CE & M - Methods of Dispute Resolution

METHODS OF DISPUTE RESOLUTION
Associate Professor Dr. Rafiq Muhammad Choudhry

BSc(Civil-Honor), MSc(CEM), PhD(MSE), Post-Doctorate (CEM), MIE(Pak), PE Email: rafiq.choudhry-scee@nust.edu.pk / choudhry03@gmail.com
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
Dr. Rafiq Muhammad Choudhry Head, Department of Construction Engineering & Management, NIT, SCEE, NUST
MECHANISMS TO RESOLVE CONTRACTUAL DISPUTES Traditional Methods Negotiation Arbitration Litigation Alternative Dispute Resolution (ADR)
LITIGATION
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 process. Judgment by Court of original jurisdiction is followed by a series of appeals/reviews/ revisions in the hierarchy of Courts of Appeal
ALTERNATIVE METHODS FOR DISPUTE RESOLUTION Methods available to a contractor for resolution of construction disputes.
Figure: Construction Claims Resolution Alternatives - LITIGATION.

MECHANISMS TO RESOLVE CONTRACTUAL DISPUTES
Alternative Dispute Resolution (ADR)
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
Figure: Construction Claims Resolution Alternatives - NEGOTIATION.

NEGOTIATION
Participation is voluntary No third party is involved to facilitate the resolution process.
Mediation Arbitration Conciliation
Third party is involved
MEDIATION (a form of settlement negotiation facilitated by a neutral third party) and non-binding resolution ) An act of bringing two parties in dispute closer together toward agreement through alternative dispute 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.
Figure: Construction Claims Resolution Alternatives - MEDIATION.

CONCILIATION 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 Main goal is to conciliate by seeking concessions
CONCILIATION Conciliation is an ADR process whereby the parties to a dispute agree to utilize the services of a conciliator, who then meets with the parties separately in an attempt to resolve their differences. He/She does this by lowering tensions, improving communications, interpreting issues, providing technical assistance, exploring potential solutions and bringing about a negotiated settlement.
Conciliation and Arbitration 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 decision, and makes no award.
Conciliation and Mediation

Conciliation differs from mediation in that the main goal is to conciliate, most of the time by seeking concessions. In mediation, the mediator tries to guide the discussion in a way that optimizes parties needs, takes feelings into account and reframes representations. In conciliation the parties seldom, if ever, actually face each other across the table in the presence of the conciliator.
Dispute About: Certification Valuations Instructions Determination Opinion
DISPUTE SETTLEMENT UNDER FIDIC - 1992
NOTICE OF DISPUTE ENGINEER DECISION AMICABLE SETTLEMENT ARBITRATION
DAB & DRB
DISPUTE ADJUDICATION BOARD (DAB) DISPUTE REVIEW BOARD (DRB)
ARBITRATION
A legal technique for the resolution of disputes outside the court where in the parties to a dispute refer it to one or more persons by whose decision they agree to be bound
Figure: Construction Claims Resolution Alternatives - ARBITRATION.

HISTORY OF ARBITRATION An ancient practice Under English law, the first law on arbitration was the Arbitration Act,1697.
ARBITRATIONS UNDER VARIOUS LAWS & PROCEEDURAL RULES ARBITRATION UNDER LOCAL LAW INTERNATIONAL ARBITRATION
MODEL ARBITRATION CLAUSE LOCAL ARBITRATION
Any dispute shall be finally settled under the provisions of the Arbitration Act, 1940 as amended thereof for the time being in force. 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.
MODEL CLAUSE FOREIGN ARBITRATION 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 appointed under such Rules. 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.
ARBITRATION UNDER ARBITRATION ACT, 1940 ARBITRATION PROCEEDINGS CIVIL COURT ACTIONS UNDER ARBITRATION ACT, 1940
Popular Arbitration Procedures followed in Pakistan

No particular arbitration procedure has been prescribed by the Arbitration Act, 1940. In the absence of a standardized arbitration procedure, the arbitration under the local law usually follows any one of the following two procedures with the consent of parties:
(i) Reliance on Documentary Evidence
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 > Document submittal by both parties > Written Submittal > Arguments > Award.
(ii) Reliance on Oral Evidence: 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 Respondent Witnesses on Affidavits > Arguments > Award.
1. COURT ACTIONS UNDER ARBITRATION ACT, 1940
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 the award or a signed copy of it to be filed in the Court. Together with the award any depositions or documents which may have been taken and proved before them are also filed in the Court
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 arbitration award. Any party willing to file 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

Where the Court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the Court proceeds to pronounce judgment according to the 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.
The Court passes such judgement after the time for making an application to set aside the award has expired.
Appointment of arbitrator Removal of arbitrator Stay of Legal Proceedings Setting aside the Award Enlargement of time for making the award
ARBITRATION OR LITIGATION? Almost all construction contracts include provisions for binding arbitration of future disputes. Parties to the construction process often gain a false sense of security from having an arbitration clause in their contracts.
Under both arbitration and litigation, the parties 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.
ARBITRATION OR LITIGATION? Inconsistent Results Arbitrators are not bound by rules of evidence, or for any previously rendered decisions.
A court is obligated to be bound by previous decisions rendered for similar circumstances.
ARBITRATION OR LITIGATION? Speedy Results? Arbitration hearings are not normally held on a dayto-day basis, and it is rare to be able to schedule more than two hearings on consecutive days.
An arbitration that involves four days of hearings may actually take two or three months.
ARBITRATION OR LITIGATION? Discovery Arbitration proponents cite the fact that there is no expensive, time-consuming discovery process.
Discovery actually occurs in during the hearings.
Litigation proponents cite the fact that discovery is related to hearings and discussions.
Discovery in a lawsuit often discloses valid claims or defenses that can lead to settlement discussions.
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.
THE MEDIATION PROCESS Mediation is a particular form of settlement negotiation in which a trained third-party neutral intervenes by agreement of the parties.
In order to guide and facilitate the parties' negotiations toward an agreement that resolves the dispute.
THE MEDIATION PROCESS Why is a Mediator Needed? A mediator is needed when one or more of the following circumstances exist:
1. Parties are unable to narrow the gap between the expectations of one group and the inflexibility of the other. 2. Too many issues are open and the parties are unable to get movement going. 3. The parties wish the mediator to explore and narrow the differences between them. 4. There is a desire to resolve a problem mutually and end a dispute amicably.
THE MEDIATION PROCESS Why is a Mediator Needed? A mediator is needed when one or more of the following circumstances exist:
5. It is desired to furnish the parties with a realistic look at the demands and possibility of obtaining them. 6. There is a wish to give the parties some idea of how their positions look to an impartial person. 7. The parties wish a mediator to be used as a conduit through which private, confidential disclosures can be made without jeopardizing their original positions. 8. There is a wish to avoid negative consequences, such as a lawsuit.
THE MEDIATION PROCESS Mediation as Distinguished from Arbitration Like arbitration, mediation is a private, unofficial means of dispute resolution.
Like arbitration, it is generally favored by modern law.
It generally promises savings in time and cost as compared with civil litigation.
THE MEDIATION PROCESS Mediation as Distinguished from Arbitration Mediation & arbitration differ in a number of ways:
1. An arbitrator has final power of decision, subject only to very limited judicial review.
A mediator has absolutely no power beyond the power of illumination and urging.
2. An arbitrator normally takes a passive role, leaving it largely to the parties to present and press their cases.
A mediator is normally an active intervenor in, and principal shaper of, the process.
3. Mediation is more informal than civil litigation, and the order of proceedings tracks the usual order of litigation.
The order of proceeding is much less structured than either arbitration or litigation.
4. The arbitrator avoids all exparte communication with the parties on the merits of the dispute or the parties' positions.
The mediator will nearly always assemble privately with each party to learn as much as they are willing to disclose with respect to the dispute.
5. While arbitration is a private proceeding, information about it may become public in some circumstances.
As when a losing party seeks to have a court vacate the award. Mediations are settlement discussions, and, as such, some information about them is inadmissible.
6. The arbitrator imposes a decision upon the parties that he/she has made, which please neither party.
The mediator, if successful, guides parties to a decision that they can have a major role in shaping. And with which, by definition, they both agree.
THE MEDIATION PROCESS Use of Mediation as a Dispute Resolution Tool Mediation is generally used first, and its use may precede either arbitration or litigation. It may be used even after an arbitration or litigation.
But prior to an award.
SETTLEMENT OF DISPUTES BY ARBITRATION Business Disputes In the world of business, disputes are inevitable, as one person may understand rights & obligations differently from another.
No matter how carefully a contract is written.
When disputes arise out of day-to-day activities, parties frequently like to settle privately & informally.
This is what commercial arbitration is for.
SETTLEMENT OF DISPUTES BY ARBITRATION What is Arbitration? Arbitration is the voluntary submission of a dispute to one or more impartial persons for final and binding determination.
It is private and informal, designed for quick, practical, inexpensive settlements.
An orderly proceeding, governed by rules of procedure and standards of conduct prescribed by law.
SETTLEMENT OF DISPUTES BY ARBITRATION What is Arbitration? Arbitrators are experts, whose decisions represent their judgments of the rights of the parties to a dispute. The guiding principle is to hear all material evidence & not to hear arguments/evidence from one side on which the other has no opportunity to comment/rebut.
A significant difference between court action & arbitration is that, in arbitration, strict rules of evidence do not apply.
SETTLEMENT OF DISPUTES BY ARBITRATION What is Arbitration? Most arbitration cases are heard by a panel of three arbitrators, each usually representing a different field of specialization.
Governed by majority rule, both in procedural decisions and in rendering the award.
When three-person boards are used, it is customary for one of the arbitrators to serve as a chairperson.
Whose powers are the same as those of the other two.
SETTLEMENT OF DISPUTES BY ARBITRATION Authority of the Arbitrator This decision-making authority must be exercised by the arbitrator alone to the best of its ability.
It may not be delegated to others.
Broad powers to determine matters of fact, law & procedure.
Under rules of arbitration, the award must be in writing & represent the judgment of at least the majority of the board.
Unless the contract requires a unanimous decision.
SETTLEMENT OF DISPUTES BY ARBITRATION Authority of the Arbitrator Relief granted in the judgment must be consistent with the contract and may include specific monetary as well as performance damages. Arbitrators are not required to write opinions explaining the reasons for their decisions.
SETTLEMENT OF DISPUTES BY ARBITRATION Arbitration Agreements Regulated by Law Arbitration agreements are recognized by statute by the Arbitration Act 1940.
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CE & M - Methods of Dispute Resolution

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METHODS OF DISPUTE RESOLUTION

Associate Professor Dr. Rafiq Muhammad Choudhry

Figure: Construction Claims Resolution Alternatives - LITIGATION.

MECHANISMS TO RESOLVE CONTRACTUAL DISPUTES

Alternative Dispute Resolution (ADR)

Figure: Construction Claims Resolution Alternatives - NEGOTIATION.

Mediation Arbitration Conciliation

Third party is involved

Figure: Construction Claims Resolution Alternatives - MEDIATION.

Conciliation and Mediation

Dispute About: Certification Valuations Instructions Determination Opinion

DISPUTE SETTLEMENT UNDER FIDIC - 1992

NOTICE OF DISPUTE ENGINEER DECISION AMICABLE SETTLEMENT ARBITRATION

DAB & DRB

DISPUTE ADJUDICATION BOARD (DAB) DISPUTE REVIEW BOARD (DRB)

Figure: Construction Claims Resolution Alternatives - ARBITRATION.

MODEL ARBITRATION CLAUSE LOCAL ARBITRATION

Popular Arbitration Procedures followed in Pakistan

(i) Reliance on Documentary Evidence

1. COURT ACTIONS UNDER ARBITRATION ACT, 1940

2. COURT ACTIONS UNDER ARBITRATION ACT, 1940

3. COURT ACTIONS UNDER ARBITRATION ACT, 1940

4. COURT ACTIONS UNDER ARBITRATION ACT, 1940

5. COURT ACTIONS UNDER ARBITRATION ACT, 1940

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