Dispute Settlement in the Construction sector
To Dispute or Not to Dispute!
Something that Governments, Organizations, Businesses and people around the world have learnt during the COVID-19 Pandemic is that change is inevitable and we all need to adapt to it. The Pandemic changed the lives of people completely, and in one way or the other we learnt to find alternative methods of carrying out the functions. In case of a construction and manufacturing industry which cannot shift to informal methods of working (like working from home), the interpretation of contracts and their clauses becomes difficult. These things being considered makes it convenient when a body like FIDIC comes into play. FIDIC stands for ‘Fédération Internationale des Ingénieurs – Conseils’, which is best translated from French as The International Federation of Consulting Engineers.
The President of FIDIC, William Howard, started with introducing the progress made by FIDIC in reaching out to individuals and stakeholders all over the world. Webinars held by FIDIC have received a great response and the following webinar, “To Dispute or Not to Dispute” had more than 11,500 Attendees from over 150 countries by the end of the said webinar.
Lindy Patterson, from Essex Chambers is a Counsel, Arbitrator, Adjudicator and full time Dispute Board member. Having worked internationally, she got an opportunity to witness the rise in the number of disputes during the Pandemic. Force Majeure, meaning “the act of God”, is a clause that is part of every Contract and this has led to a rise in financial claims made by people to cover losses. At first the disputes saw a steep rise, but now 2 years into the pandemic, people have realized that we are in this for a long haul and have opted to settle and not get into formal disputes. She also adds that the construction industry has been able to cope up with this change, which it historically failed to do so.
Having shifted Dispute resolution on online medium, it is not only cost effective but also saves time. Online tribunals have their own drawbacks. For instance , inspection of documents and holding the attention of the members online for a long time becomes a task.
Mohammad Ali Jahan, President of IFAWPCA, highlights the biggest issues faced by contractors with respect to disputes. Asia-Pacific being home to the biggest development projects, states that the biggest issue is that the contractors fail to read the contracts properly. Second issue being, the engineers working on the ground level, many a times, do not understand English. So it’s difficult to explain the clauses of the contracts to them. The biggest remedy to this would be carrying out training programs.
It is definitely costly, it is also necessary that we need to make such training programs a little more affordable. He also threw light on the fact that during the Pandemic, there was a better level of communication between contractor and clients. The learning, he pointed out, is that, during or after the pandemic people were only result oriented. Instead of holding someone responsible, people tried to make it a win-win situation. Parties came together to reach the end goal, instead of targeting a specific party.
Rebecca Shorter, Partner in White & Case LLP, an international law firm, threw light on contract measures to avoid the disputes in the construction industry. The most important recommendation by her was making sure to have a clear dispute resolution clause in the contracts. The technical specifications, the general and particular conditions should be framed and checked by the parties involved. The next recommendation was following the
FIDIC dispute resolution clauses allow the parties to resolve the disputes incrementally to get a swift or a temporary resolution which helps in concentrating on finishing the projects and still reserving the rights to go to court if the outcome is not satisfactory. The last pointer is appointing a dispute board to avoid further disagreement during the disputes.
The last speaker, James Perry, partner in PS Consulting Sarl, advised on how to go about disputes once the dispute process is started. He started off by telling to be careful of the shot first and ask questions later approach.
The dispute board should be used for dispute avoidance first rather than going for the dispute. He suggested using the dispute board in a targeted way by trying to ask specific questions instead of overloading them with all the issues. This opportunity of working with the dispute board should be used to understand and develop the case along with understanding the strengths and weaknesses as well. Another thing James emphasized on was that the parties should keep trying to discuss with each other and keep trying to solve the problem in parallel.
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