Construction Mediation Landscape in the Civil Justice System in Hong Kong

Alternative dispute resolution techniques as means to speedily and economically resolve certain types of disputes have been well recognized. In this regard, some jurisdictions have opted to use mandatory adjudication to deal with construction, in particular payment-related disputes. The situation in Hong Kong is a bit different. The Government of the Hong Kong Special Administrative Region aspires to make Hong Kong a hub for arbitration and mediation services for the region. Voluntary mediation has been introduced in the civil procedures rules of the High Court as part of the newly launched Civil Justice Reform. Adverse cost order is used to discourage “refusal to mediate” and “failing to attempt to mediate.” While the new measures that came into effect on April 2, 2009, sound sensible, a better picture on the actual impacts will unfold as more cases reach the Court. Nonetheless, the cost sanction may be able to make the voluntary use of mediation less voluntary.     

Adjudication: Temporary Binding and Tiered Dispute Resolution in Construction and Engineering: Hong Kong Experience

Hong Kong (under the “One Country Two Systems” Policy, Hong Kong, although an administrative region of the PRC operates a separate legal system, whose roots lie in the English common law system) has a justified reputation for being at the forefront of developments in techniques to avoid and resolve disputes in the construction industry. [This is illustrated by the adoption of the UNITRCAL Model Law by the Arbitration (Amendment) Ordinance 1996, specific powers given to Arbitral Tribunals under the Arbitration Ordinance (Cap. 341) including powers to consolidate, and the development of the dispute resolution adviser system. See the genesis, development and future use of the dispute resolution adviser system by Colin J Wall, Hong Kong Society of Construction Law dated November 17, 2004]. However, it has not, to date, seen the widespread adoption of adjudication as a means of resolving disputes. This article examines the history of the use of adjudication in Hong Kong, current trends, and offers some possible reasons for the limited adoption of adjudication.     

What do disputants want? Preferences for third party resolution procedures.

Traditional adjudicative procedures for resolving small claims disputes have been augmented with less formal means of dispute resolution including arbitration and mediation. Exp 1 (74 undergraduates) investigated initial preferences and perceptions of the consequences that are likely to follow adjudication, arbitration, and mediation. Results revealed that Ss preferred mediation over adjudication. Mediation was viewed as having greater interpersonal focus, while adjudication was perceived as more fair and solution focused. Exp 2 (122 undergraduates) examined the impact of 3 dispute characteristics (strength of position, nature of relationship, other party's cooperativeness) on preferences for mode of resolution. Overall, preference was mediated by case strength, with differences in case strength related to perceived differences in the extent to which the various procedures would facilitate a favorable outcome. (French abstract) (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

Perspective from the United States: Tensions between “Getting It Done” and “Getting It Right”

For over 2 decades, and in response to complaints that arbitration was too expensive and too time consuming, the American construction bar has been energetic and innovative in developing a broad array of dispute resolution tools for resolving construction disputes. These “tools” have included “partnering,” mandatory negotiations, interim decision making by design professionals, mediation, standing neutrals and dispute resolution boards, minitrials, early neutral evaluation, and expert determinations, all developed as alternatives to arbitration and litigation. More recently, in 2006, a voluntary “fast track” process for resolving construction disputes within 100?days has been proffered by the CPR Institute for Conflict Prevention and Resolution. Yet, there are certain dynamics or “tensions” inherent within, and associated with, all construction disputes that continue to resist efforts to speed up dispute resolution processes; these tensions must be reconciled or taken into account before any fast track or “adjudication”-type process will be generally accepted in the United States construction industry. Thus, for now and in the foreseeable future, there will continue to be a smorgasbord of dispute resolution processes for resolution of construction disputes. This is a good thing, because parties to construction disputes come with a great variety of appetites and needs. The focus of attention should be, not so much on development of the ideal or best dispute resolution tool, but having a willingness to select the “best tool for the job,” after the nature of the dispute is known.     

Construction Adjudication in the United Kingdom: Past, Present, and Future

Adjudication was enacted in the Housing Grants, Construction and Regeneration Act (1996) as a means of improving payment practices in the U.K. construction industry. It is a statutory right that can be invoked unilaterally at any time on a construction contract that is in writing and is a quick (28?days) and usually inexpensive alternative to arbitration or litigation covering all manner of disputes. Construction adjudication has developed from zero in 1998 to 2,000 cases in the year 2002 reducing to about 1,500 cases per annum currently. Construction adjudication produces a decision that is “temporarily binding” and will be enforced by the courts until the substantive issues in dispute are resolved by litigation, arbitration, or agreement. The principles of natural justice apply but the courts apply them pragmatically because of the statutory time scales. The adjudicator may get the decision wrong. The courts will still enforce the Decision. A dispute must exist for adjudication to be invoked. A governmental review of the Act has resulted in recommendations including extending adjudication to oral contracts.     

The Effective Mediator

Mediation is becoming the premier method of resolving disputes within the construction industry. The linchpin to the mediation process is the mediator. An effective mediator may make the difference between mediation success or failure. Yet, considering the importance of an effective mediator, there is a dearth of information as to the attributes of one and how to recognize and retain one. Considering the importance of mediation in the arbitration process as well as the trend toward court ordered mediation, it behooves industry members to understand the attributes of an effective mediator. This paper will discuss the skills an effective mediator needs to assist the parties in moving forward, crafting a sustainable settlement as well as leave the disputing parties and their counsel satisfied with the process and result. It will alert readers what to look for when engaging a mediator’s service and what questions need to be asked in the quest for the effective mediator to assist in the resolution of disputes.     

ADR: Trial Lawyer's Perspective

Despite the current publicity and popularity of alternative forms of dispute resolution (ADR), trial lawyers are urging a careful evaluation of the trade‐offs involved in choosing between traditional adjudication and ADR, both in general and in construction disputes specifically. The writer first presents recent evidence that casts some doubt on the justification for complaints against our system of formal litigation. He then discusses the major factors to be weighed in choosing between traditional adjudication and an ADR technique by parties involved in construction disputes. Among the factors considered are costs, certainty, sufficiency of information, the right of review, privacy, and guidance. He concludes with the contention that arbitration and other ADR techniques can be advantageous in many cases, so long as they are voluntary rather than mandatory.     

Logistic Likelihood Analysis of Mediation Outcomes

Dispute persists in all building and construction projects. Alternative dispute resolution methods are now commonly used as a means to resolve construction disputes. Mediation, interalia, is the popular choice in Hong Kong due to its cost-saving, flexible, speedy, confidential, and voluntary attributes. In mediation, tactics used by a mediator is central in driving desired outcomes. This paper reports a study that employs logistic regression (LR) to predict mediation outcomes respective to the tactics used. To achieve this, three main stages of work are involved. First, taxonomies of mediator tactics and mediation outcomes were developed. With these, the second stage included the development of logistic regression models each with a mediation outcome taxonomy as dependent variables and the taxonomies of tactics as independent variables. In the third stage of the study, the LR models were validated using an independent set of testing data. The LR models suggested that “win-win settlement,” “progress,” “improvement,” and “time advantage” are responsive to mediator tactics of “ice-breaking,” “trust building,” “encourage for self-improve,” and “process control,” respectively. In addition, it is observed that these relationships are positively correlated.     

MAUT-Based Dispute Resolution Selection Model Prototype for International Construction Projects

Disputes are common in international projects because of contractual, cultural, and legal factors. The dispute resolution methods currently adopted in international projects are varying, including litigation, arbitration, adjudication, mediation, expert-determination, dispute resolution board, and minitrial. The problem in question is on how to select the most appropriate resolution method that can fit nicely in the nature of the dispute and the disputing parties’ needs. A dispute resolution selection prototype (Model) based on the analytical hierarchy process and multiattribute utility technique (MAUT) is presented in this paper. The Model developed consists of five components: Selection factors, dispute resolution methods, utility factors, relative importance weightings, and user’s preferred weightings. These were based on the quantitative data provided by 41 experts in the field, who were barristers, arbitrators, mediators, and project managers. The Model is considered beneficial to the industry, as it provides construction professionals with a systematic and objective approach in the management of international project disputes.     

Evolution of Statutory Adjudication as a Form of Dispute Resolution in the U.K. Construction Industry

This paper reports on the rapid growth in the use of this form of dispute resolution and its apparent decline. It considers how this novel form of dispute resolution has changed in nature from its original limited role of providing a speedy and inexpensive process of resolving disputes so that cash could flow in the industry and be of help primarily to those in the lower reaches of the subcontracting chain into a highly developed legal process which has increasingly been utilized for large and contractually complex disputes. Statutory adjudication is still used extensively in the U.K. construction industry as the method of choice to resolve disputes, many of which would previously have gone to court or to arbitration. Data for this study were provided by the Adjudication Reporting Center at Glasgow Caledonian University.     

International Construction Dispute Adjudication under International Federation of Consulting Engineers Conditions of Contract and the Dispute Adjudication Board

The role of institutional arbitration has become significantly less commercially viable in the international construction industry as a primary means of dispute resolution because of the uniqueness of the construction process. As a result, the construction industry has developed an innovative form of primary dispute adjudication called the Dispute Adjudication Board (DAB). This paper will show the need for an efficient dispute resolution process because of the globalization of the construction industry. It will focus on the standard contract forms of the Féderation Internationale des Ingénieures-Conseils (International Federation of Consulting Engineers) (FIDIC), which are widely used in international construction projects. The paper will then discuss recent developments in the FIDIC, including the development of the DAB to address the fundamental need for a commercially viable means of construction dispute adjudication.     

Mediation∕Arbitration: Alternative Dispute Resolution Process

Interest in alternative dispute resolution (ADR) techniques for the construction industry has grown in recent years. Traditional litigation has been criticized on several fronts. The traditional procedures are often cumbersome, expensive, and lengthy. The outcome of litigation is uncertain and often confusing. For certain cases, alternative procedures may be useful in quickly resolving disputes. Sometimes there is no alternative to litigation. Each case is unique, and the appropriate form of dispute resolution mechanism must be established for each project. This paper reviews the process of mediation∕arbitration, and compares that process to other alternative dispute resolution procedures.     

Adjudication outside Construction, Adjudication for Consumer Disputes

Adjudication is increasingly seen as the preferred means of resolving many construction and consumer disputes. As one party in dispute observed in a personal communication to the writer “It is a forum to finally express my woes. One can often feel helpless . . . in this situation and the process of adjudication has proved cathartic.” However, the differences between construction adjudication and consumer adjudication are not often understood or appreciated. This paper, first, explores some of those differences using, as an illustration of consumer adjudication, the Communications and Internet Services Scheme (CISAS) administered by IDRS Ltd. for the Chartered Institute of Arbitrators and approved by the Office of Communication which is the regulator for the U.K. telecommunications and Internet industry. Second, it looks forward to how the advantages of both may be combined to produce more effective dispute resolution with consistently high standards for resolving differences between parties, ensuring disputes are always effectively and efficiently investigated while streamlining procedures so that they are easy to use, transparent, and cost effective.     

Disputes and Dispute Resolution Systems in Sino-Foreign Joint Venture Construction Projects in China

There has been a sharp increase in the number of Sino-Foreign Joint Venture (SFJV) construction projects in the People’s Republic of China since the 1990s. Despite the Chinese Government’s new measures for boosting foreign involvements, entering into the construction market remains problematic for many foreign contractors. One of the problems concerns construction disputes. In light of this, this paper reports a study on disputes and dispute resolution systems in SFJVs. A questionnaire survey of 41 practitioners in the field was carried out. The main purpose was to identify the most common sources of disputes and the most commonly used dispute resolution methods in SFJVs. Results show that the sources of construction disputes can be classified into three categories: contractual, cultural, and legal matters. The most commonly used dispute resolution methods are mediation and arbitration. These findings will give both Chinese and foreign contractors invaluable insights into disputes and dispute resolution systems in SFJV projects.     

Alternative Dispute Resolution Techniques: Design Professional's Perspective

Alternative dispute resolution (ADR) techniques offer members of the design‐construct community the opportunity to resolve disputes without having to resort to expensive and lengthy litigation. Disputes inevitably arise because elements of the design‐construct process, such as contracts, specifications, and personnel, are not perfect. Even with a qualified project team that is dedicated to the construction of a quality project, some disputes will occur. Knowing this, a project team's primary objective should be to anticipate circumstances which might generate a dispute and to develop proactive strategies for dealing with such circumstances. When a dispute does occur, internal negotiation should be tried first. This process involves decision makers—those involved financially and those who understand the ultimate impacts of the dispute on the quality and long‐term success of the project. Lawyers should not actively participate in internal negotiation except as a last resort. If this process does not generate a settlement, mediation and arbitration should be tried before commencing litigation proceedings. ADR is an approach to dispute resolution that may be less expensive and time‐consuming, and is more likely to yield “win‐win” settlements than other dispute resolution techniques.     

Legal Framework for Alternative Dispute Resolution: Examination of the Singapore National Legal System for Arbitration

Effectiveness of any alternative dispute resolution (ADR) method depends on the national legal system to which it is subjected. In Singapore, the increasing growth in the use of ADR methods may be adduced to developments in the Singapore legal environment. This paper reviews the characteristics of the Singapore national legal system for arbitration. It examines how the legal system facilitates effective use of ADR. By its features, the Singapore national legal system ensures parties’ autonomy but deters parties from taking opportunistic advantage of the voluntary nature of ADR. It enables procedural flexibility, and confidentiality of arbitration proceedings. It insulates the arbitration process from intervention from the Singapore courts and from corruption; and it provides maximum judicial support in the arbitral process. Hence, it ensures that disputes can be brought to a conclusion within a reasonable amount of time, at a reasonable cost, as well as preserving business relationships. The Singapore legal system insures the integrity of arbitration and the independence of arbitrators and arbitral institutions by immunity provisions. In addition, the legal system enhances the use of mediation and conciliation in a sequential tier with arbitration by providing a time limit for mediation or conciliation to terminate should they fail to produce a mutually acceptable settlement. In Singapore, the court system is generally known to be efficient; hence, ADR faces the practical challenge of becoming lengthier than court proceedings. The continuing search for and use of expedited arbitration procedures by arbitral institutions such as the Singapore International Arbitration Centre should reduce this challenge. This paper provides useful information on how a national legal system may be designed to support the use of ADR methods and facilitate their effectiveness.     

Adjudication: Singapore Perspective

Adjudication was introduced into Singapore under the Building and Construction Industry Security of Payment Act of 2004. The Singapore regime is the seventh of its kind, taking after the precedent regimes in the United Kingdom, Australia (in the states of New South Wales, Queensland, Victoria, and Western Australia), and New Zealand. The adjudication regime in Singapore most closely resembles the regime in New South Wales under the Building and Construction Industry Security of Payment Act of 1999. Based on the statistics currently available, it would appear that the Singapore regime has enjoyed some success thus far in achieving its policy objectives of expediting payment and improving cash flow within the construction industry. There is some indication that this has been due to a positive change in the underlying mindset towards payment in the construction industry. Nevertheless, it remains to be seen whether this success can be sustained and improved upon. This may have wider implications including a possible reduction in the use of litigation and arbitration proceedings for resolving construction payment disputes in Singapore.     

Dispute Review Boards: Expected Application on Egyptian Large-Scale Construction Projects

The construction industry is heavily affected by the troubles arising out of construction disputes, especially when it comes to large-scale projects, as a direct result of the inherent complexity of such projects. This paper seeks the most suitable dispute-resolution mechanism for large-scale construction projects in Egypt, which is a developing country in the Middle East with an emerging reformed economical policy, a population in excess of 70 million people, and an increasing need for infrastructure and industrial development. This dispute-resolution mechanism was attained through a multistep methodology that (1) started with the study of the Arbitration process in relation to an Egyptian construction project with an initial contract price of 85 million; (2) continued with interviews of five senior experts in the field of construction disputes in Egypt about their views pertaining to the most efficient dispute-resolution methodology for Egyptian megaprojects; (3) developed a tailored questionnaire to assess the perceptions of 35 professionals toward the issue of construction disputes and dispute resolution mechanisms, including DRB; (5) concluded by carrying out a what-if scenario for the arbitration case of the large-scale construction project using DRB instead of arbitration. On basis of the analysis of the methodology, the authors concluded that despite the wide range of current dispute-resolution methodologies, the employment of DRBs in accordance with a set of 13 regulatory guidelines should mitigate the negative effects of disputes in Egyptian large-scale construction projects. Accordingly, this paper is both timely and valuable for all owners, contractors, and professionals who are acquainted with Egyptian megaprojects.     

Evaluating Learning Approaches of Construction Students in Hong Kong through a Matrix Framework

Learning is a process of acquiring knowledge, and students may adopt different learning approaches to achieving their learning goals. While educationalists can draw up what they believe is a good construction curriculum for students, students’ learning would depend on their own learning approaches and attitudes. Acknowledging a lack of research on the learning attitudes of construction students, a matrix framework of learning approaches (MFLA) based on the relationships between three learning motives and three learning strategies is proposed in this paper. The MFLA enabled a major empirical survey to be carried out in Hong Kong to examine the learning characteristics of construction students. A questionnaire based on Biggs’s study process questionnaire was distributed to five groups of construction-related students in three universities in Hong Kong. The results of the survey indicate that seven of the nine hypothetical learning approaches exist in construction education in Hong Kong. The assortment of learning approaches used varied across the five student groups. As a result, different teaching and learning factors should be adopted by educators of construction students to meet the distinctive characteristics of students in various universities.     

Exploring Critical Success Factors for Partnering in Construction Projects

The construction industry is a very competitive high-risk business. Many problems, such as little cooperation, lack of trust, and ineffective communication resulting in adversarial relationships between contracting parties, are facing the construction industry. Partnering is perhaps one of the most innovative developments in delivering a project efficiently and reducing construction disputes. It provides a sound basis for a “win-win” climate and synergistic teamwork. Project partnering in the Hong Kong construction industry has gained in popularity since 1994. A number of potential factors contributing to partnering success have emerged and deserve further study. This paper presents a review of the development of the partnering concept in general and identifies critical success factors for partnering projects from the Hong Kong perspective in particular. Through a postal questionnaire survey geared toward project participants with hands-on partnering experience, the opinions of various parties—clients, consultants, and contractors were sought and evaluated in relation to partnering success factors. The relationship between the perception of partnering success and a set of success factors hypothesized in the study was derived using factor analysis and multiple regression. The results indicated that certain requirements must be met for partnering to succeed. In particular, the establishment and communication of a conflict resolution strategy, a willingness to share resources among project participants, a clear definition of responsibilities, a commitment to a win-win attitude, and regular monitoring of partnering process were believed to be the significant underlying factors for partnering success. Such an identification of success factors could well formulate effective strategies for minimizing construction conflicts and improving project performance.