CONSTRUCTION: A TREND SETTER IN DISPUTE RESOLUTION
As the international business world begins to make wider use of the dispute resolution techniques known as "ADR," it should look to the construction industry as the trend-setter in this growing area of business and law. Out of necessity, the construction industry has made unique and stellar contributions to modern day dispute resolution, and these techniques are increasingly being incorporated into main stream business relationships.
While traditional methods of dispute resolution have simply addressed business problems after they have manifested themselves in the form of disputes, the construction industry focuses on the causes, not just the symptoms, of disputes. The distinguishing feature of construction industry dispute resolution is the emphasis on the prevention, management, control, avoidance and earliest possible ("real time") resolution of disputes.
The construction industry has a long tradition of "real time" resolution of disputes. For example, during the last 100 years construction contracts have designated the project architect or engineer as the "dispute resolver of first resort," requiring that in the event of a dispute, the design professional should make an immediate, impartial but non-binding ruling on the merits of the dispute.
As a fall-back, if either party was unwilling to accept the decision of the design professional, the dispute would immediately be submitted to a single "ad hoc" arbitrator for prompt resolution, in an efficient and simple process held at the project site. This method, which usually did not involve lawyers, obtained an early and binding final resolution of the problem.
About a generation ago the single-issue "ad hoc" arbitration model was abandoned in favor of saving all unresolved disputes for resolution in a single project-end omnibus arbitration. At about the same period of time, design professionals' decisions fell out of favor as a dispute resolution device.
With the decline of these original real time dispute resolution techniques, the construction industry has come back stronger than ever with a more powerful and effective series of new techniques for preventing, controlling and providing early resolution of disputes at the project site.
Today enlightened managers in the industry are moving the dispute resolution process closer to the sources of the disputes through such techniques as intelligent pre-project planning, realistic risk allocation, incentives for cooperation, partnering, step negotiations, and dispute review boards.
These techniques, used in combination or separately, have been remarkably successful in avoiding problems, reducing adversarial relationships, and keeping disputes from interfering with the progress or profitability of the project.
Today, sophisticated participants in a well-managed construction project that uses these techniques would consider the project a failure if any construction disputes were not resolved at the job site during construction. As a testament to the effectiveness of these techniques in resolving problems without litigation, there are even a few construction lawyers in the United States, including our firm, are willing to undertake the representation of a construction client for the entire course of a project for a flat fee, with a stipulation that if the project ever gets involved in litigation or arbitration, the lawyer will refund the entire fee.
There is no reason why the innovative dispute prevention, control and early resolution techniques that have been developed by the construction industry cannot be adapted and used advantageously in other business relationships. In order to obtain the best results, one should consult a lawyer who is thoroughly familiar with these techniques so they can properly be adapted in other business relationships.
(This article is intended to provide the reader with general information and should not be considered a substitute for specific legal advice or opinion. Readers are advised not to act upon this information without seeking professional counsel.)
For further information please contact
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