The Literature Review – Part One

1.0 The Introduction

This literature review aims to appreciate the challenges of using mediation as an alternative dispute resolution (ADR) approach for construction-related disputes in Uganda, where the contract parties predominantly adopt the Fédération Internationale des Ingénieurs-Conseils (International Federation of Consulting Engineers, FIDIC) forms of contract for construction works. The FIDIC forms of contract have a multi-tiered dispute resolution process embedded in them. The review explores literature from leading authors, journals and research theses on the design, application and drafting of tiered dispute resolution clauses. Furthermore, it explores fundamental challenges curtailing the use of mediation in standard form contracts (SFC), such as FIDIC.

The authors confirm that FIDC’s dispute resolution procedure is indeed multi-tiered. On further examination into the procedure, the authors revealed that the process allows for amicable settlement, unlocking numerous alternative dispute resolution (ADR) options, one of which is mediation. However, the authors also highlight that under FIDIC, adjudication is accorded the first priority, but it is not crystal clear what other options the disputing parties can pursue before they get to the last tier of the ADR process, i.e., arbitration. The authors highlight the importance of ensuring clarity in such ADR clauses (procedure) but also caution that excessive clarity in ADR clauses may complicate matters.

Furthermore, a review of the critical challenges curtailing the uptake of mediation is discussed. It is evident that the researchers and authors acknowledge FIDIC’s dominance in the worldwide construction industry but opine that even though mediation can play a significant role in the resolution of construction-related disputes, it is not a panacea to resolving all such disputes – just like adjudication. Drawing from these findings, the review then elaborates on the mediation landscape in Uganda, supported by arguments from local proponents (primarily researchers) to derive a research question.

2.0 Multi-tiered dispute resolution

Baker et al. (2009) and Klee (2018, p.485) highlight the massive presence of FIDIC contracts in the global construction and engineering industries. The FIDIC forms of contract adopt an escalating dispute resolution procedure, proceeding from one stage to another in default of acceptance by one (or both) of the parties, moving between different techniques, i.e., the dispute adjudication board (DAB), negotiation by way of amicable settlement and then to arbitration (Baker et al., 2009, p.505). At amicable settlement, Baker et al. (2009, p.541) aver that the FIDIC forms of contract do not limit the ADR approaches that the contract parties can pursue, and neither do they explicitly state them. Klee (2018, p.456) also confirms this, but claims expert determination or mediation are frequently used at amicable settlement. Charrett (2013) asserts that it is vital to explicitly specify an ADR approach in a contract because when disputes formally crystallise, communications between the parties may have deteriorated to the point where the parties are unwilling to agree to anything. Thus, by design, FIDIC’s amicable settlement clause is arguably not as explicit as it should be, but it unlocks the possibility for disputing parties to apply other ADR mechanisms besides adjudication, one of which is mediation.

Klee (2018, p.454) asserts that the FIDIC forms of contract (from 1999 onwards) have a tiered dispute resolution procedure, i.e., first, the engineer’s determination about a claim (more an act of dispute avoidance rather than dispute resolution) and second, adjudication through a Dispute Avoidance and Adjudication Board (DAAB) in the 2017 edition – referred to as a DAB in earlier editions. Next, after an unsuccessful, obligatory attempt to achieve an amicable settlement, a dispute can end up at arbitration. However, Hollands (1992, pp.365-368) advises that amicable settlement should preferably be encouraged at any time. Jaber (2015) agrees with this and further posits that attempting amicable settlement should not be limited to only commence when either party issues a notice of dissatisfaction with the DAAB’s decision to the time arbitration starts. Brunet et al. (2016, p. 667) also suggest that mediation can be timed to occur immediately before arbitration or earlier in a dispute’s lifespan as a step in a tiered dispute resolution plan. It appears, therefore, that the positioning of FIDIC’s amicable settlement clause (and therefore when to adopt other ADR methods) is open to challenge.

Rather than leaving disputing parties to decide what ADR option to pursue when a dispute manifests, Richbell (2008, p.133) advocates for embedding tiered dispute resolution processes (cascading from negotiation, mediation, adjudication and then to arbitration or the courts) into contracts, Richbell argues that where mediation fails, adjudication should be the next tier (and not the reverse) and further asserts that tiered resolution processes are more valuable when embedded in a contract for the contract parties to follow. Klee (2018, p.449) also supports incorporating a tiered approach in construction contracts (following clearly described steps in the dispute resolution section of the contract) as a means to mitigate project disputes. Therefore, as some form of proactive trigger or prompt, FIDIC’s ADR clause could perhaps be enriched by explicitly stating the ADR options that the disputing parties can explore.

2.1 Drafting the ADR clause

FIDIC’s tiered dispute resolution procedure assigns adjudication a kind of “superior” status. Yet, Hinchey (2020) asserts that the best ADR technique is one that suits the values and objectives of the disputing parties, while Charrett (2013) argues that from a disputant’s perspective, the best ADR technique is that which achieves appropriate proportionality between the competing demands of the time and cost of the process, and the ‘‘justice’’ the technique delivers. Charrett’s thesis concluded that there is no single best ADR method for a specific dispute or from a particular protagonist’s viewpoint, and searching for the best ADR method is largely illusory. Hinchey (2020) further highlights that searching for the best ADR technique is unreal and further posits that mediation and its variants should act as filters so that only the stickiest disputes transition to the next tier as a last resort. Therefore, the “superior status” FIDIC accords to adjudication is open to challenge.

Charrett further avers that the best ADR method should be appropriate to the specific features of the dispute but highlights that a dispute’s features only manifest when the parties are already in dispute and not inclined to agree to anything. Both Charrett and Bunni (2005, p.440) suggest that contract parties need to agree to use any ADR method(s) before contract signature. Though, such prior agreement is arguably speculative and may commit the parties to use ADR methods that may not suit the specific dispute that eventually emerges. Kantor and Parrott (2016) and Jaber (2015) agree with this and suggest that parties pay careful attention to drafting the ADR clause. They assert that parties should select suitable ADR methods based on their suitability for the project and the disputes that are likely to arise from it, even if they do not anticipate any disputes arising.

When drafting the ADR clause, Kantor and Parrott (2016) state that the clause must be explicit whether each ADR step is optional or mandatory to prevent the risk of procedural disputes. If mandatory, the clause should highlight the applicable repercussions if either party violates the clause. In applying the Court of Appeal’s judgement in Sulamerica Cia Nacional de Seguros SA v Enesa Engenharia SA [2012] EWCA Civ 638, 2012 WL 1684741 Kantor and Parrott further assert that if, for instance, the clause includes an agreement to mediate, the clause must meet certain conditions for that agreement to be a condition precedent to triggering the last ADR option tier, i.e. a sufficiently certain process, a defined administrative process for selecting a mediator, and include the mediation process or a sufficient model of it. Apart from the FIDIC forms of contract stipulating the duration for an amicable settlement, there is insufficient information in the ADR clause to guide disputants who may want to use mediation.

Continue to Part Two

Journals

Barrett, N. (2019) Dispute boards’ use likely to grow. Construction Law Journal, Volume 30 (Issue 9) November 2019, pp. 24-26

Charrett, D. (2013) The ‘‘best’’ method of resolution of construction disputes: elusive or illusory? International Construction Law Review Journal, Volume 30 (Part 1) 2013, pp. 88-98.

Hinchey, J. W. (2020) Rethinking resolution of construction disputes. Construction Law International Journal, Volume 15 (Issue 1) March 2020, pp. 11-18.

Kantor, E and Parrot P. (2016) ‘Gaps’ can end in tears. Construction Law Journal, Volume 26 (Issue 7) September 2016, pp. 27-28.

Theses

Jaber, M. S. (2015) Amicable settlement as an effective stage in the resolution of construction disputes. [Master of Engineering Management Thesis]. American University of Beirut

Books

Baker E, Mellors B, Chalmers S, Lavers A. (2009) FIDIC Contracts: Law and Practice. 1st Ed. New York: Routledge

Brunet E, Craver B. C, Deason E. E. (2016) Alternative Dispute Resolution: The Advocate’s Perspective. 5th Ed. North Carolina: Carolina Academic Press

Bunni, N. G. (2005) The FIDIC Forms of Contract. 3rd Ed. Oxford: Blackwell Publishing

Hollands, E. D. (1992) Fidic study on amicable settlement of construction disputes. In: Fenn, P and Gameson R. eds. Construction Conflict Management and Resolution. London: E & F Spon, pp. 365-368

Klee, L. (2018) International Construction Contract Law. 2nd Ed. Oxford: John Wiley & Sons

Richbell, D. (2008) Mediation of Construction Disputes. 1st Ed. Oxford: Blackwell Publishing Limited.

Case Law

Sulamerica Cia Nacional de Seguros SA v Enesa Engenharia SA [2012] EWCA Civ 638, 2012 WL 1684741