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ADR - wasting of time and costs

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Wed, 2005-01-26 05:45

Shahzad Munawar

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Refer the matter to Alternative Dispute Resolution (ADR) is wasting of time and costs as compared to other Dispute Settlement Forum?

Is this trure?

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Fri, 2005-03-25 14:38

Philip Jonker

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On second thought, we used to have this one when I was studying, BBB, Bullsh_t Baffles Brains, A perfect example of how you can confuse without really trying to hard. The point being, the more you waffled in your exam papers, the more you scored.

Fri, 2005-03-25 14:30

Philip Jonker

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Hi Stuart,

This is all becoming confusing, there is another thread ABCP "as built critical path" , can people not speak normally and stop mixing the abreviations/jargon?

Fri, 2005-03-25 05:17

Stuart Ness

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Andrew,

I think that you are confusing it with the definition of ABCP: - A Botched-Contract Project! ;-)

Cheers,

Stuart

www.rosmartin.com

Wed, 2005-03-23 19:37

Andrew Flowerdew

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Stuart - I’m interested in learning more about the ’tea leaf reading’ method. I have found rune stones work well and recently have started to develop a method using tarrot cards, soon to launched as ’Tarrot Impact Analysis’.

Wed, 2005-03-23 04:58

Stuart Ness

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David,

I think that is because lawyers are too heavily involved in arbitration and they have (successfully) managed to turn arbitration tribunals into a law courts!
What’s even more worrying is that lawyers are also now convinced that they make excellent mediators!!

AAGGHH!!

Cheers,

Stuart

www.rosmartin.com

Tue, 2005-03-22 05:35

David Bordoli

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I thought it was the other way around? What with the cost of Arbitration I thought that Litigation was the ADR now!

David

Tue, 2005-03-22 04:07

Stuart Ness

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It may be a matter of terminology, but I always considered that ADR – Alternative Dispute Resolution – included arbitration, in that ADR is an alternative to litigation, rather than an alternative to arbitration!

Or has arbitration now become the norm in the 21st Century, and ADR as an alternative to it, includes mediation, adjudication and tea-leaf reading?

Cheers,

Stuart

www.rosmartin.com

Mon, 2005-03-21 20:46

Andrew Flowerdew

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There was a time (and possibly still is with some) when contractors took alot of effort to spot the claims when tendering, let alone when they actually built the project. I can remember spending many an hour reading the contract documents and drawings looking for every way possible to claim extra monies and the site offices hadn’t even landed!

That said, I’m sure clients did the same but in reverse. Thankfully this practice is, at least in my experience, a distant memory and I agree with those which believe prevention is better than cure. Sort it as you go.

I support ADR, mainly because of it’s speed and low cost when compared to formal arbitration. I would not rely on avenues of ADR as always being the end of a dispute, especially if the dispute is based more on legal technicalities.

Generally, there’s a time and a place for ADR and arbitration, try an avenue of ADR first if the dispute is relatively straightforward, arbitration if not.

Sat, 2005-02-26 05:40

Shahzad Munawar

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Yes, the contractors sometimes are far too imaginative and lateral thinking when it comes to using the contract to create claims but please note that such claims are always rejected by the Engineers/ Employer/ Forums which are contradictory and beyond the Contract whether these amount to Million dollars having no contractul base .

That Claim always qualifies and entertains which falls in Contract Stipulations and reasonable to some extent showing the default of the Employer and Engineer genuinely.

Thu, 2005-02-24 19:30

#10

Jonathan Kirby

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Hi

We seem to agree that changing Conditions of Contract are not a good idea and I would agree that to resolve a dispute the best way foreward would be to find a new or alternative method of resolving the dispute ... but my experiance has been that once the dispute has become entrenched then both parties are unwilling to look at alternatives.

On stuarts 1st point I’m sure that many employers/RE’s/developers think that contractors sometimes are far too imaginative and lateral thinking when it comes to using the contract to create claims ?
Regards
JK

Mon, 2005-02-21 05:24

#11

Stuart Ness

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Hi Jonathan,

My reference to changing the Contract terms post-Contract was not to imply that the Parties should renegotiate wholesale changes or additions to the agreed terms and conditions. I agree that this would only add to confusion and inconsistencies in the Contract mechanism.

My reference was particular to the idea of the Parties realising that the dispute resolution provisions are not cast in stone and that – if both Parties were in agreement – they are free to amend the details of how their disputes could be resolved. I was not suggesting that the Parties amend the Contract terms at every twist and turn of the difficult contractual route!

Many projects with which I am involved run for long periods of time, often over 3 years, and there can easily be a time frame of 5 years between the time of a draft Contract being produced and a dispute under that Contract being resolved. At the time of contract drafting, the idea of mediation or some similar form of ADR may not have been fashionable, and so it may be very worthwhile for the Parties to consider this option if it helps to ameliorate their situation.

Incidentally, I do agree with you that any tinkering of the Conditions of Contract after its execution will often bring a large smile to the face of lawyers !

Cheers,

Stuart

www.rosmartin.com

Sun, 2005-02-20 22:25

#12

Allan Morrison

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Hello Jonathon,

I agree with Stuart’s comment that many contractors lack constructive thought in using a contract. I feel it is a failure to think laterally.

When disputes occur it is blinkered to feel that the contract is the sole source of remedy to resolve a dispute. In addition to the written contract terms, there are also implied terms, case law, and other options open.

You do raise some very good points. I agree with the point you make about individuals who draft badly worded amendments to standard Ts and Cs. As you correctly say, this can invoke a complex legal muddle which only benefits the parties lawyers, rather than the parties themselves. It is a senior management responsibility to have controls in place to ensure such amendments are written by one suitably qualified person, and if possible checked by another.

Barings bank was brought down by lack of internal management control. Nick Leeson’s actions should not have even been possible.

As a consultant brought in on one contract worth over £100 Million, I witnessed a lack of controls that exposed an entire company (that will always remain nameless of course). Certainly a company that I wouldn’t buy shares in!

I wonder how many FTSE100 sized companies (that have lasted for eons on a wing and prayer)are really just a ’powderkeg waiting for a spark’?

Sun, 2005-02-20 07:53

#13

Jonathan Kirby

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Allan
Agreed.

I note Stuart’s comment "Unfortunately, too many Contractors are lacking in constructive thought to consider this possibility." with respect to mutual agreement to change contract conditions.

On the last two major projects Post contract agreements were entered into to resolve certain issues, but in both cases they merely served to create inconsistancies and confusion at the end of the day. Both ended in bitter and long running disputes.
Conversely prior to this using the old FIDIC and ICE 5th i was envolved with many claims and disputes which by following the contract without "ammendments" even though it got quite heated and entrenched at times , disputes were resolved by the site teams with "the Engineer" and directors stepping in as necessary. These many contracts were all "resolved" by the end of the maintainance period or close to it.
There is a tendancy at present for Employers or Developers to ammend standard conditions of contract [usually to transfer more risk to the contractor]. Lawers love this as it is invariably a mess, with inconsistancies and poor terminology, result is more disputes and wasted time and costs.
Start may think that contractors "lack constructive thought" , but I feel this is disengenuous , they are probably wise to the foolishness of tinkering with the Conditions of Contract.
It is far better for both parties to operate to the CoC properly. The need for post contract "agreements" is i believe a good sign that the contract is heading onto the rocks.

Regards JK

Sat, 2005-02-19 00:43

#14

Allan Morrison

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Hello Jonanthan,

I totally agree. I reccommend dispute avoidance as the primary approach in any given contract. It is a truism that prevention is better than cure.

Reasonable and fair practice would avoid most disputes.

Unfortunately the terms "reasonable" and "fair" are completely relative terms. It is all a matter of the frame or perspective of each party. Even with the best will in the world well meaning individuals will still end up in entrenched disputes.

I dont think litigation lawyers et al need worry about having to find a new business any time soon.

Thu, 2005-02-17 17:05

#15

Jonathan Kirby

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Hi.

Biggest waste of time money and effort is getting into dispute in the first place.
If both parties behave openly, honestly and are robust and professional in interpeting the contract then problems can be resolved ... and fairly. Aggressive practices and dodgy claims/conflict creation only benefits lawers and the like.

JK

Wed, 2005-02-16 22:49

#16

Uri Shachar

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Stuart,

Technically, you are right. The parties may agree to a different Dispute Resolution method post-contract, but realistically, once dispute arises between the parties these parties are not likely to agree on anything.

In most cases (I do not have the figures available, but I’d guess more than 90%) the Dispute Resolution Clause in the Contract remains in place.

Wed, 2005-02-16 19:10

#17

Stuart Ness

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Wed, 2005-02-16 06:38

#18

Stuart Ness

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Hi Shahzad,

No one is doubting that all of the terms of a Contract must be applied, but as both Allen and I are saying, the Parties to a Contract are free, by mutual agreement, to amend the dispute resolution procedures post-contract if they both so wish.

This allows greater flexibility into the dispute resolution process if this helps to reach a mutual and amicable settlement quicker and cheaper than would otherwise have been the case.

Unfortunately, too many Contractors are lacking in constructive thought to consider this possibility.

Cheers,

Stuart

www.rosmartin.com

Wed, 2005-02-16 05:46

#19

Shahzad Munawar

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The word referred as limitation in my post means Contract compliance either by mutual understanding between the parties or by an Amendment to Contract.

In each condition, Contract always be applied.

Wed, 2005-02-16 05:04

#20

Stuart Ness

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Sorry, Shahzad,
But I have to disagree with you.

Most Conditions of Contract allow for the Parties to mutually amend the respective Terms and Conditions of Contract provided that the change is in writing and is executed by the authorised representatives.
Therefore, it is possible post-contract for the Parties to introduce mediation into the dispute resolution process as a pre-requisite to an arbitration. I have also seen situations where the Parties defer their disagreement to a Third Party Expert in order to reach common ground and minimise the extent of the dispute even though there was no specific requirement for the Parties to do so under the existing Contract terms.

In my view, a Contract is not necessarily “limited” as you put it; if both Parties mutually agree to change any of the existing terms and conditions, this is not limitation.

In addition, I have seen arbitration venues changed by mutual agreement of the Parties once the arbitration process is underway, even though Contract specifies a particular venue.

Cheer,

Stuart

www.rosmartin.com

Wed, 2005-02-16 04:46

#21

Shahzad Munawar

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My view is closely to URI

"the parties upon dispute do not usually have the choice as of which method to utilise. The contract under the Dispute Resolution clause has already made this choice for them."

so both parties should follow the Contract not to seek other forums beyond the limitation of Contract.

Tue, 2005-02-15 08:41

#22

Allan Morrison

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Hello Uri and Stuart,

I agree that the contract often has detailed directions on how disputes will be handled should they arise.

It is often overlooked that despite these agreements, the parties are still free by agreement to adopt another approach. Thus an arbitration agreement in the contract will indeed likely be binding on a party that does not wish to follow this route. On the other hand if both parties wish to use (for example) mediation, then as it is their dispute they can do so.

For disputes under English law there is a very important mechanism in place called the Pre-Action Protocol. This is a protocol of actions reccomended prior to litigation. In Dunnett v Railtrack plc (2002) the Court of Appeal stated "Lawyers who dismissed the opportunity for arbitration or mediation out of hand would suffer uncomfortable consequences". This is proof that ADR (even if it is not followed) must at least be given full consideration.

Tue, 2005-02-15 06:44

#23

Stuart Ness

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Hi Uri,

In many cases (at least in my experience) it is very possible for the Parties to negotiate terms and conditions of Contract in advance of signing a Contract Agreement, which means that the Parties may very well mutually establish the nature of the dispute resolution process.
In addition, I have seen a Contractor request that mediation be added in to the Contract Terms & Conditions as a pre-requisite to the implementation of arbitration proceedings, and the other Party was very happy to include such a provision.
I think that it is a long-term process to educate those who formulate Contracts to ensure that the dispute resolution process that is selected does match the complexity and potential likelihood of time-consuming disputes...

In any event, most international contracts have arbitration, rather than litigation, as their method of dispute resolution and as Allan notes below, ADR frequently means anything other than litigation.

In this regard Shahzad, what did you mean in your original post with regard to “…other Dispute Settlement Forum.” ?

Cheers,

Stuart

www.rosmartin.com

Mon, 2005-02-14 23:07

#24

Uri Shachar

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Shazhad,

As Allan correctly argued, there are advantages and disadvantages to each Dispute Resolution Method. However, the parties upon dispute do not usually have the choice as of which method to utilise. The contract under the Dispute Resolution clause has already made this choice for them.

Mon, 2005-02-14 22:12

#25

Allan Morrison

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Hello Shazhad,

This is a frequently asked question. From my experience the answer depends on the details of the dispute in question. Incidentally the term ADR has different definitions depending on who you talk to. I shall define ADR as being any alternative process to litigation.

Matters to consider are (amongst others) the amount in dispute, the personalities involved, privacy, complexity of the dispute, and future business.

For example in a dispute between companies involved in telecommunications where commercial issues are extremely sensitive-then a non public forum is often vital. In such cases ADR is preferrable, and arbitration is commonly used. Please note that arbitration is frequently more expensive than litigation, but has important advantages including the option of appointing an arbitrator who is an expert in the area of dispute. Other advantages include the full backing of the courts(in UK legal systems), and the ability of the parties to customise the procedures to suit their needs.

Please note that arbitrators (under the 1996 Arbitration Act in England) are required to attain a just resolution of the dispute. I know of cases where the Directors are more concerned with a speedy resolution than with a just one. This is often in order to normalise business relations between the companies in dispute. In this case mediation may be the best option.

There are cases though where ADR techniques may not be the best option. In my experience, in the most entrenched and legally complex disputes where considerable sums are involved then litigation may be the best approach.

My own experience incidentally is as a Director of a company that specialises in dispute resolution and project management in energy and construction.

I hope these comments are of some help.

Best regards,

Allan Morrison

Fri, 2005-02-11 05:45

#26

Stuart Ness

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In my view, ADR – such as mediation, adjudication or resolution by Third Party Expert – can be a good thing in trying to resolve disputes ahead of any arbitration proceedings. In addition, ADR can help to focus the minds of the Parties at board level and this, of its own volition, can help towards a settlement.

The problem with the construction industry in this regard is that many disputes are extremely complex, particularly where they involve that (well worn!) expression: forensic delay analysis!

Many large construction projects will now have a DAB which will attempt to resolve differences as they arise and thus avoid the usual scenario of a contractor filing for arbitration as the final completion date arrives (or disappears!!!).

It is not unusual for arbitrators to enquire if the Parties have previously attempted mediation, and if not, they may well be told to go and try that avenue first; sometimes Contracts require that the Parties attempt mediation in advance of commencing arbitration proceedings.

I have just spent several weeks doing some Expert Witness work for an arbitration, that has already been live for the past 12 months, and the case itself will not be heard until this summer. Arbitrations are often long and expensive and mediations can be over in a few days, but in the end the method of resolution rests very much with the complexity or simplicity of the issues at hand, as well as the willingness (or otherwise) of the Parties to reach agreement!!

Cheers,

Stuart

www.rosmartin.com

Thu, 2005-02-10 01:37

#27

Shahzad Munawar

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My answer is "Arbitration"

Wed, 2005-02-09 03:34

#28

David Waddle

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Which method of dispute resolution would you prefer?

Tue, 2005-02-08 09:35

#29

David Bordoli

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Tue, 2005-02-08 00:09

#30

Shahzad Munawar

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still awaited comments and comparison

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