Legal: Time to take the pledge

We are all only too aware of the costs associated with disputes in the construction industry, even where traditional methods of resolving them have been eschewed in favour of attempts to nip issues in the bud, such as contractually agreeing to escalation of negotiation procedures and facilitative mediation. In an attempt to address some of the difficulties, a different approach is now being heralded. In the spirit of promoting goodwill among all those involved in construction projects, a number of industry bodies have recently teamed up with two major employers to launch the Conflict Avoidance Pledge (CAP).

While this is all (so far) being done on a voluntary basis, it chimes well with the growing use in construction contracts of clauses requiring parties to “discuss and negotiate” first before embarking on a more formal stage of the dispute resolution process. A typical – and potentially expensive, if carried through to its conclusion – ascending scale of such processes, is: without-prejudice discussion and negotiation (no lawyers); mediation; adjudication (often without extensions of time), followed by arbitration or litigation.

Recent experience of large and commercially influential bodies in the infrastructure sector such as Network Rail and Transport for London, which have used conflict avoidance and early intervention methods to bring parties to the table at an early stage of a potential dispute, has led to the setting up of the Conflict Avoidance Coalition Steering Group (CACSG), which is responsible for devising the CAP. Members include the RICS, RIBA, the Chartered Institute of Arbitrators, the  Institution of Civil Engineers, the International Chamber of Commerce UK, the Dispute Resolution Board Foundation and the Chartered Institution of Civil Engineering Surveyors. 

Having a skilled panel available on permanent standby, able to act fast and with a high level of technical expertise, enables early resolution of problems before they transform into fully fledged disputes

In its current (2014-19) programme of upgrade work, Network Rail has used dispute avoidance panels to provide reports whose focus is to alert parties to potential problems and ways to resolve them; they do not include either binding or non-binding recommendations. Having a skilled panel available on permanent standby, able to act fast and with a high level of technical expertise, enables early resolution of problems before they transform into fully fledged disputes. There are cost implications, but these are more than made up for by the saved costs of dispute resolution (almost inevitably much more substantial). 

As part of its own extensive refurbishment works, Transport for London has adopted a conflict avoidance process whereby differences are resolved at an early stage by the parties’ directors and/or managers, not by lawyers. This helps in retaining good commercial relationships, and avoids or significantly reduces legal costs. The disadvantage is the risk of being bound by a result that might have been different had professional legal representation been engaged.

Other recognised forms of early intervention and/or resolution processes are:

n Early neutral evaluation (ENE)

n Use of dispute boards, both dispute review boards and dispute adjudication boards. Dispute boards are widely used in the US, and now more frequently in a range of international building projects. In the UK they were used in the Channel Tunnel and the London 2012 Olympic projects.

n Evaluative mediation (as opposed to simple “facilitative” mediation). 

The actual terms of the pledge are as follows: “We believe in collaborative working and the use of early intervention techniques throughout the supply chain, to try to resolve differences of opinion before they escalate into disputes. We recognise the importance of embedding conflict avoidance mechanisms into projects with the aim of identifying, controlling and managing potential conflict, whilst preventing the need for formal, adversarial dispute resolution procedures. We commit our resources to embedding these into our projects. 

n We commit to working proactively to avoid conflict and to facilitate early resolution of potential disputes. 

n We commit to developing our capability in the early identification of potential disputes and in the use of conflict avoidance measures. 

n We will promote the value of collaborative working to prevent issues developing into disputes. 

n We commit to work with our industry partners to identify, promote and utilise conflict avoidance mechanisms.”

RICS has recently announced that some 50 bodies in the construction industry have signed the CAP, which records a public commitment to promoting co-operation between contracting parties. To promote this aim, the CACSG is developing a set of guidance manuals explaining the value of conflict avoidance techniques and the practicalities of how to implement them. 

The pledge has been open for signature since November 2017. It will be interesting to see whether significant actors in the public sector decide – as a matter of public policy evidencing good practice – to sign up. Equally interesting will be to see how many of the major contractors in the private sector sign up. For all parties in a conflict situation, prevention is a more attractive proposition than cure.