Keep talking to avoid disputes, say expert webinar panellists

30 Mar 2021

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The third event in the FIDIC Covid-19 Webinar Series 2021 took place on 30 March 2021 with an event looking at how the pandemic has affected construction disputes, how FIDIC contracts can help bring the industry together and how working flexibly can avoid costly disputes, writes FIDIC communications advisor Andy Walker.

The webinar “To dispute, or not to dispute?” saw 530 people attend and was moderated by FIDIC chief executive Nelson Ogunshakin. The speakers included barrister Lindy Patterson QC from 39 Essex Chambers, Mohamed Ali Janah, president of the International Federation of Asian and Western Pacific Contractors' Associations, Rebecca Shorter, partner at international law firm White & Case and James Perry, a partner at international arbitration firm PS Consulting.

As ever, FIDIC president Bill Howard was also on hand to introduce the event. Speaking at the start of the webinar, Howard hailed the success of FIDIC’s webinar series that had reached out to more than 20,000 industry professionals over the recent period. Addressing the subject of this event, Howard said: “We need to look at the word collaboration and think about how we are going to do just that. Put more thought into fairness and partnership and forging that collaborative approach to achieve a win-win situation for all parties to contracts,” he said.

Lindy Patterson QC from 39 Essex Chambers said that she had a clear sense that disputes had increased since the pandemic. “Most of us anticipated that claims would come from force majeure, but actually disputes have arisen from the more practical effects and consequences of the pandemic, for example due to sites being left abandoned or on projects that parties were looking to get out of and then used Covid as a reason for so doing,” she said. Where disputes had arisen, Patterson said that parties had adjusted to the online environment and conducted disputes remotely. “It has been impressive the ways that the industry has adjusted. Costs have been reduced due to the lack of travel needed by arbitrators and others and hearings have been scheduled quicker in the new digital environment,” Patterson said. She believed that this would continue going forward, especially on shorter hearings.

Mohamed Ali Janah, president of the International Federation of Asian and Western Pacific Contractors' Associations, was asked about the biggest issues for contractors that are likely to cause disputes and how issues can be reduced. He said that there were issues with contract interpretation and also communications between contractors and clients, both of which could lead to disputes. “The remedy for this is training and also following FIDIC’s Golden Principles but we also need to look at making training more affordable for stakeholders to attend,” he said. Ali Janah said that he was aware of an increasing dialogue in the industry as a result of the pandemic and a shift away from a “disputes mindset”, which he said was to be welcomed. “Pre-Covid, contractors felt that they were unreasonably treated by the clients but the pandemic has made everyone want to collaborate and cooperate more and understand the issues they face together,” he said.

Asked about what kind of contractual measures that would help to reduce disputes, Rebecca Shorter, partner at international law firm White & Case, said that it was crucial to have an effective dispute resolution clause in contracts. “It’s also important to concentrate on resolving disputes incrementally and continuing to work while reserving your right to take action later,” she said. Shorter also highlighted the importance of dispute boards, which she said acted as like an “insurance policy” in case contracts went wrong. She also spoke about how the legal profession supports contractors, engineers and clients in avoiding disputes and stressed the importance of being involved early on projects. “Early advice is crucial in interpreting contract clauses and stopping issues escalating and effective record keeping is also important. Investment in legal professionals is vital in helping to avoid disputes later,” Shorter said.

James Perry, a partner at international arbitration firm PS Consulting, said that it was important to avoid a “shoot first, ask questions later” approach. The appointment of a dispute board was critical in avoiding the dispute in the first place and the boards should be used for that in the first instance, he said. “It is much better to have the dispute board helping you to avoid disputes by providing informal advice and assistance rather than going straight to referral and a formal dispute phase,” Perry said. “Do not stop trying to settle your claim. The DAAB can help you to work through questions, save projects and save money. Going to a dispute early is a mistake,” he said. “Keep the dispute board involved and use the technology available to help you,” said Perry.

Reflecting on the new digital environment the industry was now working in, Lindy Patterson said that she had detected that people were more ready to adopt a mediation approach and there was a willingness of parties to try and resolve disputes. “Running parallel mechanisms for the resolution of disputes has also increased,” she said.

The webinar discussion covered a wide range of issues and questions including the essential differences between mediation and arbitration, the beneficial role of the dispute board and how they work in practice, contract interpretation, the need to encourage collaborative behaviours in the industry, the diversity of FIDIC trainers and how to frame an argument to demonstrate that the disputes board is not just an added cost but provides real added value on a contract. A number of attendees also posted in the chat their fervent wish that more parties would actually read and re-read the contracts they were working on and take note of the obligations they had signed up to, as this would also avoid disputes.

Closing the webinar, FIDIC president Bill Howard highlighted the need to cost-effectively resolve disputes as early as possible. With some disputes lasting for years, it’s not good for anyone to go down the disputes route, he said. Howard also said that FIDIC was working hard to provide more cost-effective training for practitioners, but urged people to see the bigger picture and see investment in training and development as a worthwhile cost that could save a lot of money in the long run.

Taking place later this week, on Thursday 1 April at 12 noon CET, is the launch webinar for FIDIC’s second State of the World report, Establishing the Value of Water. Click here to book a place at this event.

The next FIDIC webinar is Developing a commitment to quality in construction projects which takes place on Tuesday 6 April 2021 at 12 noon CET. Please register your place as soon as possible to secure your place at this free event.

Click here to book your free place at the FIDIC webinar, “Developing a commitment to quality in construction projects”.

Click below to view the webinar recording for To dispute, or not to dispute?

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