As part of our re:build Britain campaign, our Resolving disputes: when contracts go wrong webinar gathered construction specialists to look at the main types of dispute resolution available to the construction sector and to offer top tips for dealing with these disputes.
Simon Lewis, construction expert at Womble Bond Dickinson (WBD), was joined by a series of specialists from across the industry including Emily Leonard, Managing Associate at Womble Bond Dickinson, Rachel Gwilliam, a Senior Legal Manager at Bouygues Energies & Services, accredited TECBAR adjudicator Karen Gough of 39 Essex Chambers, Jessica Tresham, Partner at Womble Bond Dickinson and Hannah Gardiner, Associate at Womble Bond Dickinson.
The event touched on various types of alternative dispute resolution (ADR), as well as best practice for securing the most fair and amenable outcome for all parties and answering questions from attendees on their main concerns around disputes. The panel of experts outlined the following tips for successful dispute resolution.
A challenging landscape
Simon highlighted that the “series of shocks” that the UK economy has experienced in recent years – Brexit, the pandemic and cost of living crisis – have significantly impacted the construction sector. With the costs of materials and energy rising, the consequences are evident across the supply chain.
For adjudication expert Karen, the macro issues around the industry such as rising inflation, insolvency risks and material shortages will dictate the upcoming trends over the next 12 months. Karen predicted that during 2022 and 2023 fact-specific disputes will arise as a direct consequence of the pandemic, Brexit and global tensions such as the Ukraine conflict. The result: materials and labour shortages, steep price inflation project delays, security issues and insolvency risks.
Moving away from litigation
Emily emphasised the importance of industry and courts encouraging and supporting ADR where circumstances enable a dispute to be resolved without incurring the time and costs of a trial. Hannah agreed, citing that in 2019 and 2020, 68% of cases settled before trial and highlighted that mediation in particular can produce more durable and palatable results for all parties, due to its flexible and voluntary (less adversarial) nature.
Rachel touched on the NEC forms of contract (New Engineering Contracts), where options differ between tiers W1, W2 and W3 options, and outlined the types of dispute resolution available.
The right timing
Emily explained that mediation and negotiation options should always be in a party's mind and there is benefit in initiating ADR methods at critical points during the dispute process.
Jessica agreed that looking at key stages in the process and proposing mediation before a significant cost is due, for example, may be a consideration.
Preparation is key
The panellists were all in agreement that preparation is essential in a dispute. Emily explained that decision makers must be briefed adequately to achieve successful outcomes. For Karen, being clear about the dispute and the claim is vital, with parties needing to ensure their draft is well written and any supporting documentation is relevant and concise. She also recommended preparing and presenting expert reports in claims where extension of time or valuations are included. Jessica added that knowing the strengths and weaknesses of your own case is a crucial planning step, as well as understanding the possible costs involved and ensuring the required representatives have the authority to agree resolutions.
For Emily, the success of resolving disputes depends on several factors: comprehension of the issues, understanding each party’s position and whether the relationship will continue afterwards, adequate briefing of decision makers, and engagement with the process from each party throughout the dispute. Jessica reiterated the importance of considering whether a commercial relationship could continue after the process, explaining that mediation could help to salvage a relationship between parties following a dispute, as well as preventing adverse publicity.
It is extremely important to ensure clear and open communication with everyone in the process to allow for successful dispute resolution. Rachel also explained that having honest conversations with clients is important, as they will be aware of the market conditions in which everyone is operating. When it comes to adjudication, Karen stressed that playing games risks the integrity of the process and that honest communication is best.