Construction Law, Lecture material Andualem Endris Yadeta

1. Dispute and Dispute
Resolution Mechanisms
Mada Walabu
University
Construction Law
CoTM 4241
Chapter 4
College of Engineering
Construction Technology and Management Department
Instructor: Andualem Endris (M.Sc)
E-mail: andu0117@yahoo.com

2. What is Dispute?
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3. Disputes
• Dispute is a disagreement between parties
• Construction projects are generally complex, for
this reason, disputes are always present
• Involves many parties.
• When a project ends up in a dispute, the project
will fail to meet its original goals and
expectation.
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4. Disputes
• Clients will suffer from high legal fees, delayed
completion and occupation and general dissatisfaction.
• The contractor’s profits will diminish and to these will be
added additional legal fees.
• No winners under these circumstances
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5. Causes of Disputes
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6. Causes of Disputes
• May arise on a construction project for a number
of reasons:
 Late or non-payment for works satisfactorily
completed when payment is due.
 Inaccurate valuation of variations and works in
progress.
 Delays in the supply of general construction
information
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7. Causes of Disputes …Cont’d
 Late issue of instruction varying some sections of the
works, which disrupts the contractor’s progress and
program of works.
 Shortcomings, omissions and errors in contract
documentation giving rise to ambiguities in contract
requirements.
 Failure of contractor to construct the works diligently and
to program.
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8. Causes of Disputes …Cont’d
 Increase in scope of work (changes, extras and errors)
without proper consideration for extension of production
time.
 Acceleration to complete within original program without
proper agreement over the payment.
 Poor workmanship and failure to use specified materials,
skilled operatives and recognized methods.
 Failure to inspect works in progress regularly and
condemning only when works are completed.
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9. Causes of Disputes …Cont’d
• It can be deduced from the above list that the main areas
of construction disputes revolve around:
payments
contract documentation
Time and cost overruns
Construction information and site supervision
• Owing to their diverse status, the view points of the
project participants towards disputes areas vary.
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10. Alternative Dispute Resolution
Mechanisms (ADR)
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11. Dispute Resolution Mechanisms
• An introductory survey of the construction
industry’s commonly used dispute resolution
mechanisms.
• Negotiation
• Mediation
• Conciliation
• Dispute Review Boards
• Arbitration
• Litigation
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12. Negotiation
• Dispute resolution between the parties involving
only the parties
• Informal
– Conversations, emails, texts, phone calls
• Formal
– Meetings, documentation, presentations
• Resolution
– Regardless of how you got there:
Put it in writing
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13. Elevating the Negotiation
• Can’t settle at the jobsite level?
• Push the dispute “upstairs”
• Again, only the parties are involved
• May be multiple meetings
• Resolution must be written
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14. Mediation
• Mediation: Bringing in a respected, neutral,
uninvolved person to help everyone reach a
mutually acceptable resolution
– The mediator DOES NOT decide
– Mediation may not resolve a dispute
• Key Points
– Voluntary
– The resolution is binding, but the process is not
– You set the rules
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15. Mediation
• The Parties must agree to mediate
• The Parties must select a mediator
• The Contract may define mediation terms,
procedures, maybe even the mediator
• Select a mediator with whom you are
comfortable and who you believe will also be
credible with the other parties
• The mediator proposes several possible
solutions to the dispute.
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16. Mediation – The Process
• Parties provide the Mediator with information to
understand the dispute
• The Mediator chooses to meet individually with the
parties, or to call all parties together in a “joint
session”
• After a sufficient exchange of information, the
Mediator breaks the parties apart and begins shuttle
diplomacy
• The Mediator works for you – make the Mediator
work, not just shuffle back and forth
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17. Mediation – The Resolution
• Mediators DO NOT Decide
– The Parties decide
• The Mediator’s Proposal
– Not always offered
– May be requested
– NOT binding until all parties
accept
– The process is still voluntary
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18. Conciliation
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• Conciliation is a voluntary proceeding
• It requires that the parties be subject to a third
person (neutral or conciliator).
• The aim is to assist with legal or technical
aspects in the matter, in order to reach a
satisfactory arrangement.
• This practice is referred to as ‘reconciling’ the
parties in an attempt to find a common
agreement.

19. Dispute Review Boards
• A contractually defined process
• 3 members – all are neutral:
– Contractor nominated, Owner nominated
– Those two appoint the 3rd neutral
• Typically defined in the contract
– But can be established any time the parties agree to
do so
• Regular site visits
• Conducts hearings
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20. Dispute Review Board Hearings
• Frequently “no attorneys”
• Parties explain their case to the DRB
• Exhibits, Calculations, Presentations
• DRB hears and receives the information
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21. Dispute Review Board Decisions
• Check your contract – terms vary
• Typically non-binding but admissible
• Probably the best independent evaluation
you’ll ever get for your problem
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22. Arbitration
• Arbitration is the submission of a dispute to one or more
impartial persons for a final and binding decision, known
as an "award."
• Awards are made in writing and are generally final and
binding on the parties in the case.
• Many times contract defined
• Always an option if all parties agree.
• Variety of associations provide, arbitration services.
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23. Arbitrator Selection
• Big Benefit: You “choose” your Judge
• Must be confirmed independent and unrelated
• Look for folks who will understand your situation,
but without bringing too much bias and pre-
conceived resolutions
• Consider the expediency of a single arbitrator
versus the combined wisdom of a three-party
panel
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24. The Hearings
• NO Ex Parte communications
• Arbitrator sets schedule
• Proceedings are formalized through rules
• Evidence is presented through sworn testimony
• Arbitrator may question the witnesses and the
attorneys
• Arbitrator sets, with party input, closing briefs,
submission timelines, and form of decision
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25. The Decision
• The Final Decision is Final
• There are very few accepted ways to overturn a
Decision:
– The Arbitrator failed to hear evidence
– The Arbitrator was on the take, misbehavior
– The Arbitrator exceeded the powers granted to the
Arbitrator
• Other than winning an appeal using one or more of
those conditions – you are stuck with the Decision.
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26. Litigation
• May be a Federal or State Agency Court
– For example: Board of Contract Appeals,
• In a courtroom, you get to choose
– Judge: “Bench Trial”
• Yesterday, the Judge sentenced a rapist to life, today, the Judge
is hearing you argue about money and time
– Jury: Your “Peers”
• Check that jury pool – do any of them really understand the
nuances of a construction project?
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27. Litigation
• Getting There
– Many times contract defined
– Any party can initiate: “I’m gonna sue you!”
• Adjudicator Selection
– The Judge is assigned
– You may be able to choose a jury
• Hearings
– Strict rules of evidence
– The Court’s schedule – your schedule just doesn’t
matter.
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28. Litigation - Process
• Tedious
• Discovery – produce Everything
• Motions, Legal Positioning
• Pre-Trial Hearings
• Finally, the Hearing itself
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29. Litigation - Frustration
• Cancel your vacation, you’re scheduled to be in
Court
• But the Court will delay, as you are “trailing”
• When you do arrive, plan on lots of vacant times
• Remember the money you are paying your team
to be there.
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30. Litigation – The Decision
• Likely one party won’t like the Decision
• That party will then file for appeal
– Frequently used to encourage the “winner” to accept
an immediate but smaller resolution
• After years in Trial Court, now years of Appeals
– And you may be sent back for a new trial
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31. Litigation Closure
I’m just so glad,
I won…
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32. Assignment 2
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• Briefly discuss the difference between
‘Conciliation’ and ‘Mediation’
• Differentiate between ‘Judge, and
‘Jury’.
Submission Date: January 09, 2020

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Thank You!