An A to Z of construction dispute avoidance and resolution – Part 2
Contractual disputes are common in the construction industry. As a result, a number of construction-specific methods of dispute avoidance and resolution have arisen – both industry-led and by way of legislation. This two-part article provides an alphabetical run through of some of the more common concepts a construction practitioner is likely to encounter and has been written with commercial personnel, transactional and disputes-focussed lawyers in mind.
In part 1, we looked at A to M of construction dispute avoidance and resolution. In this part 2, we look at N to Z.
N is for New York Convention
Arbitral awards are enforceable in the national courts of signatories to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958. There are currently 155 signatories, so for international projects arbitration may offer significant advantages over other forms of dispute resolution, which may be more onerous to enforce in contractors’ home jurisdictions.
O is for Overseas counterparties
Where counterparties to a contract are based overseas, consideration should be given at the time of drafting and entering into the contract as to how any claims will be enforced against them. Simple steps include an obligation to appoint a process agent and potentially providing for arbitration as the means of dispute resolution.
P is for Pre-Action Protocol
The Pre-Action Protocol for Construction and Engineering Disputes applies to all construction and engineering litigation and governs to the conduct of the parties before proceedings are commenced. Failure to comply with the requirements of the protocol can result in costs sanctions. Our November 2016 article considers the differences between the current protocol and its predecessor.
Q is for Quick and dirty
Adjudication is often referred to as a “quick and dirty” process because of its cash-flow focussed “pay now, argue later” approach. Depending on the facts of the dispute in question, this can either be a strength or a weakness. Before commencing an adjudication, think about whether and how you can use the limitations of the procedure to your commercial advantage. If the dispute is particularly complex, legally nuanced or involves multiple parties, adjudication may be a less suitable form of resolution.
R is for Records
A well-maintained paper trail with detailed records will be invaluable in any dispute. It will help the commercial and managerial teams involved to recall the detail and order of events; help the legal team and any experts build up a picture of what happened; and can sometimes provide crucial evidence in support of a party’s position.
S is for Smash and grab
See our article on the status of smash and grab adjudications following the recent Supreme Court decision in Grove Developments Ltd v S&T (UK) Ltd.
T is for TeCSA
The Technology and Construction Solicitors' Association is a membership organisation for solicitors specialising in construction and engineering. Alongside TECBAR, whose members come from the Bar, TeCSA helps shape and inform court practice and provides training and social opportunities for members. TeCSA also maintains a panel of accredited adjudicators and provides an adjudicator and arbitrator nomination service.
U is for Under hand
The statutory limitation period (under the Limitation Act 1980) to bring a claim for a breach of a “simple” contract – one signed “under hand” - is 6 years from the date of the breach. For breach of a deed (a contract or other document executed with additional formalities) it is 12 year.
V is for Verbal contract
Verbal contracts are recognised and binding in English law but, in a case of dispute, can raise evidential difficulties. See more in "W is for Writing, below".
W is for Writing
Prior to 2011, a construction contract needed to be in writing in order to fall within the scope of the Construction Act. This is no longer the case since section 107 of the Act was repealed in October of that year. However, contracts made between 1 May 1998 and 30 September 2011 will be caught by the Act only if they are in writing.
X is for eXpert determination
Expert determination (the appointment of an expert in a particular area to decide a dispute between the parties) can be a useful means of determining technical disputes where a specific specialised expert opinion is required. In the right circumstances, it may prove quicker and cheaper than other forms of dispute resolution but this will not always be the case. Where a dispute arises over a matter of law or contractual interpretation, an expert may not be best equipped to resolve the dispute. We therefore recommend that the parties consider the likely nature of future disputes and give thought to the procedure that will govern the expert’s selection and appointment before agreeing expert determination as their preferred means of dispute resolution.
Y is for Y (UK)2
This optional clause can be used in various NEC forms of contract to ensure that the payment provisions comply with the requirements of the Construction Act. If using a schedule of amendments, for clarity’s sake you may prefer to include the provisions of this option as Z clauses, alongside any other changes to the payment terms.
Z is for Zzz
Hopefully the diverse mix of subjects covered in this article has illustrated that no two construction disputes are alike - it is a field where one will never get bored.
This article was written by Laura Sharples and Jessica Evans.