Background
This article highlights Part 8 of the majority of CCDC Construction Contracts, which prescribes the pathway of the Dispute Resolution process pursuant to a CCDC contract. In addition to the general conditions outlined in this article, it is critical that parties to a CCDC contract are familiar with any applicable supplementary conditions to the contract that may change or alter these standard provisions on a project specific basis.
Role of the Consultant
The first section under Part 8 serves an important purpose in the dispute resolution process. Parties to the contract ought to be aware of the importance of the role of “Consultant” while performing the contract, and particularly should a dispute arise. Pursuant to GC 8.1 of the CCDC contract, the Consultant is to act as a decision maker of first instance regarding the interpretation and administration of contract.
During the construction phase of a project, parties should make use the role of consultant to resolve issues surrounding the interpretation or application of the contract in the event of a dispute, as the consultant is responsible for providing contract administration services such as inspection, testing, reviewing drawings, preparing change orders, responding to requests for time extensions, rejecting deficient work, determining amounts owing to the contractors and issuing payment certificates.
Typically, in these types of circumstances, either of the parties refers a matter in dispute to the Consultant for their initial interpretation and finding. The Consultant provides his/her findings to both sides in writing in response, within a reasonable time pursuant to GC 2.2. If neither party disputes the Consultant’s finding within 15 Working Days, the parties are deemed to have accepted it and have expressly waived and released the other party from any claims in respect of the particular matter dealt with in that finding.
It is after this timeframe and exchange of required documents that the parties can enter into three dispute resolution processes offered under Section 8 of CCDC contracts.
Dispute Resolution Process
1. Negotiation
The parties shall make all reasonable efforts to resolve their dispute by amicable negotiations and agree to provide, without prejudice, frank, candid and timely disclosure of relevant facts, information and documents to facilitate these negotiations.
2. Mediation
Under GC 8.3.1 of the majority of CCDC Contracts, a “Project Mediator” shall be appointed either within 20 Working Days after the Contract was awarded, or, if the parties neglected to make an appointment within the 20 Working Days, within 10 Working Days after either party by Notice in Writing requests that the Project Mediator be appointed.
After a period of 10 Working Days following receipt of a responding party’s Notice in Writing of reply, the parties shall request the Project Mediator to assist the parties to reach agreement on any unresolved dispute. It is important to note that, the mediated negotiations shall be conducted in accordance with the Rules for Mediation and Arbitration of Construction Disputes.
Mediation is non-binding and is conducted on a “without prejudice” basis. This means that the decision is not imposed upon either party. The Project Mediator’s role is merely to help and facilitate the communication between the parties.
If the Mediation happens to be an unsuccessful process, the parties may elect to invoke the next step of Part 8, which is arbitration.
3. Arbitration
If the dispute has not been resolved by way of mediation, under 8.2.5, the Project Mediator will terminate the mediated negotiations by giving Notice in Writing to the Owner, the Trade Contractor and the Construction Manager. Then, within 10 Working Days, either party may refer the dispute to be finally resolved by arbitration under the latest edition of the Rules for Mediation and Arbitration of Construction Disputes. It is important to note that the arbitration shall be conducted in the jurisdiction of the Place of the Project.
Why Arbitration?
Arbitration is becoming more and more popular as a means to resolve disputes within the construction industry. The parties involved in the dispute must select an arbitrator or a panel of arbitrators. Typically, the partis agree on the selection process in the contract.
It is important to consider that an arbitration panel may be appropriate for a high value dispute, but it may be costly for a dispute of small value.
Similar to mediation, arbitration proceedings are generally confidential.
As well, parties typically share the costs of the arbitration, including arbitrator fees, venue expenses, and legal representation fees. It is important to note that these specific cost-sharing arrangements should be clearly outlined in the contact at the drafting stage.
The courts have also promoted arbitration since it has advantages over conventional litigation. Parties are permitted to select a neutral person who happens to have particular expertise in the area. It is also fairly informal and less expensive than the litigation process.
Unlike negotiations and mediation, arbitration awards issued under CCDC contracts are enforceable through the courts, just like court judgments. This means that the arbitration decisions are typically binding on parties and final, with limited opportunities for appeal. This is due to the fact that the finality of the decisions can expedite the resolution of disputes compared to lengthy court proceedings. It also provides a legal mechanism to ensure that the arbitration decision is upheld.
Of course, litigation is available if the parties do not agree to arbitrate, and in some high value cases, the court process is necessary or even preferable by the parties. The choice between arbitration and litigation often depends on the value of the project, the preferences of the parties involved, the nature of the dispute, and the contractual agreements in place. If the parties are not certain about these when they enter into a CCDC contract, it is important to ensure the arbitration and litigation provisions included in the contract are clear, appropriate and sensible at the drafting stage.
Have any questions? Feel free to contact Pooneh Sooresrafil for more information.
These comments are general in nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.