Alternative Dispute Resolution For Energy And Infrastructure Projects - What Are The Alternatives?

Introduction

Energy and infrastructure construction projects take time, are technically complex, are of significant value, and involve a spectrum of participants with different interests. It is inevitable that there will be claims and disputes arising out of these projects. The contractor will ask for more time, more money, or both. Whilst not all claims will become disputes, it would be a rare owner that accepted every claim.

So, acknowledging that claims and disputes are going to arise, what is the best procedure to try and resolve them without having to resort to formal litigation or arbitration proceedings?

Agreeing your dispute resolution provisions – invest time now, save time and money later

Naturally, disputes are the last thing on the parties' minds as they work long and hard to negotiate and agree detailed contract provisions and to close the deal. However, a midnight-hour handshake on an agreement which includes boilerplate or unconsidered dispute resolution provisions is best avoided. Careful thought about the most suitable type of dispute resolution provisions at the outset will pay dividends on large-scale construction contracts. This is because the dispute provisions present the parties with a real opportunity to put in place alternative processes which will allow claims and disputes to be identified quickly, resolved efficiently and, above all, will allow the parties to maintain their focus on the real objective – the completion of the project.

A multitude of alternative dispute resolution processes can be used to try and resolve disputes in advance of formal proceedings.

Alternative methods of dispute resolution – what are they and why should parties use them?

Construction contracts are usually arranged so that, where possible, practical issues, including claims, are dealt with during the currency of the works. As a first step, the claim will be notified to and determined by the owner or its representative (the Engineer or Project Manager). If either party is dissatisfied with that determination, a number of other processes can be pursued to try and resolve the dispute in advance of formal proceedings. Typically, the procedure will involve at least one, but probably a combination, of the following, and the parties may be required to go through one step before they can proceed to the next:

Negotiation Conciliation or mediation Adjudication Litigation or arbitration, or, in some instances, expert determination There are a number of reasons why alternative dispute resolution processes can be advantageous:

They encourage the contractor to present sound and supported claims as early as possible. If a contractor knows that in order to establish its claim it is likely to have to go through not one, but a number of processes...

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