An excerpt from The Projects and Construction Review, 11th Edition

Dispute resolution

Disputes arising from construction and engineering work on projects are generally dealt with under three separate regimes: arbitration, arbitration and court proceedings.

i Special jurisdiction

Under the Housing, Grants, Construction and Regeneration Act 1996, all UK construction contracts must contain dispute resolution provisions. If there is no award provision in a building contract, the law will contain an award provision. The law also implies a judgment scheme if the judgment provisions of a construction contract do not meet the requirements of the Local Democracy, Economic Development and Construction Act 2009

However, there are several exceptions to these rules. The parties can circumvent the legal jurisdiction rules if the construction contracts relate to energy and process plants or offshore construction work. Project companies and authorities that have concluded a concession agreement as part of a PPP project are also excluded from the award rules; Please note, however, that the other project contracts cannot invoke such an exception.

The legal jurisdiction regime stipulates that construction contracts contain provisions that allow disputes to be referred to arbitration at any time. In the case of a referral, the parties must appoint an adjudicator within seven days, after which the adjudicator must resolve the dispute within 28 days of being appointed. This period can also be extended by the parties.

Any type of dispute may be referred to arbitration and the arbitration tribunal’s decision will be final and enforceable in the English courts. However, each party can later process or arbitrate the same dispute without restriction. The English courts generally refuse to enforce adjudicator decisions unless the adjudicator was clearly inconsistent or there was a violation of natural law in the judicial process.

ii Arbitration and ADR

Contractual provisions in project documents governed by the law of England and Wales that require the filing of disputes in international arbitration are generally recognized and endorsed by the English courts. Pursuant to the 1996 Arbitration Act, and provided the arbitration agreement is in writing, the English courts will suspend all proceedings in violation of this agreement unless the court is satisfied that the arbitration agreement itself is null and void (Arbitration Act 1996). The United Kingdom is a signatory to the New York Convention, which allows arbitral awards to be recognized and enforced.

Arbitration has traditionally been used in the construction sector and most arbitration proceedings are conducted by specialized arbitrators in the industry, including former engineers, architects or experts who have subsequently trained and qualified as arbitrators. The Royal Institution of Chartered Surveyors is one of the largest nomination bodies for arbitrators and adjudicators in the UK. However, since the introduction of statutory arbitration, construction arbitration has declined significantly.

Matters that are arbitrable under English law are generally limited to civil proceedings; that is, criminal and family law as well as professional ethics matters may not be subjected to arbitration. However, a right to compensation arising out of a crime or property related to a divorce can easily be arbitrary. Note, however, that although the English courts have suggested at one point that an arbitration agreement should be considered null, void and ineffective insofar as it purports to be subject to arbitration on issues of overriding EU law10, this approach was not followed in The following cases.11 The Fern Computer Consultancy Ltd case against Intergraph Cadworx & Analysis Solutions Inc. was thereupon treated positively in court. However, there has not yet been an appeal court ruling on this issue and so some ambiguity remains.