UK: An Introduction to Dispute Resolution Procedures – Part 2

Last Updated: 2 August 2006
Article by Nicholas Gould

In the concluding of a two-part article, (to read part 1 please click here) Nicholas Gould considers some of the alternative and more innovative dispute resolution procedures that are used in the construction industry.

Mediation and Conciliation

ADR is usually taken to mean "alternative dispute resolution", or "appropriate dispute resolution". The most frequently encountered ADR technique is mediation or conciliation. There is little difference between the processes, however, a distinction that can be drawn is that in the construction industry conciliation might be more evaluative. An example of this is the ICE conciliation procedure. If the parties cannot agree a settlement then the conciliator will make a binding recommendation. On the other hand, CEDR promote a process of mediation whereby the mediator does not make a recommendation.

Mediation is essentially an informal process in which the parties are assisted by one or more neutral third parties in their efforts towards settlement. Mediators do not judge or arbitrate disputes. They advise or consult impartially with the parties in order to try to find a mutually agreeable resolution to the dispute. Normally, a mediator cannot and does not impose a decision on the parties, but assists them through their own settlement.

This does not mean that mediation is a soft option. Mediators should and do use a variety of techniques to explore the basis of the dispute and seek a resolution. This can often mean that the parties need to make some tough decisions during the course of the mediation. Essentially, the parties must reach an agreement, and so need to take a sensible and pragmatic view about the issues in dispute. In some respects, the soft option is to allow the judge or arbitrator to make that decision for them. In many mediations, the parties need to make some difficult decisions about whether to pursue or abandon parts of their claim.

The main benefits of mediation are:

  • Speed. The average mediation lasts 1-2 days. Complex multi-party, multi-million pound disputes can be resolved in this period. There is of course a short period of time leading up to the mediation during which the parties exchange relevant documents and outline their position.
  • Costs. Clearly a short mediation is far cheaper than a lengthy trial or arbitration.
  • Confidentiality. The proceedings are, like mediation, confidential.

Mediation has grown steadily in the UK since 1990, and is now used in a wide range of disputes, especially construction and engineering disputes.

Dispute Boards

The collective term Dispute Board "DB" covers the concept of Dispute Review Boards "DRB" and Dispute Adjudication Boards "DAB". DRBs initially developed in the USA. DRB comprises three independent people who evaluate disputes during the course of the project and make settlement recommendations to the parties. The recommendations are not binding.

Each party selects a board member and the parties may then agree on the third, or if they cannot agree the two board members will select the third board member. The DRB then periodically visits the site to gain familiarity with the project and the individuals working on the project. This means that if a dispute arises the board members understand the project and have already built some rapport with the individuals working on the project. They can then deal with disputes by hearing presentations from the parties and suggest solutions.

The term DRB can be misleading, as many contracts that include a DRB now provide for the DRB to make binding decisions. One should therefore carefully check the contracts in order to see what it is the DRB is actually doing.

More recently, a DAB process has been included in the 1999 FIDIC suite of standard form contracts. The key distinction between a DRB and a DAB is that a DAB considers submissions from the parties and then issues a written binding decision. The parties are obliged to comply with the decision, and unless they issue a notice of dissatisfaction within 28 days of the giving of the decision, the decision becomes final and binding.

The FIDIC form of contract provides a period of 84 days from the notice of dispute to the giving of the decision. The FIDIC contract is relatively widely used on substantial international projects. If FIDIC were to be used in the UK, then the DAB procedure would not comply with the HGCRA (because the decision is not given within 28 days) and so the parties will be able to refer a dispute to adjudication under the Scheme for a decision within 28 days.

However, FIDIC is used on large international projects where the UK legislation does not apply. Further, the 84 day period is more appropriate for international projects where the DAB members will probably need to travel from various parts of the world in order to meet up and review the projects. Co-ordinating DAB meetings therefore takes time.

DBs are particularly suited to large complex projects. The benefits of DB’s include:

  • Project based. Disputes are resolved during the project in order to keep the project progressing towards completion;
  • Dispute avoidance. The mere existence of the board encourages the avoidance of disputes: and
  • Project knowledge. The board members visit the project and get to know the individuals involved with the delivery of the project. This means the board can turn its attention to the detail of the dispute without the need to spend time understanding the parties, the contract and the general details of the project.

Project Mediation

Project mediation attempts to fuse team building, dispute avoidance and dispute resolution in a single procedure. A project mediation panel is appointed at the commencement of a project. It comprises usually a lawyer and one commercial expert who are additionally trained as mediators. There is an initial meeting at the start of the project in order to familiarise the project team with the procedures.

The panel visits the project during the course of construction. They become familiar with the project and the individuals working on the project. The project mediators are then available to resolve any differences, hopefully before they escalate. Project mediation is, therefore, very much a dispute avoidance technique, although with the ability to hold informal or formal one day mediations during the project to resolve any issue that might arise.

It is a recent development and has only been used on a small of occasions. However, it does offer some distinct advantages:-

  • Economy. It is far more economic than a DRB or DAB, and is therefore available for use on many small and medium sized contracts. A single project mediator could of course be used on a smaller project.
  • Avoidance. Many in the construction industry now place great emphasis upon dispute avoidance and are more willing to face up to and deal with disputes in a commercial manner. Project mediation allows such players in the industry to avoid and resolve disputes more economically.
  • Confidential. It is confidential and effective.

The author has drafted a project mediation procedure that CEDR is hoping to launch later this year. A standard procedure will be available for those that would like to use project mediation on their projects.


There are clearly a wide range of dispute resolution techniques available to those working within the construction industry. Many of the standard forms will dictate the applicable dispute resolution technique for a particular project. Care is therefore needed when putting together contract documents. Thought should be given to the most appropriate dispute resolution technique for a particular project, or better still a dispute escalation clause should be included which provides for disputes first to be considered by senior managers before progressing to mediation and then either litigation or arbitration.

If the Housing Grants Act applies, then adjudication will always be available "at any time". In respect of arbitration, thought should be given to whether the 100-day procedure is an appropriate one that could be adopted for the project. For lower value projects the 100-day procedure should certainly be seriously considered, however, for larger projects it is perhaps less desirable.

For further articles by Nicholas Gould please visit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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