SEPTEMBER - NOVEMBER 2021

DISPUTE RESOLUTION

EXPERT
DETERMINATION
FOR DISPUTE RESOLUTION
BY AJANTHA PREMARATHNA FAIQS, CQS

58: SEPTEMBER - NOVEMBER 2021: BUILT ENVIRONMENT ECONOMIST

 DISPUTE RESOLUTION
The construction industry is the sector
most affected by disputes across
its delivery time. Unlike many other
industries, the production duration for
the construction sector is a very lengthy
and time-consuming process involving
planning, designing, construction,
operation, and maintenance. At the
same time, there are a higher number
of stakeholders associated with the
process compared to many other
industries. These stakeholders vary
from the client, authorities, consultants,
subconsultants, contractors,
subcontractors, suppliers, operators,
manufacturers, end-users, and so on.
DISPUTES
The lengthy process and number
of stakeholders can often lead to
miscommunications, misinterpretations,
misinformation, ambiguities, and
discrepancies. The outcome of all of this
is that the contracting parties (clients
and consultants, clients and contractors,
contractors and subcontractors,
subcontractors and suppliers) embark
on various claim situations, conflicts, and
disputes.
Construction
professionals who
have knowledge of the
subject matter of the
disputes have been
sidelined with legal
professionals taking
over the governing of
the proceedings at a
heavy cost.
BUILT ENVIRONMENT ECONOMIST: SEPTEMBER - NOVEMBER 2021: 59
The cost of resolving such disputes
is, to some extent, a waste of global
resources. Had such disputes been
avoided or minimised at the inception
of the project, the resources mobilised
to resolve the dispute could have been
utilised towards a more productive and
meaningful global purpose.
Dispute resolution in the construction
sector has now become a lucrative
industry for its stakeholders. The amount
of money spent to resolve such disputes
is enormous. Due to the current trend
of the industry contracting parties,
disputes cannot be avoided. Therefore,
contracting parties should look for
the most effective dispute resolution
mechanisms to resolve their disputes
efficiently and cost effectively with
minimum resources.
DISPUTE RESOLUTION
Currently, there are various dispute
resolution options that are specified in
contracts and are being practiced in the
industry. Firstly, either the architect, the
contract administrator, or the engineer
could step in between parties to resolve
disputes. This is the most appropriate
and most economical mechanism to
resolve the dispute between the parties.
However, the quality of this approach
would depend on the experience of the
dispute resolver such as the architect, the
contract administrator, or the engineer.
The poor quality of dispute resolution by
the architect, the contract administrator,
or the engineer may result in the dispute
not being resolved at this stage and
thereby escalating it to the next level.
The next level of dispute resolution
mechanisms vary from adjudication,
arbitration, litigation, and other amicable
solutions. Although almost all the
disputes arising in the construction
sector are related to technical,
DISPUTE RESOLUTION
contractual, or commercial matters, with
a few issues centred on legal issues,
most of the adjudication and arbitration
proceedings are to some extent
hijacked by legal professionals from
the construction industry. Adjudication
and arbitration proceedings have been
transformed into a mini-court hearing
and have been overly complicated
with legal jargon and procedures.
Construction professionals who have
knowledge of the subject matter of the
disputes have been sidelined with legal
professionals taking over the governing
of the proceedings at a heavy cost.
This is not usually the expectation of
contracting parties when they incorporate
adjudication or arbitration clauses into
their contract. Their expectation is that
technically qualified and experienced
construction professionals in the industry
would investigate their disputes and
would resolve them technically and
professionally within a reasonable time
at affordable costs. The current cost of
adjudication and arbitration is exorbitant
and out of proportion to the dispute
that parties expect when looking for a
resolution.
EXPERTS
In addition to the arbitration and
adjudication, contracting parties rely
on several other alternative dispute
resolution mechanisms. These include
facilitation, conciliation, mediation,
and expert determination. All of these
alternative amicable solutions have their
own merits and demerits. In facilitation,
the facilitator may or may not be a
technical person, but an individual who
has a good personality and experience
to work between two parties and narrow
down the dispute. Mediators and
conciliators could also be a technical
60: SEPTEMBER - NOVEMBER 2021: BUILT ENVIRONMENT ECONOMIST
or non-technical person. In all of these
mechanisms, the individual working
between the parties to settle the dispute
would not go deep into the core of
the dispute but would try to negotiate
between the parties and narrow the gap
of the disputes, or would try to bring the
disputed parties to the negotiation table.
Due to a lack of technical substance for
a solid settlement in most cases these
amicable mechanisms fail, and the
dispute would then go to the next level.
Adjudicators and arbitrators are mostly
technical professionals who have wider
experience and deep knowledge of their
respective subject matters. However,
adjudication and arbitration are not an
ideal means of dispute resolution due
to heavy costs, time consumption, and
the complicated and strict rules and
procedures.
As stated above, disputes arising in
the construction industry are mainly
involved with technical, commercial
and contractual issues which are rarely
legal. There are sufficient experts in
the construction industry who are
excelling technically, commercially,
and contractually. Therefore, disputes
in the construction industry should
be left in the hands of experts in the
construction sector to resolve them
effectively. Such expert determinations
could be administrated with less rules
and complicated (legal) procedures,
unlike arbitration and adjudication where
representatives gamble with various
delays and procedural tactics at the cost
of the disputing parties.
EXPERT DETERMINATION
Where contracting parties use expert
determination, the process should
be appropriate for the dispute to be
determined and the relevant clauses
need to be enforceable in the contract
in a practical and effective manner. The
parties would agree in advance whether
or not they will be bound by the decision
of the expert. The expert provides a
speedy and effective way of resolving
disputes, particularly disputes which
are of a specific technical character or
specialised kind. Unlike arbitration or
adjudication, expert determination is not
governed by legislation. The adoption
of expert determination is a consensual
process by which the contracting parties
agree to take defined steps in resolving
disputes.
The expert determination clause in the
contract between the parties would
specify that disputes shall be determined
by an expert. There is nothing wrong
with such a provision in a contract.
Also, it is perfectly acceptable that the
expert determination clause provides
that the expert’s decision shall be ‘final
and binding’ or ‘conclusive’ similar to an
award from arbitration.
Problems may be faced by the experts
when factual issues are referred to them.
The expert does not have the power to
compel a witness to give evidence or test
a witness through cross examination.
In those circumstances, the expert can
be placed in an impossible position
when trying to determine the truth
out of competing versions of the facts.
However, in a technical dispute the
expert himself would be in a position to
justify the matter in dispute and may call
further expert witnesses if required. The
validity of such determination may be
challenged where the expert is required
to decide a legal question or legality of
the matter but, in so doing, it is necessary
for the expert to form a view as to the
correct contractual interpretation of the
 DISPUTE RESOLUTION

relevant legal matter with the help of a determination. An expert does not have
legal expert. power to call evidence and the witnesses'
expert may have to depend on a series
The expert determination mechanism
of expert witnesses. As almost all of the
requires parties to agree on the identity
disputes that are referred to the experts
of the expert, and if the parties failed to
are technical in nature it rarely would need
agree on the expert within a specified
evidence and factual witnesses.
timeframe given in the expert clause in
the contract, either party may request Considering the user-friendliness of
a nominated third party such as a the overall process, unlike strict rules
professional institution to appoint a and procedures that govern arbitration
suitable expert. proceedings run by legal professionals,
expert determination shall be more
An expert will be appointed because of
streamlined for better practice in the
his or her knowledge and experience
construction industry.
on the subject in dispute. It is prudent,
unlike arbitration and adjudication, to
give the expert some flexibility as to the
manner in which the process of dispute
determination is to be conducted.
The reason for making an expert Ajantha Premarathna FAIQS, CQS,
determination non-binding may be FRICS, FIQSSL is a Chartered
to give the parties an idea as to how Quantity Surveyor with three fellow
the dispute might be decided if it was memberships from professional
pursued through a binding process like quantity surveying institutions of Sri
arbitration or litigation. Lanka, Australia, and United Kingdom.
He is the Region 2 President of the
SUMMARY International Chapter of the Australian
Institute of Quantity Surveyors.
The disputes in the construction industry
are a common scenario. The majority
of these disputes can be resolved and
determined by the professionals in the
construction industry, as they are the
experts in the industry, more economically
and effectively than traditional arbitration
and adjudication proceedings. Similar
to the arbitration award, expert
determination can be treated as a binding
decision between the parties. In order
to be binding, the expert determination
clause in the contract shall state so.
Having a binding expert determination
clause in the contract ensures parties
can effectively settle their dispute. The
problem may arise when evidence or
a witness may need to call for such

BUILT ENVIRONMENT ECONOMIST: SEPTEMBER - NOVEMBER 2021: 61

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