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Can alternative dispute resolution tools reduce Middle East construction conflicts?

by Oscar Rousseau on Mar 31, 2018

RICS’s Jackson, also a panellist, said the regional construction industry was “at a tipping point”. The Dispute Resolution Question Time moderator, Neil Hargreaves, partner at professional services network Deloitte, said that everybody he had spoken to in the industry wanted “to avoid complex, time-consuming, lengthy, expensive arbitration, litigation, and dispute resolution processes”.

Regardless of the numbers, it is clear that local contractors want a solution. There are many mechanisms contractors and clients could utilise to not only minimise litigious dispute cases, but to avoid going through the courts altogether. ADR mechanisms have been raised as the best way to manage disputes in a manner that does not harm relationships between developers and contractors.  This segment comprises all measures that do not involve litigation, with popular mechanisms including mediation, adjudication, conflict avoidance, and expert determination.

Jackson called for greater uptake of ADR in the region: “This is where the industry must go, and we’re seeing some people moving towards embracing alternative means of dispute resolution, but there is still nowhere near enough buy-in from the client side.”

He said that developers in the GCC were “reluctant to adopt” ADR mechanisms for a number of different reasons. Furthermore, the low uptake of ADR had led to contracts being delivered in an “adversarial manner”, causing delays, contract problems, and cost overrun on projects, leading to disputes that ultimately go through formal dispute processes, he said.

Earlier this year, it emerged that Dubai International Financial Centre (DIFC) Court was planning to explore how ADR mechanisms, including mediation and the development of ad-hoc tribunals, could help with large infrastructure and construction development contract dispute cases. In fact, the chief justice of DIFC Courts, Michael Hwang, said during a speech in February that mediation and ad-hoc tribunals could help to “reduce costly and lengthy disputes, and minimise the impact to large-scale, time-sensitive emerging disputes quickly and amicably”.

While the courts had a mandate to explore all dispute resolution mechanisms, Hwang said that it was “now time to pursue the development of other modes of ADR, including, in particular, the world of mediation”, he added.

For times when ADR mechanisms are simply not sufficient to solve a complex dispute, Dubai has introduced another service that can dispense fair justice. This development is the introduction of the Technology and Construction Division (TCD), a specialised sub-division of DIFC Courts, set up to streamline the resolution of complex construction disputes. Launched in September 2017, TCD has judges from the DIFC Courts’ bench with professional experience in construction and technology cases.

Major construction projects in the UAE are sometimes fast-tracked from inception through to completion, creating a pressurised environment where “things can, and do, go wrong”, explained BLP’s Lilley. ADR mechanisms, including conflict avoidance and mediation, can help this process, but the problem with wider adoption is that the client often wants a decision: “[The client] doesn’t always recognise the value of having a third party mediate to give a recommendation. We need to change this mindset,” he said.

“I think we need more legislative help and I think the [construction] industry needs the help.”

Lilley explained that in other countries and legal jurisdictions, statutory adjudication is an option that enables a relatively quick decision to be made on disputes, to resolve them within 28 days.