1

Construction Contract Dispute

Management
by
Melaku Tadesse (Civil Engineer), CM

melakutdsse@gmail com
Tel: 0911 232267

Feb. 2020
 Discussion on Dispute Sources and
Resolution
2

 Resolving Contract Disputes

 Setting Discussion Objective: Summary of
expectations of participants
 Dispute Sources
 Mechanisms commonly in use
 Practices under the NCB & ICB Contracts
 Dispute Sources
3

 How dispute arises

 when a party makes a claim or an assertion against another
is rejected by the recipient and the rejection is pronounced
by the claimant
 It may be due to unfulfilled obligation,
 wrong doing which a party ought not have done
 Unavoidable in construction industry as the industry is a
fertile breeding ground
 Sources include, but not limited to
 Ambiguities or errors not properly done/stated in the
tender or contract
 Refusal of a party to give timely remedy
 Dispute Sources
4

 Source include…continued
 Ignoring entitlement of a party (contractor) by the
owner/engineer
 Unfair claim pursued by a party
 Acknowledge failure but inability to compensate
 Failure of a party to adhere stated procedure in the
contract but still pursue the case
 Giving notice to every potential claim (even if
insignificant) or without caring for the validity may
induce bad feeling form the receiving end
 Dispute Sources
5

 Major Cause, among others, include:

 design fault, defective work &/or material,
 costs of variation, wrongly withheld money, loss and
expense for delay and prolongation,
 extension of time to defend LD for late completion
 Dispute Settlement Methods
6

 Dispute settlement methods

 It is easier (in fact essential for a contractor) to agree on a
method of resolving a dispute before it has arisen rather
than after
 Parties may settle their dispute by themselves or through
involving facilitators (third party mainly refers to mediation
and conciliation) or let others independently decide for
them. Others mainly refers to adjudication, arbitration or
court
 Decisions made by others may be binding or not based
on the choice of the parties or depending on the law
governing
 Dispute Settlement Methods
7

 In Non-binding settlement, the dispute resolver will:

 agree on a procedure with the parties
 read the parties respective positions statements and any
documents provided in support
 consult with the parties privately and with both together
 encourage parties to talk
 help parties to focus on the real matter
 help parties to preserve their working relationship, even if
un successful in their current dispute
 agree to share costs of dispute resolver
 Dispute Settlement Methods
8

 Amicable settlement: without involving external body except

the Supervising Engineer
 Using ADR system, i.e., mediation or conciliation
 MEDIATION: (assisted negotiation of parties)
 independent party is involved to talk independently and
bring the parties to a negotiation table. His role is to help
them see their positions and find solution by themselves
 Without express permission, the mediator will never
disclose what has been said to him by either party to the
other
 Even if it helps, it is not necessary to have a detailed
understanding of the facts or the law of the matters in
dispute
 Dispute Settlement Methods
9

 MEDIATION
 He is not supposed to make recommendations or
influence the parties.
 He will not advise the parties of their right; but to draw
parties closer and to settle their difference execute an
agreement. The mediator:
 will advise the parties about the strength of their case,
 helps each to see the weakness of their own and the
strength of their opponent’s position.
 CONCIALTION: (conciliator can give recommendation)
 Similar procedure to mediation but the conciliation takes
more active role in the settlement of the dispute.
 Dispute Settlement Methods
10

 CONCILIATION
A conciliator necessarily has to have a more detailed
understanding of the facts and the law of the matter in
dispute.
 The conciliator will express an opinion on the relative
merits of the parties respective case.
 He will try to persuade them of his views, finding so will
attempt to guide the parties into an agreement compatible
with the parties rights under the contract
 Deemed suitable for complex construction disputes
 Dispute Settlement Methods
11

 DISPUTE BOARDS 
 Members are appointed during the project. Ad-hoc Boards
are appointed when needed for a dispute.
 Three Person Boards have one person nominated by each
party and approved by the other party, together with a
chairman by agreement.
 One Person Boards are chosen by agreement. This is
practiced in ERA road construction contracts and is
referred as Dispute Rive Expert
 The Board may be appointed under different procedures to
suit the particular project
 DRB gives a Recommendation on a dispute.
 Dispute Settlement Methods
12

 DISPUTE BOARDS 
 DAB gives a decision, which must be implemented, but the
dispute can then be referred to arbitration or the courts.
 Larger Boards are used for very large or long term projects
where different specialties are required.
 Full Term Boards are appointed at the start of the contract,
make regular site visits, keep up to date with progress and
deal with any disputes.
 Payment to DRE is shared by the parties
 Dispute Settlement Methods
13

 ADJUDICATION
 Adjudicator gives a decision, within a limited time frame,
often during the construction period.
 The decision must be implemented but the dispute can be taken
further to arbitration or courts.
 The procedure is normally included in contract, with provision for:
 A Notice of Adjudication, which determines the matters to be
decided.
 How the adjudicator is selected and appointed.
 Statements of claim, defense and reply to defense.
 A meeting and site visit if appropriate.
 The adjudicator’s decision and its enforcement.
 Dispute Settlement Methods
14

 Expert determination
 The expert uses his knowledge and investigation to make
his decisions. He is not required to justify his decision to
any of the parties
 Expert is appointed for his knowledge and understanding of
the particular issues in dispute in the filed he is an
acknowledged expert
 The expert will agree on a procedure with both parties
 He will read the parties respective position statement and
documents related
 Parties cannot change their position or amend during the
process.
 Dispute Settlement Methods
15

 Expert determination
 If stated in the agreement Consult with the parties privately
and together,
 He has investigator role. Hence, in relation to the disputed
issue he is required:
 to find facts and the law, making his own enquires, tests,
and calculations, if required, involving research &
hearing
 Then, form his own opinion and decide on the merits of
the parties position.
 Dispute Settlement Methods
16

 ARBITRATION
 Arbitration is a very thorough procedure which results in a
legally binding award.
 May be one or odd number usually three where each side
selects one and those selected meet and select the
chairperson
 The contract between the parties should include provision,
whether the arbitration is:
 Local Arbitration, where the project, the parties and the
arbitration are all in the same country
 International Arbitration, where the arbitration involves
the laws of more than one country.
 Dispute Settlement Methods
17

 ARBITRATION
 Institutional or ad-hoc
 International Arbitration may be subject to laws from a
number of different countries
 The law stated in the contract between the parties.
 The law of the country, or countries, where the project is
located.
 The arbitration law which is stated to apply.
 The law of the country in which the arbitration is held.
 The law of the country where award is being enforced.
 Dispute Settlement Methods
18

 Notification of Dispute: Common Contents include:

 Parties to the contract
 Contract b/n the parties
 The issue in dispute
 Summary of the matters in dispute
 Details of the issue in dispute
 Substantiations
 Litigation
 Any of the parties may take the case to an appropriate
court
 A party may take a case for enforcement of decision
19

Thank you
for your Attention and Participation

melakutdsse@gmail.com
Tel: 0911 232267