Alternative Dispute Resolution (ADR) CPD for SLQS OMAN Alternative Dispute Resolution (ADR) Real Life Cases and Path to ‘Reasoned’ Decisions Tilak Kolonne BSc(QS)Hons, Dip(Arb), Dip(Adj)*, FRICS, FIQSSL, ACIArb Chartered Quantity Surveyor, Arbitrator, Adjudicator Tel: +94 777 957288 Email: tpk@vform.net 2 April 2017

Contents Dispute Commercial disputes Dispute resolution Litigation Alternative Dispute Resolution (ADR) Decisions Engineer’s decision Adjudicator’s/ DAB’s decision Arbitral Award Reasoned decisions & Unreasoned decisions Legal reasoning Real life cases

Dispute Conditions of Contract for Design, Build and operate projects (Gold Book) First Edition 2008 Sub-Clause 1.1.3.1 “Dispute” means any situation where (a) one Party makes a claim against the other Party; (b) the other Party rejects the claim in whole or in part; and (c) the first Party does not acquiesce, provided however that a failure by the other Party to oppose or respond to the claim, in whole or in part, may constitute a rejection if, in the circumstances, the DAB or the arbitrator(s), as the case may be, deem it reasonable for it to do so.

Is there a dispute? Crystallization of dispute ; whether or not there is a dispute Commercial disputes

Dispute Resolution Ways of achieving a solution in commercial disputes (concerning contracts) Litigation A judicial contest to determine and enforce legal rights Non Litigation (Alternative Dispute Resolution)

Alternative Dispute Resolution "Alternative Dispute Resolution" (ADR) is a term generally used to refer to out-of-court dispute resolution processes in which the parties meet with a professional third party who helps them resolve their dispute in a way that is less formal and often more consensual than is done in the courts Binding, non-binding, final (Temporarily/permanent)

The ‘Engineer’ as dispute resolver Engineer’s decision may be a prerequisite to proceed to adjudication or arbitration The QS may be asked to make the decision on the Engineer’s behalf Will the Employer and the Contractor be comfortable with an Engineer’s decision without reasons? (unreasoned decision) Importance of knowledge on ‘legal reasoning’ to give a ‘reasoned decision’/ decision with reasons

Adjudication Adjudication generally refers to processes of decision making that involve a neutral third party with the authority to determine a resolution through some form of judgment/ decision A QS with required skills can act as Adjudicator Construction Adjudication Awards/ Decisions “We can’t avoid reasoning; we can only avoid doing it well” - Peter Kreeft

Arbitration Arbitration is a legal technique for the resolution of disputes outside the courts, wherein the parties to a dispute refer it to one or more persons (the "arbitrators", or “arbitral tribunal"), by whose decision (the “award") they agree to be bound. A QS with required skills can act as an Arbitrator Can the parties live with just the decision which is unreasoned? Or the losing party had the need (if not the right) to know the reasons why he had lost and the winner (as might often happen) had the need to know the amount awarded was less than he had claimed.

Reasoned decisions FIDIC 1999 (C)/ Red Book in Clause 20.4 (4th para) calls for decisions with reasons; “…the DAB shall give its decision which shall be reasoned…” Arbitration Act No.11 of 1995 (Sri Lanka) calls for reasoned award; “The award shall state the reasons upon which it is based unless the parties have agreed that no reasons are to be given…”

Reasoned Decisions Why reasoned decisions? The parties are entitled to be told why they have won or lost. Meek v City of Birmingham District Council [1987]. To guide parties and others interested in their future conduct A reasoned decision should set out the facts and legal reasoning on which the decision is based.

Reasoned decisions It enables any subsequent proceedings to review the decision and decide whether it is subject to reversible error It is a valuable intellectual discipline for the decision maker It should be borne in mind that what the parties want is a reasoned decision, rather than a legal dissertation

Unreasoned decisions Unreasoned decisions Views that arbitral awards may be given without reasons The UNCITRAL Model Law provides (in Article 312) that: “the award shall state the reasons upon which it is based unless the parties have agreed that no reasons are to be given or the award is an award on agreed terms under article 30”

Unreasoned decisions Can be the case with Adjudicator’s or Engineer’s decision? less favorable! Industry is used to see reasoned decisions

Legal reasoning All legal reasoning follows one path. No legal argument can be accepted or rejected without all of the following: Issue – what specifically is being debated? Rule/ law – what legal rule governs this issue? Facts – what are the facts relevant to this rule? Analysis – apply the rule to the facts. Conclusion – having applied the rule to the facts, what’s the outcome?

Legal reasoning In the process of Engineer’s decision, adjudication and arbitration basically a judicial process is followed Parties present their respective case Parties lead evidence The decision maker arrives at his decision Legal reasoning would be applicable to the necessary degree

Legal reasoning There are lots of facts that make up one’s story. The decision maker looks for “material” facts that fit the element of the rule. Facts are statements that can be proven true. Opinions are statements that reflects one’s feelings or views, and they cannot be proved true.

Legal reasoning There are so many rules that no one can know them all. An argument has no weight unless it says exactly which rule is being relied upon. In the analysis the decision maker sees that the material facts fit the law. Rule/ law can come from the governing law of the contract and in construction works, from the contract documents including Conditions of Contract

Real Life cases Issues Case 1 Please read Case 1 scenario given in a separate handout Issues Is there an amendment to the contract for transferring the design responsibility to the Engineer? Has the Contractor the right to change and execute the Engineer’s Instruction?

Real Life cases Case 1 Rule/ law Parties to the contract only can amend the contract (contract law/ privity of contract) Clause 2.5 of the Conditions of Contract says that the Contractor has the obligation to carry out the EI

Real Life cases Case 1 Facts A meeting was held between the parties’ representatives and the Engineer and agreed The Engineer issued an instruction under the Contract and re-confirmed

Real Life cases Case 1 Other views of interest Parties' representatives cannot amend the Contract! Is it the Contractor’s duty to say the Engineer’s design is not sufficient? What if the structure collapses? who will be responsible? Feelings, sympathy on the parties

Real Life cases Case 2 Contractor’s claim for entitlement of extension of time (in principle) Extensive submissions made by parties Submissions reveled parties were continuing discussions/ correspondence Issues? rule/ law? facts? Preliminary issues/ objections

Important Note! As a decision maker, it is your duty to weigh and to evaluate all the evidence received in the case and, in that process, to decide the facts. It is also your duty to apply the law to the facts as you find them, whether you agree with the law or not. You must decide the case solely on the evidence and the law and must not be influenced by any personal likes or dislikes, opinions, prejudices, or sympathy

Further reading… Carillion Construction Ltd v. Devonport [2005] EWCA Civ 1358; [2006] BLR 15 (CA) Thermal Energy Construction Ltd v AE & E Lentjes UK Ltd [2009] EWHC 408 (TCC)  Pickavance, James. A Practical Guide To Construction Adjudication  Turner, Ray. Arbitration Awards. Oxford, UK: Blackwell Pub, 2005

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