Lec 6 - Dispute Resolution

5/28/2018 Lec 6 - Dispute Resolution

1/42

Dr. Rafiq Muhammad Choudhry

Head, Department of Construction Engineering & Management, SCEE, NUST

IN THE NAME OF ALLAH, THE

BENEFICENT, THE MERCIFUL


2/42

METHODS OF DISPUTE RESOLUTION ANDCLAIM MANAGEMNT

Associate Professor




BSc(Civil-Honor), MSc(CEM), PhD(CEM), Post-Doctorate (CEM), MIE(Pak), PEEmail: [email protected]/ [email protected]

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


3/42

FIVE PRINCIPLES OF CONTRACTADMINISTRATION

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.



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 notdraft the document.


4/42



that are quite important in construction contracts. 3. The Document Supersedes All Previous Discussions. The rule is that the document speaks for itself.

When it does nots eak for itself or is so inarticulate no one



knows what it means, oral testimony is permitted to determinethe 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.


5/42



that are quite important in construction contracts. 5. The Document Must Be Read in the Context of theTrade.

If a word or hrase has a commonl acce ted meanin in



the construction industry, that meaning must be appliedwhen reading and interpreting construction contracts.


6/42

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 forthe handling of claims and disputes.


7/42

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 ive rise to dis utes. Mere failure

CLAIMS AND DISPUTES



to pay a claim does not necessarily mean that there is adispute. A dispute arises when one party makes a claim

against the other and the other party disputes liability

either expressly or by conduct.


8/42

About:

Certification Valuations

Instructions

Dispute



Determination

Opinion


9/42

MECHANISMS TO RESOLVE

CONTRACTUAL DISPUTES

Traditional Methods Negotiation

Arbitration



Litigation

Alternative Dispute Resolution (ADR)


10/42

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 rocess.

LITIGATION



Judgment by Court of original jurisdiction isfollowed by a series of appeals/reviews/ revisions

in the hierarchy of Courts of Appeal


11/42

LITIGATION METHOD FOR DISPUTE RESOLUTION

Litigation



Figure: Construction Claims Resolution Alternatives - LITIGATION.


12/42

MECHANISMS TO RESOLVE

CONTRACTUAL DISPUTES

Alternative Dispute Resolution (ADR)




13/42

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


14/42

ALTERNATIVE METHODS FOR DISPUTE

RESOLUTION - NEGOTIATION

Negotiation



Figure: Construction Claims Resolution Alternatives - NEGOTIATION.


15/42

Participation is voluntary

No third party is involved to facilitate the resolution

process.

Mediation

NEGOTIATION



Arbitration Third party is involved

Conciliation


16/42

A form of settlement negotiation facilitated by a

neutral third party and non-binding resolution

An act of bringing two parties in dispute closer

MEDIATION



toget er towar agreement t roug a ternat vedispute 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.


17/42


RESOLUTION - MEDIATION

Mediation



Figure: Construction Claims Resolution Alternatives - MEDIATION.


18/42

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

CONCILIATION



Main goal is to conciliate by seeking concessions


19/42

Conciliation is an ADR process whereby the

parties to a dispute agree to utilize the services

of a conciliator, who then meets with the partiesseparately in an attempt to resolve their

differences.

CONCILIATION



He/She does this by lowering tensions, improvingcommunications, interpreting issues, providing

technical assistance, exploring potential solutions

and bringing about a negotiated settlement.


20/42

PEC Rules of Conciliation (Rule 1 to Rule 21)

Professional Engineer

PEC may recommend names

One or odd number

Costs are borne b the arties

CONCILIATION



Payment within 30 days

Completed with 90 days, if not extended

Either party have option to go to arbitration or litigation


21/42

Conciliation differs from mediation in that the

main goal is to conciliate, most of the time by

seeking concessions. In mediation, the mediatortries to guide the discussion in a way that

optimizes parties needs, takes feelings into

Conciliation and Mediation



account and reframes representations.

In conciliation the parties seldom, if ever, actually

face each other across the table in the presenceof the conciliator.


22/42

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

Conciliation and Arbitration



, .


23/42

NOTICE OF DISPUTE ENGINEER DECISION

AMICABLE SETTLEMENT

DISPUTE SETTLEMENT UNDER FIDIC - 1992



ARBITRATION


24/42

DISPUTE ADJUDICATION BOARD (DAB) FIDIC

1999

DAB & DRB



DISPUTE REVIEW BOARD (DRB)


25/42

ARBITRATION

A legal technique for the resolution of disputesoutside the court where in the parties to a dispute

refer it to one or more persons by whose decision




26/42


RESOLUTION - ARBITRATION

Arbitration.



Figure: Construction Claims Resolution Alternatives - ARBITRATION.


27/42

An ancient practice

Under English law, the first law on arbitration wasthe Arbitration Act,1697.

HISTORY OF ARBITRATION




28/42

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



,

Award within 6 months.

ARBITRATION UNDER LOCAL LAW

INTERNATIONAL ARBITRATION


29/42

Any dispute shall be finally settled under

the provisions of the Arbitration Act, 1940 as

amended thereof for the time being in force.

MODEL ARBITRATION CLAUSE LOCAL ARBITRATION



The said arbitrator/s shall have full power to openup, review and revise any decision, opinion,

instruction, determination, certificate or valuation of

the Engineer related to the dispute.


30/42

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

MODEL CLAUSE FOREIGN ARBITRATION



.

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.


31/42

ARBITRATION

UNDER ARBITRATION ACT, 1940

ARBITRATION PROCEEDINGS

CIVIL COURT ACTIONS UNDER ARBITRATION



ACT, 1940


32/42

Popular Arbitration Procedures followed in

Pakistan

No particular arbitration procedure has beenprescribed by the Arbitration Act, 1940. In the

absence of a standardized arbitration procedure,



any one of the following two procedures with the

consent of parties:


33/42

(i) Reliance on Documentary Evidence

Reference of Dispute (Statement of Claim) filed bythe Claimant > Written Reply (Statement of

Defense) filed by Respondent > Rejoinder filed by



ram ng o ssues ocumen su m a yboth parties > Written Submittal > Arguments > Award.


34/42

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

(ii) Reliance on Oral Evidence:



Award.


35/42

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

1. COURT ACTIONS UNDER ARBITRATION ACT, 1940



e awar or a s gne copy o o e e n e

Court. Together with the award any depositions

or documents which may have been taken and

proved before them are also filed in the Court


36/42

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




ar ra on awar . ny par y w ng o e

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


37/42

3. COURT ACTIONS

UNDER ARBITRATION ACT, 1940

Where the Court sees no cause to remit the awardor any of the matters referred to arbitration for

reconsideration or to set aside the award, the Court



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.


38/42

The Court passes such judgement after

the time for making an application to setaside the award has expired.





39/42

Appointment of arbitrator

Removal of arbitrator

Setting aside the Award

Enlargement of time for making the award





40/42

ARBITRATION OR LITIGATION?

Almost all construction contracts include provisions

for binding arbitration of future disputes.

Parties to the construction process often gain a falsesense of security from having an arbitration clause in

their contracts.



n er ot ar trat on an t gat on, t e part es 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.


41/42

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.


42/42



an ouan ouan ouan ou

Lec 6 - Dispute Resolution

Documents

Transcript of Lec 6 - Dispute Resolution