Using the courts as a last resort in dealing with disputes

25/11/2010

By Chris Kirby-Turner, Associate in Construction & Engineering.

Amid controversial government plans to close 54 county courts across England and Wales, the effectiveness of the out of court routes is in sharp focus.

The construction industry is relatively well catered for already, the Technology & Construction Court having led the way with innovative measures that are likely to be adopted in other areas.

The first key measure is the Pre-Action Protocol for Construction & Engineering Disputes. This is a process which parties must follow before issuing court proceedings (providing there are no limitation issues). It requires each side to set out fully its legal and factual position, so each party can understand their opponent's position.  It goes significantly further than the general protocol by requiring the parties to meet on an off the record basis, to see if the points in dispute can be narrowed, or a global deal reached. The contents of that meeting remain off the record and cannot be brought to the Judge's attention, until he or she has made their decision (they might take them into account when dealing with legal costs).

Mediation

One form that these meetings can take, which is increasingly popular, is a mediation. Here, a neutral third party is appointed as a mediator, to facilitate off the record negotiations. He or she will not have any power to make a decision, but they can discuss matters with each side individually, to try and see if there are issues of common ground or compromise that can be used to bring the parties closer together, or do a deal.

Adjudication

Another very important option that is available for most construction disputes is adjudication. This is very much a rough and ready remedy, which was designed with the express objective of keeping cash flow moving in the industry. It is a radically slimmed down version of litigation, usually not even involving a hearing, and generally deals with much narrower issues. This enables the process to take place within as little as 28 days, so providing a much quicker and potentially more cost effective way of resolving disputes than would be available in the courts. Whilst not suitable for every occasion, its speed and relative simplicity mean it has been broadly, and warmly, welcomed by the industry.

Summary

The inevitable downside of all of these processes is that where they are not successful they can lead to more time and resources being expended than if the parties had gone straight to the courts. However, with careful thought to each situation, disputes can be handled more effectively and imaginatively than ever before.  Future reforms should seek to ensure that the alternative options tie in as much as possible with the court proceedings, to remove the risk of duplication, and to ensure there is no disincentive to actively and fully pursuing the less formal routes.