Lec 6 - Dispute Resolution

IN THE NAME OF ALLAH, THE Dr.
Rafiq Muhammad Choudhry BENEFICENT, THE MERCIFUL Head, Department of Construction Engineering & Management, SCEE, NUST
METHODS OF DISPUTE RESOLUTION AND CLAIM MANAGEMNT
Associate Professor Dr. Rafiq Muhammad Choudhry

BSc(Civil-Honor), MSc(CEM), PhD(CEM), Post-Doctorate (CEM), MIE(Pak), PE Email: rafiq.choudhry-scee@nust.edu.pk / choudhry03@gmail.com
Head, Department of Construction Engineering and Management-NIT School of Civil and Environmental Engineering (SCEE) National University of Sciences and Technology (NUST) Sector H-12, Islamabad
Dr. Rafiq Muhammad Choudhry Head, Department of Construction Engineering & Management, SCEE, NUST
FIVE PRINCIPLES OF CONTRACT ADMINISTRATION There are five basic rules of contract interpretation that are quite important in construction contracts.
1. The Document Must Be Read as a Whole.
Every provision of the document is presumed to have meaning. No provision should be presumed to be meaningless or superfluous.
2. The Document Will Be Construed against the Drafter.

A contract may be subject to more than one reasonable interpretation, with a court is facing the burden of choosing. In such a situation, the document is interpreted in favor of the party that did not draft the document.
3. The Document Supersedes All Previous Discussions.
The rule is that the document speaks for itself. When it does not speak for itself, or is so inarticulate no one knows what it means, oral testimony is permitted to determine the intended meaning of the parties.
4. Specific Terms Govern over General Terms.

A narrowly drafted provision, customized to fit a specific situation, more accurately reflects the parties' intentions than a "general provision of the contract.
5. The Document Must Be Read in the Context of the Trade.
If a word or phrase has a commonly accepted meaning in the construction industry, that meaning must be applied when reading and interpreting construction contracts.
CLAIMS AND DISPUTES The term claim applies to the differences that are developed during the life of the contract. When claims or disputes arise, the owner and engineer must pay careful attention to the procedures set forth in the contract documents for the handling of claims and disputes.
CLAIMS AND DISPUTES

Most construction contracts reflect that the contractor will make claims, for example progress payment claims and claims for extension of time. Most claims do not give rise to disputes. Mere failure to pay a claim does not necessarily mean that there is a dispute. A dispute arises when one party makes a claim against the other and the other party disputes liability either expressly or by conduct.
Dispute About: Certification Valuations Instructions Determination Opinion
MECHANISMS TO RESOLVE CONTRACTUAL DISPUTES Traditional Methods Negotiation Arbitration Litigation Alternative Dispute Resolution (ADR)
LITIGATION
In litigation the parties take their disputes to Courts of Law for their resolution. Litigation is a lengthy process (time consuming) At times it becomes an endless process. Judgment by Court of original jurisdiction is followed by a series of appeals/reviews/ revisions in the hierarchy of Courts of Appeal
LITIGATION METHOD FOR DISPUTE RESOLUTION Litigation
Figure: Construction Claims Resolution Alternatives - LITIGATION.

MECHANISMS TO RESOLVE CONTRACTUAL DISPUTES
Alternative Dispute Resolution (ADR)
ALTERNATIVE DISPUTE RESOLUTION (ADR) Process and Technique that fall outside the Judicial process followed by Courts. - ADR is generally classified into following sub-types:
Negotiation Mediation Conciliation Arbitration
ALTERNATIVE METHODS FOR DISPUTE RESOLUTION - NEGOTIATION Negotiation
Figure: Construction Claims Resolution Alternatives - NEGOTIATION.

NEGOTIATION
Participation is voluntary No third party is involved to facilitate the resolution process. Mediation Arbitration Conciliation
Third party is involved
MEDIATION A form of settlement negotiation facilitated by a neutral third party and non-binding resolution An act of bringing two parties in dispute closer together toward agreement through alternative dispute resolution (ADR), a dialogue in which a neutral third party, the mediator, using appropriate techniques, assists two or more parties to help them negotiate an agreement on a matter of common interest.
ALTERNATIVE METHODS FOR DISPUTE RESOLUTION - MEDIATION Mediation
Figure: Construction Claims Resolution Alternatives - MEDIATION.

CONCILIATION An alternative dispute resolution (ADR), process whereby the parties to a dispute agree to utilize the services of conciliator who meets with the parties in an attempt to resolve their differences Main goal is to conciliate by seeking concessions
CONCILIATION Conciliation is an ADR process whereby the parties to a dispute agree to utilize the services of a conciliator, who then meets with the parties separately in an attempt to resolve their differences. He/She does this by lowering tensions, improving communications, interpreting issues, providing technical assistance, exploring potential solutions and bringing about a negotiated settlement.
CONCILIATION PEC Rules of Conciliation (Rule 1 to Rule 21)

Professional Engineer PEC may recommend names One or odd number Costs are borne by the parties Payment within 30 days Completed with 90 days, if not extended
Either party have option to go to arbitration or litigation
Conciliation and Mediation Conciliation differs from mediation in that the main goal is to conciliate, most of the time by seeking concessions. In mediation, the mediator tries to guide the discussion in a way that optimizes parties needs, takes feelings into account and reframes representations. In conciliation the parties seldom, if ever, actually face each other across the table in the presence of the conciliator.
Conciliation and Arbitration Conciliation differs from arbitration in that the conciliation process, in and of itself, has no legal standing, and the conciliator usually has no authority to seek evidence or call witnesses, usually writes no decision, and makes no award.
DISPUTE SETTLEMENT UNDER FIDIC - 1992
NOTICE OF DISPUTE ENGINEER DECISION AMICABLE SETTLEMENT ARBITRATION
DAB & DRB
DISPUTE ADJUDICATION BOARD (DAB) FIDIC 1999 DISPUTE REVIEW BOARD (DRB)
ARBITRATION
A legal technique for the resolution of disputes outside the court where in the parties to a dispute refer it to one or more persons by whose decision they agree to be bound
ALTERNATIVE METHODS FOR DISPUTE RESOLUTION - ARBITRATION Arbitration.
Figure: Construction Claims Resolution Alternatives - ARBITRATION.

HISTORY OF ARBITRATION An ancient practice Under English law, the first law on arbitration was the Arbitration Act,1697.
ARBITRATIONS UNDER VARIOUS LAWS & PROCEEDURAL RULES PEC Rules of Arbitration (Rule 1 to Rule 41)
Professional Engineer One or 3 arbitrators Hear witnesses and hold meetings, documentary or oral evidence, Award within 6 months.
ARBITRATION UNDER LOCAL LAW INTERNATIONAL ARBITRATION
MODEL ARBITRATION CLAUSE LOCAL ARBITRATION
Any dispute shall be finally settled under the provisions of the Arbitration Act, 1940 as amended thereof for the time being in force. The said arbitrator/s shall have full power to open up, review and revise any decision, opinion, instruction, determination, certificate or valuation of the Engineer related to the dispute.
MODEL CLAUSE FOREIGN ARBITRATION Any dispute .. shall be finally settled, unless otherwise specified in the Contract, under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more arbitrators appointed under such Rules. The said arbitrator/s shall have full power to open up, review and revise any decision, opinion, instruction, determination, certificate or valuation of the Engineer related to the dispute.
ARBITRATION UNDER ARBITRATION ACT, 1940 ARBITRATION PROCEEDINGS CIVIL COURT ACTIONS UNDER ARBITRATION ACT, 1940
Popular Arbitration Procedures followed in Pakistan No particular arbitration procedure has been prescribed by the Arbitration Act, 1940. In the absence of a standardized arbitration procedure, the arbitration under the local law usually follows any one of the following two procedures with the consent of parties:
(i) Reliance on Documentary Evidence
Reference of Dispute (Statement of Claim) filed by the Claimant > Written Reply (Statement of Defense) filed by Respondent > Rejoinder filed by Claimant > Framing of Issues > Document submittal by
both parties > Written Submittal > Arguments > Award.
(ii) Reliance on Oral Evidence: Reference of Dispute (Statement of Claim) filed by the Claimant > Written Reply (Statement of Defense) filed by Respondent > Rejoinder filed by Claimant > Framing of Issues > Examination of Claimant and Respondent Witnesses on Affidavits > Arguments > Award.
1. COURT ACTIONS UNDER ARBITRATION ACT, 1940
a) Filing of Award in the Court: At the request of any party to the arbitration agreement or any person claiming under such party or if so directed by the Court the arbitrator (s) umpire shall cause the award or a signed copy of it to be filed in the Court. Together with the award any depositions or documents which may have been taken and proved before them are also filed in the Court
Once the arbitration award has been filed in the Court for making it rule of the Court, the Court issues Notice of Filing of Award in the Court. This notice is served upon all the parties to the arbitration award. Any party willing to file objections against the award for setting it aside or wishing that the award be corrected or remitted back to the arbitrator for reconsideration can do so within the prescribed period of limitation
3. COURT ACTIONS UNDER ARBITRATION ACT, 1940 Where the Court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the Court proceeds to pronounce judgment according to the award, and upon the judgment so pronounced a decree follows and no appeal lies from such decree except on the ground that it is in excess of or not otherwise in accordance with the award.
The Court passes such judgement after the time for making an application to set aside the award has expired.
Appointment of arbitrator Removal of arbitrator Setting aside the Award Enlargement of time for making the award
ARBITRATION OR LITIGATION? Almost all construction contracts include provisions for binding arbitration of future disputes. Parties to the construction process often gain a false sense of security from having an arbitration clause in their contracts.
Under both arbitration and litigation, the parties are asking an outside party to resolve their disputes.
Common sense dictates that the quickest, most economical way is for the parties to resolve the dispute themselves, without intervention of others.
ARBITRATION OR LITIGATION? Arbitrary Arbitrators Arbitrators are normally not bound by rules of law.
For example, as an owner you may have insisted that contracts include a clause providing the contractor shall not be entitled to any damages for delay.
Though courts have held such clauses as enforceable, there is nothing to prevent an arbitrator from ignoring the clause and awarding the contractor damages for such delays.
Thank You

Lec 6 - Dispute Resolution

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IN THE NAME OF ALLAH, THE Dr.

METHODS OF DISPUTE RESOLUTION AND CLAIM MANAGEMNT

Associate Professor Dr. Rafiq Muhammad Choudhry

2. The Document Will Be Construed against the Drafter.

4. Specific Terms Govern over General Terms.

CLAIMS AND DISPUTES

Dispute About: Certification Valuations Instructions Determination Opinion

LITIGATION METHOD FOR DISPUTE RESOLUTION Litigation

Figure: Construction Claims Resolution Alternatives - LITIGATION.

MECHANISMS TO RESOLVE CONTRACTUAL DISPUTES

Alternative Dispute Resolution (ADR)

ALTERNATIVE METHODS FOR DISPUTE RESOLUTION - NEGOTIATION Negotiation

Figure: Construction Claims Resolution Alternatives - NEGOTIATION.

Third party is involved

ALTERNATIVE METHODS FOR DISPUTE RESOLUTION - MEDIATION Mediation

Figure: Construction Claims Resolution Alternatives - MEDIATION.

CONCILIATION PEC Rules of Conciliation (Rule 1 to Rule 21)

DISPUTE SETTLEMENT UNDER FIDIC - 1992

NOTICE OF DISPUTE ENGINEER DECISION AMICABLE SETTLEMENT ARBITRATION

DAB & DRB

ALTERNATIVE METHODS FOR DISPUTE RESOLUTION - ARBITRATION Arbitration.

Figure: Construction Claims Resolution Alternatives - ARBITRATION.

ARBITRATION UNDER LOCAL LAW INTERNATIONAL ARBITRATION

MODEL ARBITRATION CLAUSE LOCAL ARBITRATION

(i) Reliance on Documentary Evidence

1. COURT ACTIONS UNDER ARBITRATION ACT, 1940

2. COURT ACTIONS UNDER ARBITRATION ACT, 1940

4. COURT ACTIONS UNDER ARBITRATION ACT, 1940

5. COURT ACTIONS UNDER ARBITRATION ACT, 1940

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