Now you’re talking

Formal alternative dispute resolution has begun to take hold in construction disputes, and since there is now adjudication that gives a binding decision in 28 days, it is possible that the disputing parties will more readily opt for this or one of the other forms, such as mediation.

About 30 years ago, alternative dispute resolution didn’t exist, and the parties were stuck with either litigation or arbitration. However, litigation and arbitration suffered from the same deficiencies: they were (and remain) expensive and time-consuming. It is difficult for parties to handle litigation and arbitration processes without legal representation.

Adjudication is now seen as the preferred form of resolving disputes, but this method is not the creature it once was. It has changed in its short life.

We seem to be moving away from the quick and cheap justice envisaged when the Construction Act was enacted towards a more sophisticated analysis of the disputes referred to adjudication. These days, it is more akin to arbitration.

When firms talk of alternative dispute resolution, the term ‘negotiation’ is rarely spoken. It is simply bypassed or ignored. Perhaps the only way to overcome this problem is to demonstrate that negotiation is likely to yield a better outcome than the alternatives.

However, since the advent of alternative dispute resolution, getting parties to agree to try negotiation can create problems.

Parties are unlikely to negotiate if they think they can get a better outcome by using another source of power by any sort of process, such as adjudication, that will force one of the parties to do something they did not want to do.

If parties think they can prevail completely without compromising, they are likely to refuse to negotiate. In addition, agreeing to negotiate may seem like a sign of weakness.

Keeping parties talking

Once the dispute has reached a point of stalemate and both sides have won what they can, the parties are at a standoff. Neither is able to win more, yet both are unwilling to give up either.

The art and skill of bargaining and negotiation is a central facet of any successful business

This is when the dispute is ripe for resolution, and is usually the best time to get people to the table by negotiating a settlement rather than alternative dispute resolution or litigation or arbitration.

Contractual disputes can be time-consuming, expensive and often unpleasant. They can destroy relationships painstakingly built up over a period of time. When disputes arise, there needs to be a willingness on the part of all concerned to get on with business and negotiate solutions to problems, and a universal desire to avoid recourse, wherever possible, to third-party dispute mechanisms.

Clearly, the art and skill of bargaining and negotiation is a central facet of any successful business. When problems arise during the course of a project it is not unusual for the same skills to be employed to resolve the difficulties.

Child’s play

As children, we had our own negotiating skills with our parents. We were probably more flexible than we are now as adults, and if one approach to negotiating didn’t work we would quickly switch to another.

We were not fixed in the belief that there was only one way. Perhaps we have lost our natural ability to negotiate.

Negotiation is usually the most efficient form of dispute resolution in terms of management time, cost and preservation of relationships.

It also offers confidentiality and control of the process and the outcome. By using good negotiations skills, the parties have the capacity to reach conclusions in a more satisfactory manner.

The next time you enter into a dispute, consider very carefully the words of Sir Anthony Evans, former Court of Appeal judge, now international arbitrator, speaking at the 2008 Association of Independent Construction Adjudicators (AICA) conference.

With all his experience in the field of formal dispute resolution and all those construction cases behind him, his message was simple: “Negotiate a settlement.”