Madawalabu

University
Construction Law
CoTM 4241

Chapter 4
Dispute and Dispute
Resolution Mechanisms
Lecture by: Andualem Endris (M.Sc)
andu0117@yahoo.com

College of Engineering
Construction Technology and Management Department
What is Dispute?

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 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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 Disputes

Clients will suffer from high legal fees, delayed

completion and occupation and general dissatisfaction.

The contractors profits will diminish and to these will be

added additional legal fees.

No winners under these circumstances

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Causes of Disputes

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 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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 Causes of Disputes Contd

Late issue of instruction varying some sections of the

works, which disrupts the contractors 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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 Causes of Disputes Contd
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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 Causes of Disputes Contd

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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Alternative Dispute Resolution
Mechanisms (ADR)

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Dispute Resolution Mechanisms
An introductory survey of the construction
industrys commonly used dispute resolution
mechanisms.
Negotiation
Mediation
Dispute Review Boards
Arbitration
Litigation
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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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Elevating the Negotiation

Cant 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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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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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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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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Mediation The Resolution
Mediators DO NOT Decide
The Parties decide
The Mediators Proposal
Not always offered
May be requested
NOT binding until all parties accept
The process is still voluntary

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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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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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Dispute Review Board Decisions
Check your contract terms vary

Typically non-binding but admissible

Probably the best independent evaluation

youll ever get for your problem

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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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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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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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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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 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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Litigation
Getting There
Many times contract defined
Any party can initiate: Im gonna sue you!
Adjudicator Selection
The Judge is assigned
You may be able to choose a jury
Hearings
Strict rules of evidence
The Courts schedule your schedule just doesnt
matter.
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Litigation - Process
Tedious
Discovery produce Everything
Motions, Legal Positioning
Pre-Trial Hearings
Finally, the Hearing itself

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Litigation - Frustration
Cancel your vacation, youre 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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Litigation The Decision
Likely one party wont 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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Litigation Closure

Im just so glad,
I won

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THANK YOU!

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