7 Ways to settle a Construction Dispute  

A party to a construction contract has a range of options for the resolution of dispute. Litigation remains a mechanism for deciding and resolving disputes. Increasingly popular however are the different forms of alternative dispute resolution, such as adjudication, arbitration, mediation, expert determination, conciliation, mini trial or negotiation to name but 7 of the procedures available.

A major advantage of adjudication is that construction contracts have a statutory right to adjudication even if the contract does not expressly empower it.

Where the dispute is of a sensitive commercial nature the confidentiality of Adjudication proceedings can be an advantage. As in Arbitration the dispute can be determined by a technical expert without a public hearing. A private hearing is also available in mediation, negotiation and expert determination.

The adjudication procedure is clear and an advantage over alternative forms such as expert determination where the procedure can be less structured. The HGCR Act[1] sets out a tight timetable for adjudication. Unless the time period is extended, there must be an adjudicators’ decision within 28 days of service of the referral notice. While a case originated in the courts or arbitration can take a considerable time, in some cases years to conclude.

Given the tight time constraints adjudication can sometimes be seen to produce a quick decision rather than the right decision, especially as an appeal on fact or law from the adjudicator’s judgment is not available.

The adjudication can however be flexible to the parties’ requirements, the parties can if agreed increase the time parameters depending on the intricacy or volume of material to be considered. The 28-day adjudication time frame can be increased by a further 14 days if the referring party agrees and can be further increased as necessary if agreed by the parties

In most cases, adjudication will be a fraction of the cost of litigation or arbitration. However, an adjudicator cannot order legal costs to be paid by either party unless both parties have contracted that the adjudicator has such a power.

Whilst mediation or negotiation of a dispute is relatively inexpensive, private and flexible there is no guarantee of a resolution. While the decision of an adjudicator will be temporarily binding, and produces a quick settlement to the dispute, a party can still decide to take the dispute to Arbitration or Litigation.

A perceived disadvantage of adjudication is that it might be used as preparation for a final resolution through litigation or arbitration. Parties may be concerned about divulging a significant aspect of their argument in case the dispute proceeds to trial. However, if a party has a solid case then disclosure of the merits is only likely to promote a settlement. 

The referring party can prepare a detailed case to submit to adjudication at their ease, whichcan be viewed by some as an ambush.Section 108 (2) of the HCGR Act provides that a party may give notice ‘at any time’. Respondents however may not be prepared or able to respond inside the required timeframe so they are at a disadvantage without sufficient time to deal with the response or view and reply to further information arising. Statutory Adjudication can therefore present a potentially significant tactical advantage to the referring party.  

As part of our Management Consultancy services Vinco London Consulting can help construction businesses and trade subcontractors understand the options and benefits of Alternative Dispute Resolution available to them.

Contact us for further information we would love to hear from you

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