MANAGING AND RESOLVING CONSTRUCTION SECTOR DISPUTES
CD: What key trends have you seen in construction sector disputes over the last 12-18 months?
White: The most striking trend is the decline in the number of disputes that have led to formal dispute resolution proceedings. Typically, during tough times, we notice a marked upturn disputes. That has not happened in this cycle. I also see greater attention to the identification and management of risks that can lead to disputes as the new cycle of projects has begun.
CD: What types of disputes seem to emerge regularly in this sector?
White: Commercial disputes typically fall into three categories: delays, defects and scope changes. The industry also concerns itself with personal injury and safety claims as well.
CD: Speed is a key concern in construction related disputes – without cash moving down the payment line, projects can grind to a halt. With this in mind, to what extent are parties involved in construction projects willing to sacrifice an optimal resolution for a quick resolution?
White: There is a growing trend toward that kind of dispute resolution, though only as an interim measure. Players in the construction market for large projects recognise that delay in resolution of a dispute is often the worst thing for a project. So, the use of DRBs and interim resolutions, with money moving under programs like the UK’s adjudication process, are growing in popularity. Those procedures call for a quick and dirty resolution of the issue, with money moving and a reservation of rights to appeal or otherwise contest the interim ruling after project completion. It is interesting to note that very few projects have involved post-completion reviews of the interim ruling. We also see the growing use of ‘standstill agreements’ where the parties agree to work to overcome a problem under an agreement that information exchanged, statements made and steps taken cannot be used in a subsequent dispute proceeding.
Oct-Dec 2013 issue
Dentons US LLP