Middle East records faster dispute resolution period in 2019: Arcadis

After an almost 7-month increase in 2018, the average duration of construction disputes in the region decreased in 2019

Middle East records faster dispute resolution period in 2019: Arcadis
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Middle East records faster dispute resolution period in 2019: Arcadis

The average construction dispute value and time needed to resolve disputes in the Middle East moved in opposite directions, according to the 10th edition of Arcadis’ Global Construction Disputes Report.

However, in 2019, the average dispute value increased, while average resolution time decreased, which reversed the movements witnessed in 2018.

The 2020 Global Construction Disputes Report is an annual Arcadis study that examines the most common causes of disputes on construction projects, as well as the average duration and value of disputes, as well as the methods of alternative dispute resolution (ADR) most commonly deployed.

The data used in this report was gathered prior to the COVID-19 pandemic, and evaluates how the industry collaboratively responds to the challenges that flow from the pandemic, and will play a large role in the quantity, duration, and value of construction disputes in 2020 and beyond.

The Middle East recorded a slight increase in average dispute value in 2019 to $62m from the $57m recorded in 2018. Despite the increase, the 2019 figure is still lower than the average dispute value of $91m recorded two years ago.

From a nine-year high of 20 months in 2018, the dispute resolution period in 2019 became much faster, dropping to an average of 17 months. The decrease was attributed to the involved parties’ inability to withstand long periods of uncertainty that have long-term impacts on projects.

The top two causes of disputes in 2019 remained the same from the previous year with poorly drafted or incomplete and unsubstantiated claims, as well as a failure to properly administer the contract – both of which maintained their ranking from 2018.

Failure to make interim awards on extensions of time and compensation – which is a new common cause identified in 2019 – ranked third.

In terms of the most common alternative dispute resolution (ADR) methods in the Middle East, the 2019 data mirrored the ranking identified in the previous year, with party-to-party negotiation, arbitration, and mediation ranked as the Top 3 most common methods of ADR.

Commenting on the findings, the Director of Claims and Contract Solutions at Arcadis Middle East, Shawkat Abbas, said: “The fact that poorly drafted or incomplete and unsubstantiated claims is still the top cause of disputes in the Middle East is a reminder that claimants must focus more on producing well-written and fact-based claims that can be reviewed and assessed by the receiving party.”

Abbas added: “Considering the ongoing COVID-19 pandemic, it is a good sign that involved parties are realising the need to resolve disputes fast as manifested in the shorter average resolution period in 2019, because having prolonged disputes during these times can easily compound the already negative effects of the pandemic. Hopefully, this trend will continue for the rest of 2020 and beyond.”

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