The resolution of disputes on construction projects in Canada is currently addressed in the standard forms of contract used in the Private Sector - otherwise known as the CCDC standard forms of contract.
Several similar dispute resolution provisions are found in the standard forms used in the Public Sector.
The general thrust of these provisions involves a process known as ’stepped ADR’ - essentially this process involves three ’steps’:
1. Good Faith Negotiation;
2. Mediation; and …
The ’stepped ADR’ process is, most often, initiated by the disagreement by one of the parties with the project Consultant’s finding with regard to the outcome of a dispute.
At this stage the Consultant, having delivered its finding as ‘Arbiter in the first Instance’, has no further ability to influence the outcome of the dispute and the resolution process advances from the point of delivery of the Consultant’s finding, and its timely rejection, by one or both of the parties.
There are rules for Mediation and Arbitration (CCDC 40) and these are required to be followed if the ’stepped ADR’ process is initiated within the time limits set by these rules.
Arbitration is ‘final and binding’.
Failure to meet the time limiting criteria after the initial timely rejection of the Consultant’s finding provides an opportunity to abandon the ’stepped ADR’ process thereby permitting default to other forms of dispute resolution such as Litigation or … Expert Determination or … Neutral Evaluation … etc.
When ’stepped ADR’ is invoked the parties have to brief the dispute resolution (DR) practitioners about the subject matter of a dispute. Such briefings are often heavily biased in favor of the disputant and, because of the rules; the DR practitioner cannot investigate the project independently and then, by default, make the case for one of the parties based upon these independent investigations.
While many disputes can be settled by the ’stepped ADR’ processes set out in the standard forms of contract these processes do not suit (or ‘fit’) all forms of dispute that can occur during the construction process.
Internationally, there has been a great deal of success, as a result of employing Dispute Adjudication Boards (DAB) for construction projects.
Members of a DAB are independent of the parties, highly skilled in the subject matter and in the methods of dispute management, and are paid equally by both parties to ensure the perception of impartiality.
Essentially the role of a DAB is to independently monitor the progress of a job throughout its implementation in order to become familiar with all of its nuances as the construction proceeds. If a dispute arises, and the Consultant’s findings are rejected, it is ready to intervene at the request of one of the Parties. Its findings are issued in the form of an award which is immediately binding on the parties unless protested within in a set period following the delivery of the award (usually 30 days).
In the event of a protested finding, the DAB award remains in effect on an interim basis pending final and binding resolution by an independent third-party arbitrator.
In the event of no protest within the time period then the DAB award becomes permanently final and binding.
Each method of resolution has it supporters and detractors.
Myself, I favor the DAB method over the CCDC method since, in general, it is more able to respond quickly and holistically to a problem arising in the context of the entire project with which the DAB is thoroughly familiar, as opposed to an isolated dispute laid before a DR practitioner who, by definition, can only become familiar with a project through the eyes of self-serving and probably biased protagonists.
This is a reprint of an article first published in the Ontario Bar Association ADR Section Newsletter Volume 17, No. 3, June 2009 edition written by John G. Davies.