Dispute resolution

Mediation

Clause 7.1 requires the parties to give serious consideration to mediation. This is qualified by the wording that states '... if a dispute or difference arises under this Contract which cannot be resolved by direct negotiations ...'. On a practical level where the dispute has financial consequences for a party there is naturally a limit to the time frame that can be afforded to direct negotiations and or mediation, however, there are no sanctions where a party dismisses mediation.

The benefits of mediation are:

• independent third-party intervention;
• cost-effectiveness; and
• speed.

Considering the sums of money likely to be in dispute it is worth considering mediation, however, it must be recognised that neither party is obliged to follow the outcome. Secondly, it is likely that the parties will have to bear their own costs in the matter.

Adjudication

Clause 7.2 confirms the option to proceed to adjudication under the scheme save that the adjudication nominating body shall be that specified in the contract particulars. Numerous references to adjudication fail because parties make application to the wrong appointing body. Finally the popularity of the Minor Works Building Contract 2016 in residential projects allows parties to use adjudication where adjudication would otherwise be excluded. This is particularly useful in residential projects which become protracted and complex.

The scheme is part of the statute that is known as the Housing Grants, Construction and Regeneration Act 1996 (HGCR) as amended by the Local Democracy, Economic Development and Construction Act 2009. This Act sets out the mechanisms of adjudication and there is also a considerable amount of case law available at adjudication.co.uk. Adjudication is a cost-effective mechanism used to resolve disputes, however, it is not without cost implications to the parties. The main advantage of adjudication is that the process is complete within 28 days or any other period as agreed by the parties, and the adjudicator is normally experienced in construction matters. Note that unless the parties agree otherwise the decision of the adjudicator is temporarily binding. A fresh decision can be sought by both parties by putting the dispute before an arbitrator or through litigation.

Arbitration

Where article 7 applies the parties have the option of using arbitration in accordance with Schedule 1. Note that legal proceedings are the default method of dispute resolution and parties must delete or amend the contract to enable arbitration to apply. The costs associated with legal proceedings and increase in court fees are not insignificant in deciding whether to select arbitration. That said arbitration has been known to become protracted and costly.