1. Construction Contract
Dispute Resolution
Collaborating with the Opposition in a Litigious Situation
Presented at the Managing Risk in Construction Contracts and Projects conference on January 25, 2017 by
Justin DeMerchant, Associate Legal Counsel, SNC-Lavalin

2. Legal Disclaimer
This presentation is provided for informational purposes only and does not constitute legal advice or legal
opinions; it is offered only for general informational and educational purposes. These materials are
intended, but not promised or guaranteed to be current, complete, or up-to-date and should in no way be
taken as an indication of future results. You should not act or rely on any information contained in this
presentation without first seeking the advice of a lawyer.

3. If all you have is a hammer, everything looks like a nail.
~Proverb
Give a small boy a hammer, and he will find that
everything he encounters needs pounding.
~Abraham Kaplan

4. Why does dispute resolution matter to me?
Fundamental shifts in the industry
● ‘Real’ disputes are becoming more common
● Projects and structures are becoming more complex
● Risks are being allocated differently
● Parties are becoming more sophisticated

5. Major Points & Objectives
Drafting and using dispute resolution clauses effectively
● What does a ‘good’ dispute clause look like?
● Using dispute clauses effectively
Alternatives to litigation
● Project DR, mediation, arbitration, adjudication
Best practices for settling construction disputes
● When to settle
● Valuation considerations

6. Dispute Resolution Clauses
What makes a good dispute resolution clause?
● Clear
● Fair
● Facilitates amicable agreement

7. Dispute Resolution Clauses
Tips on drafting a clause that is clear, fair, and facilitates agreement
● Logical escalation of the dispute
○ Notice - do we really have a dispute?
○ Filing a dispute - here’s why we’re right
○ Responding to a dispute - here’s why you’re wrong
○ Senior intervention - can we make a business decision?
○ 3rd party intervention
● Obligations on the parties
○ Mandatory timelines for actions
○ Form of disclosure that’s appropriate for the step
● Decide on the role of ADR
○ Permissive or mandatory ADR process

8. Dispute Resolution Clauses
Using dispute resolution clauses effectively
● Document everything (but know what’s really important to document)
● Follow the process
○ Or alter the process… in writing
● Provide proper notice
○ Form, delivery, addressee
● Understand and set out everyone’s obligations
○ Especially the first move

9. Alternatives to Litigation
...is reaching an amicable agreement… that is, of course, not always possible
The best alternative to litigation...

10. Alternatives to Litigation
Mediation
● Non-binding
● Informal
● Lower cost
● Confidential, Without
prejudice
● Parties select expert
moderator
Arbitration
● Typically binding
● Quasi-judicial
● Costs can be prohibitive
● Confidential
● Parties select expert
decision maker
Litigation
● Binding
● Judicial
● Costs can be prohibitive
● Public & precedent setting
● Decision maker is
appointed

11. Alternatives to Litigation
Adjudication
● Binding subject to appeal
● Fast-tracked quasi-judicial
● Lower cost
● Confidential
● Issues are dealt with as they arise
● Parties or central organization select
decision maker
In Project Dispute Resolution
● Contractually agreed; often binding to a $
threshold
● Party defined process
● Lower semi-fixed costs
● Confidential
● Issues are dealt with on an ongoing basis
● Decision maker selected by parties at outset of
project
Key Advantages & Similarities:
● Developed to deal with issues during the project instead of letting them build and strain the
relationship between the parties; forcing the parties to combative positions
● Decisions of the third party encourage parties to act in good faith, and provide guidance to allow
better cooperation and mitigation

12. Settling Construction Disputes
Know what you want to achieve
● Be heard and understood
● Stand on principle
● Achieve the ‘best economic outcome’

13. Settling Construction Disputes
What types of disputes are ‘acceptable’
● Extra work
● Rework
● Design changes
● Schedule changes
● Interference claims
● Impacts claims
● Productivity claims
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14. Settling Construction Disputes
Valuation considerations
● Inflating disputes
● Clear entitlement vs. unclear entitlement
● Doing the math (markups, etc.)

15. Settling Construction Disputes
Understand the ‘real strength’ of your position
● Contractual
● Fairness
● Supportable and auditable
This is generally where there is a natural gap between the parties

16. Settling Construction Disputes
Risk and Legal Costs
● Inherent risks
○ Decision maker
○ Unknown documents
● Legal costs
○ Lawyers
○ Discovery
○ Time
Both parties have these costs

17. Settling Construction Disputes
When to settle and when to dig in
● Unnatural gap
● Future business
● Conduct of the other party
● Perception of the market

18. Concluding Points
● Fundamental change in the industry
● Document, document, document
● Some disputes are easier than others
● Natural strengths of the parties

19. Thanks

20. Questions?