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A New Construction Contract for the 21st Century: Dispute Resolution

SERIES ARTICLE

By Keith Pickavance

London, UK
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Introduction

In this, the penultimate article on the advantages of the CIOB’s new Complex Projects Contract (CPC2013), we look at the provisions for dispute avoidance and resolution. Those who recognize the inevitability of uncertainty in complex projects are perfectly at ease with the proposition that claims are a natural part of the contractual mechanism. But most would agree that the goal must be to reduce their frequency, to make their settlement less contentious, to reduce the cost and possibility of injustice and to shorten the dispute settlement period, wherever possible. Standard form contracts should thus provide that differences of opinion arising during the Contract should not be allowed to remain unresolved until it is too late to do anything about them other than compensate the injured party, but that they should be brought to the fore immediately and resolved privately, if possible.

All construction and engineering standard forms of contract contain some provision for resolving disputes and most have an escalating process, but none previously available has achieved the quick, cheap and effective settlement process all agree is required.

Adjudication

FIDIC anticipates adjudication by a Disputes Adjudication Board (“DAB”), which may comprise one or three adjudicators, to which either party may refer a dispute, but the DAB may only be jointly consulted for an opinion. The DAB is not required to decide any issue in less than 84 days and may take longer, with the agreement of both parties. Unless disputed, the DAB’s decision is final and binding within 28 days. However, unless edited according to the suggestions in the FIDIC 2013 revision, if the DABs decision is not accepted it cannot be referred directly to Arbitration but must first go through a process of amicable settlement and any “notice of dissatisfaction” must be also be submitted to the DAB, for a further decision (within a further 84 day period).

Adjudication can be a statutory procedure, required by law, or, in states which do not provide for it or where for other reasons it is inapplicable, it can be required by contract. CPC2013 (and many standard forms of contract including JCT and NEC3, but not AS4000 and A201) contains provision for private dispute resolution by Adjudication. Under most forms of contract adjudication is by a single adjudicator. However, under the rules of interpretation of CPC2013, contractual adjudication can be before one or any number of adjudicators, and can be in accordance with any chosen rules, although, by default, if none is chosen the rules are those of the UK statutory scheme.

Under CPC2013, only one notice of adjudication may be given in respect of a dispute. This prevents “shopping around” for adjudicators.  If the referral is not served it lapses, and the dispute may not then be referred to adjudication again.

Unfortunately, even though statutory adjudication is supposed to be completed within 28 days, it rarely is, and because it can be commenced “at any time” it is common practice for adjudication (as it is with arbitration and litigation) to deal with many claims after the contract has been completed, leading to protracted dispute resolution about compensation for unmanaged risk after the event rather than helping risk to be managed when it occurs.

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To read entire article (click here)

Editor’s note: This article is one in a series by Keith Pickavance about the CIOB’s new contract for complex construction projects. For information about the new contract, visit http://www.ciob.org.uk/CPC.  The full article includes footnotes for quotations and section references.

About the Author

keith-pickavanceflag-ukKeith Pickavance

Keith Pickavance first qualified as an architect in 1972 and then in 1978 obtained a law degree. After 20 years as an architect in private practice the last 10 years of which also involved construction management, dispute resolution and expert witness services, in 1993 he joined an American company specialising in forensic services and delay analysis. In 1996 he set up on his own again specialising in delay analysis and time management in London and Hong Kong. That practice was acquired by Hill International in 2006, an international construction management and claims consultancy with which he is now appointed an Executive Consultant.  He is a Past President of the Chartered Institute of Building and has led the CIOB’s time management initiative since its inception in 2007.  Keith is the author of Delay and Disruption in Construction Contracts (4th ed., 2010, Sweet and Maxwell) and numerous other books and articles on delay related issues.   Contact [email protected]