KUMASI TECHNICAL UNIVERSITY

BTECH BUILDING TECHNOLOGY

COURSE: CONTRACT ADMINISTRATION AND

PROFESSIONAL PRACTICE

LECTURE 4 : DISPUTE RESOLUTION

Instructor: Professor Collins Ameyaw [Dr.-Ing., MSc, BSc, MGhIS, MGIOC, PM-IET Gh.]
 MODULE OBJECTIVES

• The course aims expose students to forms of dispute

resolution mechanism

• Highlights the importance of Alternative Dispute Resolution

in the construction industry.

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 WHAT IS A DISPUTE?
Disputes
• A “dispute’’ in a contract is a disagreement about:
o Money due to either party
o Time for performance
o Performance standards
o Interpretation of contract terms and conditions
• A disagreement becomes a dispute when it is not possible for the parties to resolve it without
resort to a formal resolution mechanism.
• The three main categories of dispute resolution are:
o Negotiation
o Alternative Dispute Resolution (ADR)
o Litigation
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TYPES OF DISPUTE RESOLUTION MECHANISMS

Negotiation

Alternative
Mediation
Dispute
Conciliation
Resolution
(ADRs)
Adjudication

Arbitration

Litigation
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 ALTERNATIVE DISPUTE RESOLUTION

• (ADR) is the procedure for settling disputes without

litigation, such as arbitration, mediation, or negotiation.

• ADR procedures are usually less costly and more

expeditious

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 NEGOTIATION

• The process of resolving a dispute or a conflict permanently, by providing for each

sides' needs, and adequately addressing their interests so that they are satisfied with
the outcome.
• Negotiation has been defined as any form of direct or indirect communication
whereby parties who have opposing interests discuss the form of any joint action
which they might take to manage and ultimately resolve the dispute between them. \
• Negotiations may be used to resolve an already-existing problem or to lay the
groundwork for a future relationship between two or more parties.
• Negotiation can also be applied within the context of other dispute resolution
processes, such as mediation and litigation settlement conferences

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 CHARACTERISTICS OF NEGOTIATION
• Voluntary: No party is forced to participate in a negotiation. The parties are free to accept or reject the outcome
of negotiations and can withdraw at any point during the process. Parties may participate directly in the negotiations
or they may choose to be represented by someone else, such as a family member, friend, a lawyer or other
professional.
• Bilateral/Multilateral: Negotiations can involve two, three or dozens of parties. They can range from two
individuals seeking to agree on the sale of a house to negotiations involving diplomats from dozens of States (e.g.,
World Trade Organization (WTO)).
• Non-adjudicative: Negotiation involves only the parties. The outcome of a negotiation is reached by the parties
together without recourse to a third-party neutral.
• Informal: There are no prescribed rules in negotiation. The parties are free to adopt whatever rules they choose, if
any. Generally they will agree on issues such as the subject matter, timing and location of negotiations. Further
matters such as confidentiality, the number of negotiating sessions the parties commit to, and which documents may
be used, can also be addressed.
• Confidential: The parties have the option of negotiating publicly or privately. In the government context,
negotiations would be subject to the criteria governing disclosure as specified in the Access to Information Act and
the Privacy Act. For general information on the privileged nature of communications between solicitor and client
during the course of negotiations
• Flexible: The scope of a negotiation depends on the choice of the parties. The parties can determine not only the
topic or the topics that will be the subject of the negotiations, but also whether they will adopt a positional-based
bargaining approach or an interest-based approach.
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 NEGOTIATION STYLES

Generally speaking, although the labels may vary from one commentator to the next, negotiating
styles can be divided into two categories:
1.Competitive/Positional-Based Negotiation: In the competitive model, the parties try to
maximize their returns at the expense of one another, will use a variety of methods to do so
and view the interests of the opposing party or parties as not being relevant, except insofar as
they advance one's own goal of maximizing returns. Competitive bargaining has been criticized
for its focus on specific positions rather than attempting to discern the true interests of the
parties. Among the criticisms which have been levelled at the competitive model are its
tendency to promote brinkmanship and to discourage the mutual trust which is necessary for
joint gain.
2.Cooperative/Interest-Based Negotiation: Cooperative or problem-solving negotiation
starts from the premise that the negotiations need not be seen as a “zero-sum” situation, i.e.,
the gains of one party in the negotiation are not necessarily at the expense of the other party.
Common interests and values are stressed, as is the use of an objective approach, and the goal
of the negotiations is a solution that is fair and mutually agreeable.
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 ADVANTAGES OF NEGOTIATION
• Flexible procedures: negotiation is probably the most flexible form of dispute
resolution as it involves only those parties with an interest in the matter and
their representatives, if any. The parties are free to shape the negotiations in
accordance with their own needs.
• “Win-win” approach: focusing on their mutual needs and interests and the use
of mechanisms such as objective standards, there is a greater chance of reaching
an agreement that meets the needs of the parties.
• Voluntary process: No one is required to participate in negotiations should
they not wish to do so.
• No need for recourse to a third-party neutral: This is important when
none of the parties wants to involve outside parties in the process, e.g., the
matter to be discussed or the dispute to be resolved may be highly sensitive in
nature.
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 ADVANTAGES OF NEGOTIATION
• Binds only the parties: Unlike the outcomes of certain adjudicative processes, e.g.,
the courts, the outcome of a negotiation only binds those parties who were involved in
the negotiation.
• Preserve Relationship: Negotiations may preserve and in some cases even enhance
the relationship between the parties once an agreement has been reached between
them
• Less Costly: Opting for negotiation instead of litigation may be less expensive for the
parties and may reduce delays.
• Agreement reflects the interest of parties: Assuming that the parties are
negotiating in good faith, negotiation will provide the parties with the opportunity to
design an agreement which reflects their interests.

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 DISADVANTAGES OF NEGOTIATION
• Weaker Party may be disadvantaged: Parties may be of unequal power and the weaker
party(ies) may be placed at a disadvantage. Where a party with an interest in the matter
in dispute is excluded or inadequately represented in the negotiations, the agreement's
value is diminished, thereby making it subject to future challenge. In the absence of
safeguards in the negotiating process, the agreement could be viewed by a participant or
others outside the process as being inequitable, even though the substance of the
agreement may be beyond reproach.
• A successful negotiation requires each party to have a clear understanding of its
negotiating mandate. If uncertainty exists regarding the limits of a party's negotiating
authority, the party will not be able to participate effectively in the bargaining process.
• The absence of a neutral third party can result in parties being unable to reach
agreement as they be may be incapable of defining the issues at stake, let alone making
any progress towards a solution.
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 DISADVANTAGES OF NEGOTIATION

• No party can be compelled to continue negotiating. Anyone who chooses to

terminate negotiations may do so at any time in the process, notwithstanding the
time, effort and money that may have been invested by the other party or
parties.
• Some issues or questions are simply not amenable to negotiation. There will be
virtually no chance of an agreement where the parties are divided by opposing
ideologies or beliefs which leave little or no room for mutual concessions and
there is no willingness to make any such concessions.
• The negotiation process cannot guarantee the good faith or trustworthiness of
any of the parties.
• Negotiation may be used as a stalling tactic to prevent another party from
asserting its rights (e.g., through litigation or arbitration).
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 MEDIATION
• Mediation is an informal, but structured settlement procedure. A mediator is employed to
facilitate and assist parties in reaching an amicable dispute settlement.

• The main characteristics of mediation are that it provides; a voluntary, non-binding, confidential
and interest-based procedure.

• Parties are free to terminate mediation at any time after the first meeting. No decision can be
imposed on the parties involved, and they may or may not agree upon a negotiated settlement.

• The confidentiality principle assures that any options the parties discuss will not have
consequences beyond the mediation process. Interest-based procedure means that the criteria
established to reach resolution does not solely adhere to the law, instead it can include
considerations concerning financial, business and personal interests as well.

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 MEDIATION
• The role of the mediator is to assist the parties in reaching a negotiated agreement. Unlike an
arbitrator, the mediator is not a decision-maker. In a facilitative mediation, the mediator merely
assists the parties in their communication and negotiations. In an evaluative mediation, the
mediator also provides a non-binding assessment of the dispute.

Main benefits
• Mediation can be applied to all sorts of disputes. One of the main benefits of mediation is that
the parties can agree to take into account a broad range of aspects, especially concerning
commercial and business interests.

• The process is flexible and can be tailored to the individual needs of parties. However, mediation
might not be the right instrument to resolve a dispute, especially if for example; the parties are
in need of a precedent, or if one party seeks public vindication, or if one or both parties require
a neutral (legal) opinion.

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 MEDIATION
63. (1) A party to any agreement may with the consent of the other party submit any
dispute arising out of that agreement to mediation by an institution or a person
agreed on by the parties.

(2) A submission to mediation may be made by writing, telephone, or other form of

verbal communication or any other electronic mode of communication and shall
briefly state the nature of the dispute.

(3) A submission to mediation through telephone, or any other verbal mode of

communication shall, unless the parties agree otherwise, be confirmed in writing and
shall state the names, addresses including e-mail addresses and telephone numbers of
the parties and in brief the nature of the dispute.
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 MEDIATION
(4) Mediation proceedings commence when the other party accepts the invitation for
mediation.

(5) An acceptance of an invitation for mediation may be by a letter, telephone, or other

form of verbal communication, fax, telex, or e-mail or other mode of electronic
communication.

(6) An acceptance by telephone or any other verbal means shall be confirmed in writing
but a failure to confirm an acceptance in writing shall not invalidate the proceedings.

(7) Failure by the other party to accept the invitation to mediation within fourteen days
after receipt of the invitation or within the period of time specified in the invitation shall
be considered to be a rejection of the invitation to mediation.
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 CONCILIATION

Conciliation is an alternative out-of-court dispute resolution instrument. Like

mediation, conciliation is a voluntary, flexible, confidential, and interest based process.
The parties seek to reach an amicable dispute settlement with the assistance of
the conciliator, who acts as a neutral third party.

30. The appointing authority or any institution or individual may, with the consent of the
parties at any time during the arbitration process, arrange a conciliation conference to
facilitate the resolution of the dispute, except that an arbitrator in the dispute shall not
be a conciliator.

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 CONCILIATION

• The main difference between conciliation and mediation proceedings is that, at some
point during the conciliation, the conciliator will be asked by the parties to provide
them with a non-binding settlement proposal. A mediator, by contrast, will in most cases
and as a matter of principle, refrain from making such a proposal.

• Conciliation is a voluntary proceeding, where the parties involved are free to agree and
attempt to resolve their dispute by conciliation. The process is flexible, allowing parties
to define the time, structure and content of the conciliation proceedings.

• These proceedings are rarely public. They are interest-based, as the conciliator will
when proposing a settlement, not only take into account the parties' legal positions, but
also their; commercial, financial and / or personal interests.

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 CONCILIATION

• Conciliation ensures party autonomy.

The parties can choose the timing, language, place, structure and content of the conciliation
proceedings.
• Conciliation ensures the expertise of the decision maker.
The parties are free to select their conciliator. A conciliator does not have to have a specific
professional background. The parties may base their selection on criteria such as; experience,
professional and / or personal expertise, availability, language and cultural skills. A conciliator
should be impartial and independent.
• Conciliation is time and cost efficient.
Due to the informal and flexible nature of conciliation proceedings, they can be conducted in a
time and cost-efficient manner.
• Conciliation ensures confidentiality.
The parties usually agree on confidentiality. Thus, disputes can be settled discretely and
business secrets will remain confidential.
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 ADJUDICATION
• Adjudication is a dispute resolution procedure which can be used to soften a strained
situation at its initial stages.
• The adjudicator is usually an expert who is conversant with construction procurement
and management and, hence is able to apply this expert knowledge when needed.
• In most contracts in Ghana, the President of the Ghana Institution of Surveyors is
normally nominated as the adjudicator and he/she would appoint somebody when issues
arise and he is called upon.
• This system unlike other methods is not intended that there should be a formal hearing.
Where necessary, parties may put their points in writing to the adjudication, who then
has a set of ways to respond. On receipt of the adjudicators reply, parties can either
choose to abide by his or her decision or go to arbitration.
• This approach is fast, cheap, less confrontational and enables parties to realize their
position and resolve disputes early.
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 ARBITRATION

• A dispute resolution method in which the solution is recommended by

an impartial third person (rather than the court) chosen by the litigants
themselves for that particular purpose.
• It is perhaps the most popular and widely known dispute resolution
process. Like litigation, arbitration utilizes an adversarial approach that
requires a neutral party to render a decision.
• In arbitration, the parties may be represented by whoever they wish as
opposed to barristers and solicitors normally retained in litigations.
• Parties are obliged, under the principle of discovery, to disclose to each
other the existence of all documents known to them which are relevant
to the matters in dispute.
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 CHARACTERISTICS OF ARBITRATION

• Voluntary: Parties must expressly agree to arbitrate in writing, or fall within the ambit of legislation
that mandates arbitration in a given situation. If the parties have agreed to arbitrate, the court, on the
motion of one of the parties to the agreement, will generally require the parties to submit the dispute
to arbitration, unless it is found that the arbitration agreement is null and void, inoperative or incapable
of being performed
• Controlled: The parties and their counsel are able to control procedural aspects of the process,
including the choice of neutral, timing and location of the hearing, as well as who, other than the parties
themselves, may be present.
• Private: An arbitration is usually conducted in private
• Informal: Subject to the CAA, there are no prescribed procedural or evidentiary rules governing an
arbitration. The rules of procedure are established by the adoption of existing rules, by a negotiated
arbitration agreement between the parties, or by the parties and the arbitrator.

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 CHARACTERISTICS OF ARBITRATION

• Adjudicative: As in litigation, once a case has been presented by each side, the arbitrator
issues a decision. Article 31 of the Code requires that an arbitral award shall be in writing, and
that reasons be provided unless the parties have agreed that no reasons are required.

• Binding/Non-Binding: All federal arbitration under the Commercial Arbitration Act is binding.
Judicial review of an arbitral award is available only on limited grounds such as incapacity of a
party; invalidity of an arbitration agreement; or that the award is in violation of law or public
policy.
• Confidential: Arbitration is generally confidential, if the parties so elect.
• Adversarial: While the arbitration process is based on the adversarial style of the litigation
model, the demeanour and nature of the hearing are determined by the parties, their counsel
and the arbitrator.

• Flexible: The parties have discretion in choosing an arbitrator and the procedure to be
followed in resolving the dispute

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 WHY USE ARBITRATION?
• Speed: One of the main advantages of arbitration is its capacity to have disputes resolved quickly. Even though
the majority of court actions settle before trial, this often occurs only after lengthy and expensive trial
preparation, including examinations for discovery. Arbitration may provide the opportunity to side-step
prescribed procedural requirements of litigation. The parties also determine the timeframe for the arbitration,
allowing them to bypass delays inherent in litigation.
• Choice of the neutral: Arbitration provides the disputants with the opportunity to choose the
individual(s) who will decide the issues in question. This freedom allows the parties to customize the resolution
process to suit these issues by, for example, choosing a neutral with expertise in the subject matter of the
dispute.
• Technical issues: Many of the disputes involving the government are technical in nature. Resolution of these
disputes is often best served by special knowledge or expertise on the part of the decision maker.Very often,
judges do not have such expertise, and they must rely on expert witness evidence. Arbitration gives the parties an
opportunity to secure the services of an individual experienced in a technical area, or one who has knowledge of
the commercial norms relevant to a particular business field. It is for this reason that disputes in the construction
industry and maritime law are often resolved through arbitration.
• Confidentiality: There are cases which, by their very nature, require a confidential outcome. This may occur
because the dispute involves privileged information or issues of particular sensitivity. In these cases, arbitration
agreement may provide the required protection. With respect to sensitive government information it may
provide protection against disclosure.
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 ADVANTAGES OF ARBITRATION

• the parties can select the arbitrator(s);

• arbitrator(s) can be selected on the basis of experience relevant to the
issues;
• the proceedings can be held in private and confidentiality may be
preserved;
• the rules of procedure can be as formal or informal as the parties and
their counsel determine, subject to any statutory requirements;
• the cost of the proceedings can often be more easily contained;
• due to increased control of the process there can be a greater
opportunity for settlement; and
• arbitral awards are binding under the Commercial Arbitration Act.

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 DISADVANTAGES OF ARBITRATION

• the success of arbitration is largely dependent on the experience of the

arbitrator(s);

• arbitral awards are not of legal precedential value;

• recourse against an award is very limited;

• may not suit disputes involving matters of public law, such as constitutional
issues;

• time and cost can be significantly affected by a lack of co-operation of the parties
or poor process design, or by lack of availability of an arbitrator(s)
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 THE ARBITRATION PROCESS

• Selecting an Arbitrator or Arbitral Panel: The first actual step in the arbitration process is
choosing an arbitrator(s), one of the most important aspects of the arbitration process. Serious
thought and effort must be put into this exercise to ensure that the arbitrator is neutral and
unbiased. The choice will depend on a number of factors, including: the legal and factual basis of
the dispute; the technical expertise required; the location of the parties; the experience of the
arbitrator(s).

• B. Preparatory Conference: Once the arbitrator has been chosen, the parties to the
arbitration and the arbitrator normally agree to hold a preparatory conference. This meeting
provides the participants with an opportunity to address and negotiate procedural details which
may remain outstanding. It is at this stage that most decisions are made regarding the mechanics
of the process itself . Such conferences need not be conducted in person and are often conducted
by telephone

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 THE ARBITRATION PROCESS

• Exchange of Exhibits and Statements of Position: The efficient exchange of information is

essential to all dispute resolution processes and inefficiency in this regard is responsible for much
of the delay that occurs in any resolution process. Arbitration provides the opportunity for the
parties to limit the potentially obstructive aspects of the litigation process. This can be
accomplished through, for example, the imposition of mutually acceptable time limits for the
appropriate exchange of information.

• Conduct of the Arbitration Hearing: During hearings, each party "shall be treated with
equality and each party shall be given a full opportunity of presenting his case".When negotiating
the terms of the arbitration agreement, the parties will normally have determined whether or not
they wish to have oral hearings. Failing consensus, the arbitrator will decide. The conduct of the
hearings is to be completely accessible to all parties to the arbitration and each participant is to
be given sufficient notice of any meeting of the tribunal to inspect items that are to be submitted
as evidence.

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 THE ARBITRATION PROCESS
• Awards: The Code provides that an award of an arbitral panel shall be in writing and shall be signed by the arbitrator
or arbitrators. The law that governs the dispute is the law chosen by the parties in the arbitration agreement. The
award shall provide written reasons, unless the parties agree otherwise. The arbitrator can, once an award has been
given, correct a typographical, clerical or computation error on its own initiative, or if so requested by a party, within
30 days of the award .

• Setting aside an award: Recourse against an arbitral award is expressly provided in the Commercial Arbitration Act .

The court may set aside an award where:

i. a party to the arbitration agreement is under some incapacity;

ii. the agreement is invalid under the applicable law;
iii. the party making application was not given proper notice or otherwise was not able to present its case;
iv. the award deals with a dispute not contemplated by or beyond the scope of the submission to arbitration ;
v. the composition of the tribunal or the procedure was not in accordance with the agreement of the parties.
vi. the award is in conflict with the public policy of that country.
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 LITIGATION

• Litigation is a dispute resolution method which involves the

use of the courts of law, a third party who is trained and
qualified in law, and a judge appointed by the courts.

• This method can be lengthy, extremely expensive and hence

only suitable for resolving complex disputes.

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 The End

For any queries, please contact

[email protected]
[email protected]
+233 (0) 244 765 455
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