EACQ 3112 –

CONSTRUCTION
LAW 1
A LT E R N AT I V E D I S P U T E R E S O L U T I O N
(ADR)
L E C T U R E B Y:
QS. HARRIET KARIUKI
D AT E : 2 N D M A R C H 2 0 22
“DISCOURAGE LITIGATION.
PERSUADE YOUR NEIGHBORS
TO COMPROMISE WHENEVER
YOU CAN. POINT OUT TO
THEM HOW THE NOMINAL
WINNER IS OFTEN THE REAL
LOSER — IN FEES, AND
EXPENSES, AND WASTE OF
TIME. AS A PEACE-MAKER THE
LAWYER HAS A SUPERIOR
OPPORTUNITY OF BEING A
GOOD MAN. THERE WILL
STILL BE BUSINESS ENOUGH.”
– ABRAHAM LINCOLN.

- ABRAHAM LINCOLN
 Introduction to
Arbitration Dispute prevention
dispute resolution

Nature and causes of

Alternative Dispute
conflicts/Psychology Conclusion.
Resolution Methods
of Disputes

PRESENTATION
OUTLINE Advantages of
Traditional Dispute
resolution
disputes
mechanisms

Considerations in
Litigation (Court
selection of method
system)
of dispute resolution
 1. Know the various forms of dispute resolution available
2. Be able to explain and describe the characteristics of each
LEARNING option
3. Be alert on the possible impact of different law systems
OBJECTIVES 4. Be able to advise and assess the suitability of a dispute
resolution process for a given situation
5. Understand the relevance of due process and natural justice
to ADR
 The term “Dispute” in Alternative Dispute Resolutions (ADR) means-
“a specific disagreement concerning a matter of fact, law or policy in which a claim or
assertion of one party is met with refusal, counterclaim or denial by the other”.
Meaning of Alternative Dispute Resolution (ADR)
INTRODUCTION TO ADR
The African center for the Constructive Resolution of Disputes defines conflict as a
 Meaning of ADR state of human interaction where there is disharmony or a perceived divergence of
 Why choose ADR interests, needs or goals. There is a perception that interests, needs or goals cannot
 General Philosophies of ADR be achieved due to interference from other persons.
 Goals and Objectives of ADR
The term “Resolutions” under the auspices of ADR denotes-“the way of finding
solution of a dispute by the agreement of both the parties with some mutually agreed
terms”

Dispute resolution is nothing but resolving a matter of dispute between two or more
parties. The concept of Alternative Dispute Resolution (ADR) denotes the process in
which disputes are addressed and settled outside of the courtroom.

From the definitions above we find that disputes arise as a result of; -
1. Conflict of legal views
2. Conflict of interest
3. Contradicting claims or allegations
 Disputes happen and when they do, those involved have the option to try and resolve
the situation themselves , or seek help from a 3rd party.

In many situations litigation can provide a definitive decision about a dispute.

INTRODUCTION TO ADR However court proceedings are often public and may be costly and lengthy, so those
involves may prefer to use ADR
 Meaning of ADR In General ADR processes are more cooperative , less competitive than court-based
 Why choose ADR litigation and do not need to involve lawyers.
 General Philosophies of ADR
 Goals and Objectives of ADR ADR methods are designed to generate less escalation and ill-will between disputing
parties and a well run ADR process can even improve rather than worsen the relation
ship between them. This is key advantage in situations where the parties must
continue to interact in the event that a settlement is reached.

Advantages of ADR???
 Win-Win Approach
In Adversarial trial system, lawyers ‘thinks’ in terms of ‘Rights’ and not in terms of
‘Interests’, and thus becomes not to find the best solution for their clients, but to win
the case.
INTRODUCTION TO ADR Thus, the system of ADR avoids this kind of hostile process, has greater potential to
attend a win-win solution which ensure better satisfactions of the interests of both
 Meaning of ADR the parties.
 General Philosophies of ADR
 Goals and Objectives of ADR Integrative Approach:
Dispute may arise between people when have different opinions and ADR tries to
attain a consensual solution between the parties based on their common interest. And
thus, ADR process integrates parties and provides them with an option to continue
their relationship on the basis of a sharing interest in the future.

Compliance With Social Norms:

Since ADR processes do not strictly rely on legal principles and emphasize parties’
interests more than their legal rights, therefore, the outcomes of the disputes through
ADR system are much more flexible allowing third party facilitators to adopt or
consider social norms in ADR to attain a more acceptable solution and avoid rigidness
unlike which is present in an adversarial justice system.
 Quicker resolution of disputes
INTRODUCTION TO ADR

 Meaning of ADR Less individual and social cost to

 General Philosophies of ADR resolves disputes
 Goals and Objectives of ADR

Flexible process and outcome

Consensual process to enhance social

harmony

Higher abidance leads to a permanent

resolution to conflicts

Confidential Process
 Nature of disputes in the construction industry

In the construction industry, disputes occur frequently and participants have been
unable to eliminate them because the industry is full of risks (Thomas 1995).
NATURE AND CAUSES OF
CONFLICTS We can classify these risks as: Employer risk events, contractor risk events and neutral
risk events.
 Nature of disputes in the
construction industry
 Common causes of disputes in
the construction industry.
 Causes of construction disputes by employers
Delays in payments
Late giving of possession to site
Variations
NATURE AND CAUSES OF Changes in scope of the works
CONFLICTS Contractor related
Delay in work progress
 Nature of disputes in the Time extensions
construction industry Quality of works
 Common causes of disputes in Technical inadequacy
the construction industry. Contract related
Ambiguity in contract documents
Risk allocation
Different interpretations of contract provisions
Other factors
Site conditions
Weather
Legal and economic factors
ALTERNATIVE DISPUTE
METHODS
NEGOTIATION
MEDIATION
CONCILLIATION
EXPERT DETERMINATION
DISPUTE BOARDS
ADJUDICATION
ARBITRATION
 Negotiation is the simplest and most obvious way to settle disputes as it involves the
ADR METHODS parties coming together to find a solution.

 Negotiation Negotiation is:-

 Mediation • Always available
 Conciliation • Confidential
 Expert determination • Fast /Cheap
 Dispute boards • Allows for preservation of relationships
 Adjudication • Parties have full control over the process and the outcome
 Arbitration(Disc. Separately)
Overall negotiation is by far the simplest, most flexible , quickest, cheapest for to
solve a dispute where the parties have total control over the process as well as the
outcome.
 Introduction.
If direct negotiation fails, or the parties do not think negotiation is worth trying, they
agree to appoint a mediator.
Mediation is a method of dispute resolution where a neutral 3rd party assists the
ADR METHODS parties involves to work together towards a negotiated settlement of a dispute.
The 3rd party will be a mediator will be a person respected by both parties.
 Negotiation
 Mediation What do mediators do?
 Conciliation Mediators help the parties weigh up the strength and weaknesses of the their case
 Expert determination and point out how personal needs and relationships affect the situation.
 Dispute boards A mediator addresses the high costs , time, money etc involved in other processes
 Adjudication such as litigation
 Arbitration(Disc. Separately) The mediators goal is not to find out who is wrong or right. But to find a workable
solution
 Subtopic Outline Once a solution is found the mediator assists in the drafting of an enforceable
 An introduction to mediation settlement agreement that reflects the deal agreed .
 What do mediators do?
Advantages and disadvantages of Generally the mediator;-
mediation • Clarifies the factual background/Facts of the case
• Sets out the matters in dispute and the common ground between the parties
• Helps the parties assess and communicate to one another what they need in order
to arrive at a settlement that they can both accept.
 Advantages.
Mediations offers the following advantages which include ;-
1. Flexibility and speed
2. Consensus: the parties have a joint objective to settle
ADR METHODS 3. Continuity: Mediation suits situations where the parties wish to preserve their
 Negotiation relationship
 Mediation 4. Control : The parties have ultimate control over the process ; any decision to settle
 Conciliation and the terms o the settlement are controlled by them
 Expert determination 5. Confidentiality
 Dispute boards 6. Formality. Unlike negotiation, mediation offers a level of formality
 Adjudication 7. The parties agree on the process to be followed during mediation
 Arbitration(Disc. Separately)
Disadvantages;-
 Subtopic Outline
8. Mediation does not always result in a settlement agreement.
 An introduction to mediation
9. Mediation lacks the procedural and constitutional protections guaranteed by
 What do mediators do?
courts through legislation
 Advantages and disadvantages
10. Legal precedent cannot be set in mediation.
of mediation
11. Mediation has no formal discovery process.
12. Potential conflict where the mediator is asked to become involved in a further ADR
process such as Arbitration
ADR METHODS Conciliation is an alternative dispute resolution (ADR) process whereby the parties to
a dispute use a conciliator, who meets with the parties both separately and together
 Negotiation in an attempt to resolve their differences. They do this by lowering tensions,
 Mediation improving communications, interpreting issues, encouraging parties to explore
 Conciliation potential solutions and assisting parties in finding a mutually acceptable outcome.
 Expert determination
 Dispute boards Conciliation differs from arbitration in that the conciliation process, in and of itself,
 Adjudication has no legal standing, and the conciliator usually has no authority to seek evidence or
 Arbitration(Disc. Separately) call witnesses, usually writes no decision, and makes no award.

 Subtopic Outline Conciliation differs from mediation in that in conciliation, often the parties are in need
 Introduction to conciliation of restoring or repairing a relationship, either personal or business.
Legal framework/Procedure
 Conciliation proceedings usually involve the following steps:

A conciliator assists each of the parties to independently develop a list of all of their
ADR METHODS objectives (the outcomes which they desire to obtain from the conciliation).
 Negotiation The conciliator then has each of the parties separately prioritize their own list from
 Mediation most to least important.
 Conciliation
 Expert determination He/She then goes back and forth between the parties and encourages them to "give"
 Dispute boards on the objectives one at a time, starting with the least important and working toward
 Adjudication the most important for each party in turn.
 Arbitration(Disc. Separately)
The parties rarely place the same priorities on all objectives, and usually have some
 Subtopic Outline objectives that are not listed by the other party.
 Introduction to conciliation
 Procedure Thus the conciliator can quickly build a string of successes and help the parties create
an atmosphere of trust which the conciliator can continue to develop.
 Expert determination is a process in which an independent third party acts as an
expert in the field, rather than as a judge or arbitrator, to settle a dispute.

It is usually used for disputes of a technical nature where the issue at hand is one of
ADR METHODS fact rather than law and requires an expert to give their opinion which will form the
 decision.
Negotiation
 Mediation
 The decision of the expert, who is impartial and required to hear from both parties, is
Conciliation
 binding. Parties may choose who is appointed as the expert, or they may use an
Expert determination
 appointing body such as CIArb to make the appointment. Similar to other ADR
Dispute boards
 processes it is entirely confidential
Adjudication
 Arbitration(Disc. Separately)

 Subtopic Outline
 An introduction to Expert
involvement
 Advantages and disadvantages
of expert determination
 Legal framework
 Process in kenya
 Expert determination is founded in contract.

Expert determination clauses govern the jurisdiction of the expert and the conduct of
the determination. They should typically cover:
ADR METHODS
• the issue(s) to be determined (this must be carefully drafted)
 Negotiation (Disc. Separately)
• the expert’s qualifications, appointment and his duty to act independently, and as
 Mediation
 an expert not an arbitrator
Conciliation
• how the reference will be conducted
 Expert determination
• how the decision will be issued (in writing, with or without reasons) and that it will
 Dispute boards
 be final and binding save in the case of fraud or manifest error
Adjudication
• provisions as to the due date for payment and the power to award interest (and
 Arbitration(Disc. Separately)
sometimes costs)
• payment of the expert’s fees (these are usually shared between the parties with
 Subtopic Outline
joint and several liability should one party fail to pay)
 An introduction to Expert
involvement
 Advantages and disadvantages
of expert determination
 Legal framework
 Process in kenya
 Adjudication is the legal process by which an arbiter or judge reviews evidence and
argumentation, including legal reasoning set forth by opposing parties or litigants, to
come to a decision which determines rights and obligations between the parties
involved.
ADR METHODS

 Adjudication is defined under the Chartered Institute of Arbitrators (K)

Negotiation
 Adjudication Rules as the dispute settlement mechanism where an impartial, third-
Mediation
 party neutral person known as an adjudicator makes a fair, rapid and inexpensive
Conciliation
 decision on a given dispute arising under a construction contract. It is an informal
Expert determination
 process, operating under very tight time scales (the adjudicator is supposed to reach a
Adjudication
 decision within 28 days or the period stated in the contract), flexible and inexpensive
Arbitration
process; which allows the power imbalance in relationships to be dealt with so that
weaker subcontractors have a clear route to deal with more powerful contractors. The
decision of the adjudicator is binding unless the matter is referred to arbitration or
 Subtopic Outline
litigation. Adjudication is thus effective in simple construction disputes that need to
 An introduction to Adjudication
be settled within some very strict time schedules.
 Role of an adjudicator
 Advantages and disadvantages
The demerits of adjudication are that it is not suitable to non-construction
of adjudication
disputes; the choice of the adjudicator is also crucial as his decision is binding and that
 Legal framework
it does not enhance relationships between the parties.
 Process in kenya
 Arbitration

This is the most structured method of ADR. The neutral arbitrator, usually a third
party, conducts formal hearings makes their own findings and renders final decision in
ADR METHODS the matter. The decision of the arbitrator is legally binding. It is much like trial but
 conducted in a private forum
Negotiation
 Mediation
 It occurs mostly in commercial contracts as it has to be included by parties during the
Conciliation
 formation of a contract.
Expert determination
 Adjudication
 Arbitration

 Subtopic Outline
 An introduction to Arbitration
 Definitions in arbitration
 Advantages and disadvantages
of arbitration
 Legal framework
 Process in kenya
 Definitions in Arbitration
An arbitrator – An independent person or a body officially appointed mutually by
parties to settle a dispute among them.

ADR METHODS Arbitration agreement - means an agreement by the parties to submit to arbitration
 all or certain disputes which have arisen or which may arise between them in respect
Negotiation
 of a defined legal relationship, whether contractual or not
Mediation
 Conciliation
 Arbitrability – Refers to whether or not arbitrators have authority to rule on a dispute.
Expert determination
 This in turn, depends on whether certain parties have agreed to have certain disputes
Adjudication
 between them resolved through arbitration.
Arbitration
Arbitral award - is any ward of an arbitral tribunal and includes an interim arbitral
award
 Subtopic Outline
 An introduction to Arbitration
Arbitral tribunal - usually means a sole arbitrator or a panel of arbitrators.
 Definitions in arbitration
 Advantages and disadvantages
of arbitration
 Legal framework
 Process in kenya
 Process of Arbitration

In Summary: Dispute – Pre-arbitration proceedings (Arbitration agreement) –

Arbitration proceedings – Post Arbitration proceedings (Award & enforcement)
ADR METHODS A claimant sends a document known as a “request for arbitration” or a “notice to
 arbitrate” to its opponent. The notice should include the nature of the dispute and the
Negotiation
 identity of the individual the claimant wishes to select as an arbitrator
Mediation
 The other party will then have the opportunity to respond within a set period of time
Conciliation
 and, where appropriate also select an arbitrator
Expert determination
 Once an arbitrator has been selected, issues of determination must be identified and
Adjudication
 afterwards the process and timetable is decided upon – these will be worked out
Arbitration
between the parties and the tribunal
The arbitration will then proceed in accordance with the procedure that has been
adopted. It is likely to include each party producing written submissions. Typically,
 Subtopic Outline
these will be supported by written witness statements and reports of technical
 An introduction to Arbitration
experts, where appropriate
 Definitions in arbitration
Hearings before the tribunal/ arbitrator, where the parties’ lawyers put forward
 Advantages and disadvantages
arguments and question the other party’s witnesses and experts
of arbitration
After the hearing, the tribunal will produce its award
 Legal framework
 Process of Arbitration
 Appeals in Arbitration

For domestic arbitrations, a party can appeal on a point of law arising in the course of
the arbitration or out of the award to the High Court under section 39 of the
ADR METHODS Arbitration Act. However, this recourse to the High Court is subject to the parties'
 agreement that such an appeal can be made. The High Court's decision is appealable
Negotiation
 to the Court of Appeal if the parties had agreed so or if the court grants leave on the
Mediation
 basis that the matter substantially affects the rights of the parties.
Conciliation
 Expert determination
 Adjudication
 Arbitration

 Subtopic Outline
 An introduction to Arbitration
 Definitions in arbitration
 Advantages and disadvantages
of arbitration
 Legal framework
 Process of Arbitration
 Appeals in Arbitration
 Arbitration in standard forms of
contract
 Arbitration in Standard Forms of Contract – JBC Green Book
Clause 45.1- If a dispute arises, it shall be notified in writing by either party to the
other with a request to submit it to arbitration and to concur in the appointment of an
Arbitrator within thirty days of the notice. The dispute shall be referred to the
ADR METHODS arbitration and final decision of a person to be agreed between the parties. Failing
 Negotiation agreement to concur in the appointment of an Arbitrator, the Arbitrator shall be
 Mediation appointed by the Chairman or Vice Chairman of the Architectural Association of Kenya
 Conciliation on the request of the applying party
 Expert determination Clause 45.2 - The arbitration may be on the construction of the contract or on any
 Adjudication matter or thing of whatsoever nature arising thereunder or in connection therewith,
 Arbitration including any matter or thing left by the contract to the discretion of the Architect, or
the withholding by the Architect of any certificate to which the Contractor may claim
to be entitled or the measurement and valuation or the rights and liabilities of the
parties subsequent to the termination of contract.
 Subtopic Outline
Clause 45.3- No arbitration proceedings shall be commenced on any dispute or
 An introduction to Arbitration
difference where notice of a dispute or difference has not been given by the applying
 Definitions in arbitration
party within ninety days of the occurrence or discovery of the matter or issue giving
 Advantages and disadvantages
rise to the dispute
of arbitration
Clause 45.4- Parties must try to solve the dispute amicably before referring it to
 Legal framework
arbitration
 Process of Arbitration
 Appeals in Arbitration
 Arbitration in standard forms of
contract
 Arbitration in Standard Forms of Contract – JBC Green Book
Clause 45.5 – Arbitration can only commence after 90 days of notice of dispute has
been issued by the aggrieved party.
Clause 45.6 and 45.7- Matters can be referred to arbitration when the construction is
ADR METHODS still ongoing or after the practical completion certificate has been issued.
 Negotiation Clause 45.8 and 45.9- state the powers of the arbitrator which include;
 Mediation a) To direct such measurements, computations, tests or valuations as may in
 Conciliation his opinion be desirable in order to determine the rights of the parties
 Expert determination b) Award any sums which ought to have been the subject of or included in
 Adjudication any certificate
 Arbitration c) Review and revise any certificate, opinion, decision, requirement or notice
and to determine all matters in dispute which shall be submitted to him in the same
manner as if no such certificate, opinion, decision, requirement or notice had been
given
 Subtopic Outline
Clause 45.10 – The word of the arbitrator shall be final and binding upon parties.
 An introduction to Arbitration
 Definitions in arbitration
 Advantages and disadvantages
of arbitration
 Legal framework
 Process of Arbitration
 Appeals in Arbitration
 Arbitration in standard forms of
contract
 Attributes of a Good Arbitrator
Impartial: In many ways, an arbitrator is like a judge, listening to both sides and
passing down a final decision. A great arbitrator should uphold ethical standards
without succumbing to pressure or corruption. When an arbitrator grants an award, it
ADR METHODS should be done on fair grounds.
 Negotiation Firm: Especially in construction disputes, proceedings often are heated.
 Mediation Competent and Experienced: A good arbitrator especially in construction should
 Conciliation have the adequate knowledge and experience when it comes to construction
 Expert determination disputes. Parties should not only choose an arbitrator familiar with the process but
 Adjudication also dedicated to the construction industry.
 Arbitration Effective communication skills: A good arbitrator should display effective
communication skills by being patient, understanding, flexible and must be a good
listener. At the heart of solving a dispute, arbitration is effective when the arbitrator
allows each party to state their facts, present any physical documents and listening to
 Subtopic Outline
the testimony of the witnesses.
 An introduction to Arbitration
Must be objective: A good arbitrator takes all relevant factors into account in making
 Definitions in arbitration
his decision. Diligence and excellence must be adopted in considering facts and
 Advantages and disadvantages
basing the award on right terms.
of arbitration
Must be discreet. He/she must value privacy in the entire process. Arbitration is
 Legal framework
private and an arbitrator must guard the proceedings of the arbitration as they are not
 Process of Arbitration
to be publicized.
 Appeals in Arbitration
 Arbitration in standard forms of
contract
 Advantages and Disadvantages of Arbitration
Advantages Disadvantages
Greater certainty about the enforcement of Reluctance of tribunals to issue sanctions for non-
awards compliance with deadlines, even where they have
ADR METHODS rules governing the proceedings permitting
interim reliefs.
 Negotiation
 Mediation Avoiding the specific legal systems and national The limited grounds for challenges and appeals
 Conciliation courts of certain jurisdictions provides parties which, together with the confidential nature of
with greater control, rather than leaving matters the process, can create a risk of a lack of
 Expert determination to the discretion of the courts. intellectual rigour in the award.
 Adjudication
 Arbitration Flexibility in terms of the procedure, allowing In some cases, a poor choice of tribunal has
parties to decide on which procedure they will resulted in an award so controversial that it is
apply. questionable whether arbitration was the right
medium for the dispute.
 Subtopic Outline
Confidentiality. Arbitration proceedings are not The cost effectiveness of arbitration has been
 An introduction to Arbitration public questioned on several occasions, as some
 Definitions in arbitration references can take longer than usual to be
 Advantages and disadvantages finalized.
of arbitration There are limited grounds for challenges and The fact that consolidation of references can only
 Legal framework appeals, such as where the award is tainted with be undertaken by consent of the parties has been
 Process of Arbitration bribery, fraud, or corruption. cited as a big disadvantage.
 Appeals in Arbitration
The time it can take from commencement of the
 Arbitration in standard forms of arbitration to publication of the final award. While
contract the process is efficient, it is not necessarily quick.
 Litigation (court system)

Litigation is a process for handling disputes in the court system. Litigation is a

contested action, where someone else, such as a judge may make the final decisions
LITIGATION for the parties unless the parties settle before trial. Settlement can happen at any
point during the process.
• Introduction to litigation
• Advantages and Court proceeding would be the ‘default’ method of resolving disputes between
disadvantages of parties if no other form of disputes resolution methods is nominated in the
litigation agreement.

The time and cost involved in litigation often has a serious and adverse effect on
business relationships

In many jurisdictions , modern practice before court starts is for the court to enquire
about and encourage settlement attempts , whether by mediation or some other
form of ADR.
 Advantages of litigation
1. Establishment of precedent.
If a party goes to court over a matter eg. An employee is aggrieved over a particular
matter. The party may wish to have a clause in the standard form decided once and
LITIGATION for all to establish precedent and avoid future litigation by other employees on the
same matter.
• Introduction to litigation 2. Publicity
• Advantages and Open and pubic proceedings can act as a way to pressure an opponent into
disadvantages of settlement.
litigation 3. Consolidation
A party whose disputes involves multiple parties , often bound by interlocking
contracts not all signed by the same parties may prefer to go to a state judge who has
inherent jurisdiction to consolidate the action and have them heard together.
4. Compulsion
Parties who want to make sure they have access to all powers of state court to
compel the attendance
 ADVANTAGES OF CONFLICTS

1. Conflict fosters an awareness that problems exist.

2. Discussing conflicting views can lead to better solutions.
CONCLUSION 3. Managing conflict is quicker and more efficient than letting conflicts fester.
• Advantages of disputes 4. Challenging old assumptions can lead to changes in outdated practices and
• Factors to consider in processes.
selecting an ADR 5. Conflict requires creativity to find the best outcomes.
method 6. Conflict raises awareness of what is important to individuals.
• Due process and natural 7. Managing conflicts appropriately helps build self-esteem.
justice 8. Managing conflicts well is a sign of maturity.
• Questions 9. Conflicts are challenging.
10. Conflicts are exciting.
11. Conflicts encourage people to grow.
 FACTORS TO CONSIDER

1. The law system that may apply

2. Time and cost
CONCLUSION 3. Confidentiality and privacy
• Advantages of disputes 4. Formality of the process
• Factors to consider in 5. Finality of the outcome
selecting an ADR 6. Impact on relationships
method
• Due process and natural
justice
• Questions
CONCLUSION
• Advantages of disputes
• Factors to consider in
selecting an ADR
method
• Comparison between
the different methods of
ADR
• Due process and natural
justice
• Questions
THANK YOU