The Basic Principles of Dispute Resolution

Dafydd Huw Davies
Effective dispute resolution mechanisms are vital as oil prices plunge and clients cut aspirational contractual commitments. Some basic principles are outlined in this article.

It's Good to Talk

Effective engagement is the first key building block. Where possible, try to speak with the other party or parties, as this helps to identify the principal causes of the dispute, helps to resolve matters, and can avoid needless escalation.

There is invariably a need to engage parties in writing at some point. Care should be taken to ensure that all correspondence reflects what was actually meant, avoiding any unintended negative or unhelpful connotations.

Mediation

In mediation, a neutral facilitator attempts to help the parties resolve the dispute by encouraging them to find common issues which can be agreed upon. There is no obligation on the parties to arrive at an agreement, but entering into mediation usually indicates a willingness to compromise.

Mediation is especially useful when the parties are keen to maintain a good relationship.

Adjudication and Arbitration

Adjudication and arbitration share common features. Both require the parties to present their case to an independent panel selected by the parties in advance. The panel operates within parameters pre-agreed by the parties, and makes a decision based on the presented information.

Before launching adjudication or arbitration proceedings, parties are strongly advised to engage with one another (through mediation or otherwise) as early identification of the issues allow each party to properly prepare.

An adjudicator’s decision is only binding until a final decision is determined by legal proceedings – though in practice an adjudicator’s decision is rarely challenged. An arbitrator’s decision, on the other hand, is final, with only limited recourse for appeal. Parties are also able to enforce an arbitration award in almost every country, due to widespread adoption of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Before launching adjudication or arbitration proceedings, parties are strongly advised to engage with one another (through mediation or otherwise) as early identification of the issues allow each party to properly prepare.

Litigation

Domestic court proceedings are normally conducted in public, unlike arbitration, adjudication and mediation, so Alternative Dispute Resolution (ADR) is usually preferred, to avoid unwanted publicity. Courts also take far longer to process disputes and the costs tend to be greater.

Online Dispute Resolution

A new online procedure has been introduced which manages the parties' dispute and assists them with their attempts at resolution. It's definitely 'one to watch' for less complicated situations.

The software can send automatic responses and suggest constructive ways of writing communications: this will be very useful for unrepresented parties.

The software can send automatic responses and suggest constructive ways of writing communications: this will be very useful for unrepresented parties.

Choose the Most Appropriate Route

If any form of resolution is to be successful parties need to be comfortable and confident with their selected method. Parties should not discount the benefits of blending the alternative elements of dispute resolution. The practice of an arbitrator referring a matter to mediation, and making an award based on the mediator’s recommendation, is a route that’s gaining popularity on the basis of cost efficiency.

Faithful+Gould successfully applies a client-focused resolution approach across a broad range of Gulf Cooperation Council (GCC) construction projects. We are well placed to assist with all forms of alternative dispute resolution, and can help clients choose the most appropriate route and effective resolution.

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