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.     

Engineer’s Study Notes for Understanding the Arbitration Process

Using arbitration to resolve commercial disputes has many advantages over court-based litigation. These include the use of “judges” who understand the relevant technical issues and industry practices and thus reduce the probability of unpredictable results can significantly reduce the cost and delay associated with document exchange and depositions and can reduce the amount of time spent on evidence presentation in hearings. Engineers can play an important role when determining whether their organizations and their clients arbitrate or litigate. The use of arbitration requires contractual agreement. Without the inclusion of predispute arbitration procedures in the project’s contracts, it is likely that disputes will be resolved through litigation and not arbitration. Engineers can influence the inclusion of arbitration because they often suggest the forms of project contracts as representatives of engineering, contracting, or owner organizations. Engineers may also find themselves in management roles where they will be involved in a dispute that will be resolved via arbitration. As a party to the arbitration, it is important for the engineer to understand what influence he or she has in making decisions regarding the arbitration process. This paper provides guidance to engineers who are in a position to influence the inclusion of arbitration in the project contracts. This paper also provides suggestions about how the engineer can work with the attorneys to influence the best and most cost- and time-efficient result in the event an arbitration has been commenced. This paper is not a theoretical research paper but rather is a practical guideline based on the experience of the writers, who are engineers and who have been in the arbitration field, both domestically and internationally for over 30?years, seeing the good, the bad, and the ugly. Together, they share their insights on why the arbitration process can be the better choice for dispute resolution.     

Effective Management of Construction Dispute Resolution

The various methods of dispute resolution can be intimidating to the untested and daunting to even those who have experienced them. Yet no matter the method selected, the parties own the process and the result. It is therefore incumbent upon the parties to not only understand the various methods of dispute resolution, but they must also be prepared to manage the selected process to conclusion. This article reviews the various methods of dispute resolution and provides tools that parties can use to manage the selected process to an end result. While not a guarantee of success, these tools sufficiently increase the likelihood of making the selected method of dispute resolution an efficient and cost-effective process.     

Judging Unreasonable Litigation Behavior at the Interface of Mediation in the English Jurisdiction

Civil procedure rules (CPRs) in the English jurisdiction were introduced to restrain the adversarial and expensive litigation activities of the legal profession. Judges use case management to fix timetables for preaction meetings, disclosure, and trial dates. Under CPR both the judiciary and the parties have a duty to consider ADR alternatives such as mediation. Costs sanctions were implemented to keep in check unreasonable litigation practices and prevent the parties and their lawyers from creating delay and unwarranted expense. Evidence exists that construction parties are beginning to utilize mediation tactically both in the settlement phases activated by CPR and during the mediation process itself and some lawyers are reported to adopt an adversarial approach in mediation. This paper examines case law from the English jurisdiction on the application of the principle of “unreasonable behavior” in litigation to analyze how effective the specialist Technology and Construction Courts (TCCs) are in countermanding the strategic interplay of mediation within CPR and to determine the developing legal rules on mediation. Case law indicates that judges in the TCC are using costs sanctions to control abuse of the preaction protocols where there is a “substantial” lack of compliance but the Halsey criteria demonstrates an uncertainty in the application of the guidelines for delay and the timing of mediation, which can impact on the expense of litigation and may result in abuse or costs injustices. Further case analysis shows that negotiations in mediation are protected by the privileged status of “without prejudice statements” but unreasonable conduct in mediation will be examined by the court if both parties waive privilege or the abuse is such that it reaches the bar set for “unambiguous impropriety.” Further protection is provided through a developing principle of confidentiality but judges are likely to use their discretion in the “interests of justice,” for example, where there are allegations of economic duress. Neither unambiguous impropriety nor economic duress is likely to encompass uncooperative or adversarial approaches within the process or hard negotiations.     

Efficacy of Trust-Building Tactics in Construction Mediation

Distrust hinders disputing parties and mediators from achieving mediation success. Mediators therefore often use different trust-building tactics to generate some degree of trust in themselves and in the mediation process. This paper reports a study that identified the trust-building tactics used by construction mediators and examined the efficacy of these tactics with respect to their outcomes. Three study stages were designed. With reference to the mediation model of Sloan (1998), trust-building tactics and outcomes were first identified in Stage I. Next, the data were collected from accredited mediators with a questionnaire survey in Stage II. The collected data were then validated via reliability assessments in Stage III. With the use of multiple regression analyses, the efficacy of the trust-building tactics was examined by relating these tactics to their outcomes. The findings of this study suggest that the trust-building tactics used in Step 4 (i.e., explore interests) of Sloan’s (1998) mediation model are influential in developing trust among disputing parties and that they can also act as a time-saving tool in the mediation process. Furthermore, it was found that mediators can earn trust by adopting the trust-building tactics used in Step 3 (i.e., issues and trust) of Sloan’s (1998) model. These tactics can also serve to improve the relationships between the disputing parties. The results show that the trust-building tactics used in the final step (i.e., solutions) of Sloan’s (1998) model seem to have low efficacy in developing trust among disputing parties.     

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.     

Quantification of Costs for Dispute Resolution Procedures in the Construction Industry

The extent to which disputes affect the construction industry has been well-documented. There are a plethora of anecdotal stories, and even some data that explain how unresolved conflict can impact project cost, schedule, and quality. In response, many systems and procedures have been developed to address disputes and their resolution within the construction industry. However, no data exist that quantitatively compare these various alternatives and the real costs of resolving a dispute using methods other than litigation. This paper presents a framework for identifying and capturing the transactional costs incurred to resolve disputes throughout the full spectrum of resolution options. Transactional cost data from 46 recently completed construction projects, totaling over $2 billion of total installed costs, confirm that these sums can account for a large portion of the settlement/award amount, the original claim amount, and even the total contract value when using some dispute resolution methods. Furthermore, using dispute trend and cost data, a comprehensive dispute management system based upon the concepts of risk management is proposed, highlighting the overriding objective of promoting dispute avoidance/resolution in the most cost-efficient manner possible.     

Effectiveness of Dispute Review Boards

A Dispute Review Board (DRB) is a panel of three respected, experienced industry professionals jointly selected by the owner and contractor of a project and established at the beginning of a construction project. It meets regularly at the job site to be briefed on the work, the schedule, and any potential issues in dispute. With the use of DRB growing, a pilot study was undertaken to determine the attitudes of industry members concerning its effectiveness in preventing and contemporaneously resolving 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.     

Dispute Resolution in the Construction Industry in Ireland: A Move to Adjudication?

Dispute resolution in the construction industry in Ireland is about to change radically with the introduction of the new Public Works forms of contract. Traditionally, Ireland has had an image of being able to resolve disputes by the use of informal channels and recourse to formal dispute resolution was seen as something to be avoided. Will this now change? This paper reviews the forms of dispute resolution which have traditionally been used in Ireland and details the new form of dispute resolution which is to be introduced. The new form of dispute resolution is unique and does not fit easily into any standard dispute resolution category. How will this dispute resolution procedure operate in practice and how will it affect the ability of parties to resolve disputes? This paper intends to provide an insight into the answers to these questions.     

Progress of Statutory Adjudication as a Means of Resolving Disputes in Construction in the United Kingdom

This paper reports on a longitudinal study on the progress of statutory adjudication in the United Kingdom since its commencement in 1998. This study was carried out by the Adjudication Reporting Centre at Glasgow Caledonian University and it considers the statistical data provided by both Adjudicator Nominating Bodies and adjudicators themselves. Various trends are shown and reasons explored. These trends include the growth in adjudication referrals, numbers of adjudicators, causes of disputes, sums of money in dispute, seasonal trends, monitoring of adjudicators’ performance, procedures adopted, time limits, fees, etc. There is evidence that the disputes, while still predominantly about payment and valuation issues, are becoming larger and more complex. The impact of statutory adjudication on other forms of dispute resolution is considered.     

Adjudication in the United Kingdom: Constitutional Implications

Good ideas are often overtaken by great events. That happened to adjudication. Originally envisaged as a single concept applying across the United Kingdom, it has been overtaken by more significant constitutional change. This paper takes a look at that process. Something of a parallel could perhaps be drawn with the individual states in the United States each introducing a similar form of legislation. The possibility exists, of course, of each area adopting a different approach but the indications are that certain communality is developing in adjudication and it is, perhaps, a measure of the success of the concept of adjudication that it is being voluntarily adopted in other dependency areas such as the Isle of Man.     

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.     

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.     

Moderating Effect of Equity Sensitivity on Behavior-Outcome Relationships in Construction Dispute Negotiation

This study builds on Adam’s equity theory by examining the moderating effects of equity sensitivity (i.e., a person’s perception of what is equitable or inequitable) on behavior-outcome relationships among negotiators in construction dispute negotiation. First, an equity sensitivity construct is developed. This construct reveals that most construction negotiators are entitleds, also known as “takers,” at the negotiation table. Moderated multiple regression (MMR) is used to test the moderating effects of equity sensitivity. The MMR models affirm that the nature of behavior-outcome relationships varies, depending on the perception of equity. An entitled construction negotiator is found to be a versatile moderator who fosters satisfactory negotiation outcomes. The models show that negotiators are able to predict inequitable responses and to take measures to forestall or deal with different inequitable situations. This study indicates the merit of further study of equity theory in the context of construction dispute negotiation. Future challenges in this area include the examination of the equity restoration responses of negotiators to create an equitable environment.     

Exploring the Influence of Contract Governance on Construction Dispute Negotiation

The obligations and rights of the contracting parties are typically set out in the conditions of contract. The attempt to have a “water-proof” contract that caters to all eventualities has turned contracts into management manuals with detailed contractual procedures to deal with, inter alia, performance, changes, payment, approval, and dispute resolution. Contract disputes, therefore, have to be negotiated within the ambits of the contracts. This study revisits the assumption of free negotiation that underpins most conventional negotiation studies, i.e., negotiation is free with rational negotiators who can walk away from the negotiating table at will. Constraints imposed by a contract are collectively described as contract governance. With taxonomies developed through principal component factor analyses for contract governance (CG) and negotiating behaviors (NH), the influence of CG and NH is explored by a Pearson correlation analysis. In general, it was found that dominating and obliging behaviors are mostly influenced by CG while compromising behavior is the least influenced. It was further found that procedural requirements influence all types of negotiators under the Rahim organizational conflict inventory except integrators. This suggests that if negotiators are having concern for both themselves as well as their counterparts, amicable settlement is possible notwithstanding the complex procedural requirements.     

Dispute Review Boards: Elements of a Convincing Recommendation

This paper will discuss the dispute review board (DRB) process and in particular the settlement recommendation and the elements thereof that may induce contractual parties to resolve their conflict. The recommendation is a document issued after the contractual parties bring a dispute to the DRB panel that they have failed to resolve. To lay the foundation for the issuance of a recommendation, the DRB process will be briefly discussed. Also discussed is the groundwork the panel itself must lay to gain the parties trust prior to the issuance of any recommendation. Given the importance of the recommendation as a linchpin of the DRB process, it is surprising to note the dearth of literature regarding it. This paper will help to partially fill that void.     

Dynamic Conflict Management in Large-Scale Design and Construction Projects

The construction industry plays a major role in both the economy and infrastructure project delivery worldwide. However, one major critical characteristic of the construction industry is the high cost incurred by the resolution of arising conflicts in projects. As a result, project managers are seeking ways to avoid conflicts and resolve them effectively and equitably when they happen. This paper discusses the dynamic nature of conflicts in terms of their evolution and escalation within a project and the interaction between conflicts and dispute avoidance and resolution techniques (DART). The paper also presents the background and development of a conflict management system, entitled the DART Simulator (DART-S). The intent of the DART-S is to provide project managers with a comprehensive and integrated approach to evaluate the impact of a DART implementation on the reduction of conflicts. The simulator was built using a system dynamic modeling within a visual simulation environment. The core of the simulator was developed by using data from literature on the nature of conflicts, dispute resolution processes, and the potential effectiveness of 46 different DART-S on conflict avoidance and resolution. The simulator was then tested and verified with a case study comparing the traditional two-step dispute resolution process with a five-step dispute resolution process. The results of this comparison clearly show that the five-step dispute resolution process is able to decrease the initial number of conflicts of a project, reduce the number of conflicts which may escalate to a higher step in the resolution process, and provide resolutions of conflicts before they reach litigation. By quantifying the amount of conflicts, evaluating the evolution of conflicts, and assessing the impact of DART implementation on conflict escalation, the DART-S provides project managers with an integrated strategy for conflict management.     

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.     

Insight into Resolving Construction Disputes by Mediation/Adjudication in Hong Kong

Resolving construction disputes using an adversarial approach is considered to be in opposition of the maintenance of a harmonious relationship between two parties. The modern arbitration process may emulate the litigation proceeding leading to delay and cost escalation. During the past decade, the Hong Kong Government has implemented a mediation clause as an alternative mode for settlement of construction disputes. In this paper, the experience and insight into resolving construction disputes by integrating mediation and then arbitration in Hong Kong are highlighted. The state-of-the-art modern mediation process and its philosophical origins are reviewed. The shortcomings of the present system are pinpointed. The success of the adjudication now practiced in the United Kingdom may suggest that there is a place for another process of dispute resolution, which may help improve the situation. The prospect of the proposed mediation/adjudication and then arbitration mechanism is discussed with particular reference to the construction industry in Hong Kong.