Construction disputes are common and can arise for many reasons, including late payments, delays, poor workmanship and variations to the agreed works.
There are several ways to resolve a dispute. This article outlines five of the most common methods used in construction disputes.
Method one: Negotiation
Negotiations are usually held without prejudice, meaning admissions, offers or counteroffers cannot generally be referred to in later proceedings.
The aim is to reach a mutually acceptable settlement before the dispute escalates to arbitration or litigation.
However, negotiation may be less effective where there is a significant imbalance in bargaining power between the parties.
Method two: Mediation
Mediation is similar to negotiations between the parties, they occur on a purely without prejudice basis and is strictly privileged between the parties. The main difference is that there is a qualified mediator who seeks to mediate a settlement between the parties.
Often this is helpful when a dispute has several issues which are personal to the parties, a mediator can often find a way to navigate those issues. The costs of the mediator are usually split equally between the parties. Such negotiations are more effective where there is an imbalance between the parties or many difficult issues.
Method three: Adjudication
Adjudication is a statutory right for any party that has a construction contract as defined by the legislation, even where it is not expressly included in the contract. It offers a quick route to a decision that can be enforced immediately.
It can be used at any stage of a project, including while works are ongoing, and a decision is usually required within 28 days.
The purpose is to provide a swift outcome so the project can continue with minimal disruption. A decision is legally binding on the parties until finally determined by the court. This means that unless the losing party abides by the decision, further court action may be required.
Method four: Arbitration
Arbitration aims to provide a fair, legally binding and enforceable resolution without the cost, delay and public exposure of court proceedings. However, this method can only be used if the contract permits or the parties specifically agree to Arbitrate.
The arbitrator reviews the evidence, hears the parties’ arguments and issues a binding decision.
This decision is known as an award and sets out the rights and obligations of each party.
Method five: Litigation
If the parties cannot resolve the dispute by other means, litigation may be the final option. This involves asking the court to decide the matter.
The court can examine documents, hear evidence and question witnesses before reaching a decision.
However, litigation is often time-consuming and expensive, so it is usually sensible to explore other resolution methods, such as negotiation, before going to court.
How we can help
No two disputes are the same and it is important to make sure that disputes are managed in a way that suits the needs of your business.
Our team of talented solicitors can help you manage disputes quickly and more cost-effectively by reviewing contracts, managing formal correspondence and leading negotiations or mediations.
Do you need help with a dispute? Get in touch today for expert advice.