‫‪Dispute Resolution Methods‬‬

‫د‪/‬م م ‪/‬صالح الدين عبد العزيز عجبان‬

Dispute Resolution Methods
• An introductory survey of the construction
industry’s commonly used dispute resolution
methods.
– Negotiation
– Mediation
– Dispute Review Boards
– Arbitration
– Litigation
Dispute Resolution Methods
What is a Dispute?
• A Change Proposal?

• A Rejected Change Proposal?

• A Weather Day Definition?

• A Claim?

• A Delay Submittal?

• An Or-Equal Equipment Submittal?

Dispute Resolution Methods

An Owner and a
Contractor
have a site meeting to
resolve some open issues.
Dispute Resolution Methods
• Multiple primes, Designers, Owners,
Subcontractors, have a site meeting to
discuss project goal setting
Dispute Resolution Methods
• Avoidance
• Negotiation
• Mediation
• Dispute Review Board
• Arbitration
• Litigation
• Self-help
Avoidance
• Even avoidance isn’t avoidance
• In construction we have lots of reasons to avoid
confrontation
• In construction, 99% of avoided disputes
become bigger – they fester – they don’t
self-resolve
But sometimes
resolution takes
a while …
Negotiation
• Dispute resolution between the parties involving
only the parties
• Casual
– Conversations, emails, texts, phone calls

• Formal
– Meetings, documentation, presentations

• Resolution
– Regardless of how you got there:
Put it in writing
Elevating the Negotiation

• Can’t settle at the jobsite level?

• Push the dispute “upstairs” – “bubble up”

• Again, only the parties are involved

• May be multiple meetings

• Resolution must be written

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
• There is no such thing as “Binding Mediation”

– You set the rules

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
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
 Mediation Resolution –
Looking for Interests
$$
The Apparent Position The Change
Request Amount

The Hidden, Unrecognized Interests

The Next Change Request
Liquidated
Damages Budget Cash Flow

I don’t wanna analyze a detailed claim

Career
Schedule Client Relationship
What will the
Industry
Board Say?
Reputation
The Bottom Line
Mediation – The Resolution
• Mediators DO NOT Decide
– The Parties decide
• The Mediator’s Proposal
– Usually offered at gridlock
– Not always offered
– May be requested
– NOT binding until all parties accept
– The process is still voluntary
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
Dispute Review Board Hearings

• Frequently “no attorneys”

• Parties explain their version to the DRB

• Exhibits, Calculations, Presentations

• DRB hears and receives the information

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
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.

From the American Arbitration Association website: www.adr.org

Non-Binding Arbitration
• When the parties agree to Arbitrate, but also agree that
the result will only be binding if all parties agree to
accept the decision
• Many view this as a “dry-run”
• Could be considered similar to the Dispute Review
Board, but without the project knowledge of the DRB
members
• In our Dispute Resolution Committee’s experience – not
a common Dispute Resolution Methodology
Arbitration – Getting There
• Many times contract defined
• Always an option if all parties agree
• Variety of arbitration providers, including:
– American Arbitration Association
– JAMS: Judicial and Mediation Services
– Most localities have regional providers
– Private individuals
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
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
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.
Arbitration Pluses & Minuses
• Finality
• Letting a knowledgeable someone else decide
• Speed
• Cost
• Evidence Rules – Discovery, Depositions
• Hearing Flexibility – dates, format, location
• Confidential Proceedings
• Predictability
 Litigation

• May be a Federal or State Agency

– Board of Contract Appeals, for example
• 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?
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.
Litigation - Process
• Tedious
• Discovery – produce Everything
• Depositions
• Motions, Legal Positioning
• Pre-Trial Hearings
• Finally, the Hearing itself
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 short days with lots
of vacant time
• Remember the money you are paying your team
to be there.
Litigation – The Decision
• Likely one party won’t like the Decision
• That party will then file for appeal
– Regardless of entitlement
– Filing is to slow the payment process
– 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
Litigation Closure

I’m just so glad,

I won…
In Summary –
The Descending Arrow of Escalation
Avoidance
Negotiation
Self-Decided -
You Keep a Say Mediation
in the Decision
Dispute Review Boards
Adapted from: Christopher Moore’s
The Mediation Process, 1996, p. 7
Adjudicated - Someone
Else Decides
Arbitration Your Fate

Litigation
Closure

? and A
What’s Next?
Delay Claims from the Owner’s and
Contractor’s Perspectives