1. Dispute and Dispute
Resolution Mechanisms
Madawalabu
University
Construction Law
CoTM 4241
Chapter 4
College of Engineering
Construction Technology and Management Department
Lecture by: Andualem Endris (M.Sc)
andu0117@yahoo.com
3. Disputes
• Dispute is a disagreement between parties
• Construction projects are generally complex, for
this reason, delays and 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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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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11. Dispute Resolution Mechanisms
• An introductory survey of the construction
industry’s commonly used dispute resolution
mechanisms.
• Negotiation
• Mediation
• 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
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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. 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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19. 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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20. 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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21. 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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22. 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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23. 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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24. 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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25. 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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26. 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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27. Litigation - Process
• Tedious
• Discovery – produce Everything
• Motions, Legal Positioning
• Pre-Trial Hearings
• Finally, the Hearing itself
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28. 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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29. 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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