAE law.

No international enforceability

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No international enforceability


Arbitration:

Arbitration is a private form of binding dispute resolution,

conducted before an impartial tribunal, which emanates from the

agreement of the parties but which is regulated and enforced byagreement of the parties but which is regulated and enforced by

the state

(Latham & Watkins (2014), Guide to International Arbitration)

The arbitral tribunal can be made up of legal and/or industry

experts chosen by the parties or appointed by a professional bodyp y p pp y p y

that has been requested to do so by the parties.

Arbitration is a private and confidential process to a greater

degree.

It can provide for the quick, practical and economical settlement

of cross-border disputes.

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Advantages of Arbitration: Usually a confidential process;

More flexible in terms of procedure than litigation;

Allows the parties to choose the tribunal;

Can be a neutral forum (for international disputes);

Award is final and binding; and

Relatively easy to enforce the award internationally.

Main factors to be considered when drafting an arbitration clause or agreement;

Seat of Arbitration - The Arbitration Act 1996 (UK) defines the seat of the ( )

arbitration as its judicial seat. The seat of the arbitration determines the

procedural rules that govern the arbitration

Governing Law of Arbitration Agreement

Language of Arbitration

Number of Arbitrators

Scope of Disputes Covered

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Institutional or Ad Hoc

Enforcement


Arbitration Under UAE Law: Arbitration agreements are currently governed by the UAE Civil Procedure

Law No.11 of 1992 (the Civil Procedure Code).

Article 203 of the Civil Procedure Code allows parties to provide in their

contract or by subsequent agreement that any dispute between them in

relation to the contract shall be referred to arbitration for resolution.

The same article also makes it mandatory that any such agreement for

bit ti t b i iti i d f th bit ti i i t barbitration must be in writing in order for the arbitration provision to be

enforceable.

UAE Arbitration Centres;UAE Arbitration Centres; Abu Dhabi Commercial Conciliation and Arbitration Centre ADCCAC

Dubai Chamber of Commerce and Industry Conciliation and Arbitration

Centre (known as Dubai International Arbitration Centre DIAC)( )

Dubai International Financial Centre DIFC

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Challenging an Award: The arbitrator's decision is final and binding on both parties (unless they

otherwise agree) and can be challenged only on the basis of serious

irregularity, lack of jurisdiction, or on a point of law. Where the award is

incomplete or contains an error, the correct course of action is to apply to

the arbitral tribunal and the tribunal can correct the award or make an

additional award as appropriate.

New York Convention (also known as New York Arbitration Convention):

Th C ti th R iti d E f t f F i A bit l The Convention on the Recognition and Enforcement of Foreign Arbitral

Awards.

The two basic actions contemplated by the New York Convention are

the recognition and enforcement of foreign arbitral awards andthe recognition and enforcement of foreign arbitral awards and

the referral by a court to arbitration.

UAE made entry into force on 19 November 2006.

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Dispute Resolution Procedures in FIDICDispute Resolution Procedures in FIDIC

How standard forms of contract deal with Dispute

Relevant Clauses in FIDIC 87:

How standard forms of contract deal with Dispute Resolution

Sub-Clause 67.1 Engineers Decision

Sub-Clause 67.2 Amicable Settlement

Sub-Clause 67.3 Arbitration

Relevant Clauses in FIDIC 99: Sub-Clause 3.5 Determinations

..If agreement is not achieved, the Engineer shall make a fair

determination in accordance with the Contract, taking due regard of all

relevant circumstances

Sub-Clause 20.5 Amicable Settlement

Sub-Clause 20.6 Arbitration

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Dispute Resolution Procedures in FIDICDispute Resolution Procedures in FIDIC

How standard forms of contract deal with Dispute

Relevant Clauses in FIDIC 99 (cont):

How standard forms of contract deal with Dispute Resolution

Sub-Clause 20.2 Appointment of the Dispute Adjudication Board

Sub-Clause 20.3 Failure to Agree Dispute Adjudication Board

Sub-Clause 20.4 Obtaining Dispute Adjudication Boards Decision

Sub-Clause 20.7 Failure to Comply with Dispute Adjudication Boards

Decision

In the event that:

( ) P t f il t l ith thi d i i(c) a Party fails to comply with this decision,

then the other Party may, without prejudice to any other rights it may

have, refer the failure itself to arbitration under Sub-Clause 20.6

[Arbitration] Sub Clause 20 4 [Obtaining Dispute Adjudication Boards[Arbitration]. Sub-Clause 20.4 [Obtaining Dispute Adjudication Board s

Decision] and Sub-Clause 20.5 [Amicable Settlement] shall not apply to

this reference.

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Sub-Clause 20.8 Expiry of Dispute Adjudication Boards Appointment


Study Check Listy How standard forms of contract deal with conflict avoidance and

dispute resolution

f Conflict avoidance

Partnering

Negotiation Negotiation

Mediation

Conciliation

Adjudication

Arbitration

P ti P t l Pre-action Protocol

Litigation

Expert Witness

YC, July 2014

p

Independent Expert Determination(RICS APC Pathway Guide, March 2014 Quantity Surveying and Construction)


Q ti ?Questions ? What is arbitration? What are the things we should write in the contract

under the arbitration?

How do you deal with the arbitration award in a dispute between a UK

contractor and a UAE Employer?

Why dispute adjudication board in FIDIC 99 and advantages?

Is adjudication used in UAE?

Is DAB practicing in UAE?

How various forms of contracts deal with conflict avoidance?

YC, June 2014


Many Thanks !

YC, June 2014

rics apc - m006 - conflict avoidance

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