construction disputes and their settlement

7/31/2019 Construction Disputes and Their Settlement

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Construction Disputes and

their SettlementBUILDING TECHNOLOGY AND

MANAGEMENT


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Development of Disputes

Natural phenomenon!

Interpretation of contract clauses

Difference in opinion regarding the execution of

the work

Unforeseen problems

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Types of Construction Disputes

Claims of Contractor against Owner/Client

Claims of Owner/Client against Contractor

Sub-contractors claims

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Claim: Demand for something considered ones due


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Claims of Contractor against Owner/Client

Claims to recover damages caused by breach of

conditions by the owner

Claims to recover loss or damage caused by an

unjust termination of the contract by the owner

Claims to recover damages upon rescinding of the

contract due to frustration

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Claim Generating Circumstances

1. Delay in the supply of drawings and clarifications

2. Defects in the specifications furnished

3. Delay/manufacturing defects inmaterials/equipment supplied by the owner

4. Changes in law, regulations or codes subsequentto the award of the contract

5. Changed or differing site conditions

6. Delay due to other contractors work

7. Acceleration in work demanded by the owner8. Defects in the contract agreement

9. Inordinate delay in the release of payments

10.Unjustified termination of the contractor by the

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11. Substantial delay in handing over the site

12. Owners failure in his implied duties

13. Unreasonable rejection of acceptable work

14. Delay in clearances

15. Suspension of work by the owner for his ownconvenience

16. Rescheduling/prolonging work for financial andother reasons

17. Work arising during maintenance period, which isnot covered by the contractors obligations

18. Owners delay in decision overamendments/change orders

19. Quantity variations, for which provision is notmade in the contract

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20. Failure by sub-contractors nominated by the

owner

21. Stipulations of near-impossibilities for compliance

or incorporation into the contract work

22. Natural calamities

23. Force Majeure

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Claims of Owner/Client against Contractor

Claims for defective work done by the contractor

Claims for delay caused by the contractor

Counter-claim as a defense

Claim against professionals

Claims following termination and breach

Claims for expenditure incurred in completing the

work left incomplete or abandoned by the

contractor

Claims for liquidated damages8


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Owners Claim Procedure

Engineers Comments Consultants Comments

Claims Committees Recommendation

Top Managements Approval

Claim Initiation by the Client/Owner

Excusable Delays

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Modes of Settlement of Disputes

By direct negotiations between the client and the

contractor

Settlement by arbitration

Through civil courts

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Direct Negotiations

Easiest and least expensive

Majority of the disputes are settled through

negotiations

Arbitration is sought after, only if direct

negotiations fail

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Settlement Through Courts

Last resort

Attempted only if direct negotiation and

arbitration fails

Time consuming, to the tune of several years

Expensive

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Settlement Through Arbitration

Arbitrationis the hearing and determination of

a dispute by an impartial referee selected by theparties concerned.

Arbitratoris a person chosen by the concernedparties to pronounce judgment on the dispute.

Sole Arbitrator

Joint Arbitrators

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Advantages of Arbitration over Litigation

1. Cost

2. Speed

3. Convenience

4. Technical knowledge

5. Informality

6. Proceedings in private premises

7. Finality of award

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Indian Arbitration Act 1940

Arbitration without intervention of a court

Arbitration with intervention of a court

Arbitration in lawsuits

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Provides for arbitration in the following three cases:


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The Act:

does not dictate the form of arbitration to be

adopted

does not prescribe the procedure for arbitration

does not interfere with the award given by the

arbitrator

does not require the arbitrator to state reasons in

support of his ruling

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Arbitration Clause

1. All disputes will be settled through arbitration in

accordance with the Indian Arbitration Act, 1940

2. The parties may appoint a single arbitrator or

each party may nominate an arbitrator and thetwo nominated arbitrators may mutually select an

umpire

3. The parties will mutually agree regarding the

sharing of arbitration fees and expenses

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4 The arbitration proceedings will be conducted by

the arbitrator(s) in accordance with laid down

procedures, at mutually convenient places and

dates

5 If difference in opinion arises between the twoarbitrators, the decision of the umpire will be

final

6 The arbitration award will be final and bindingupon both parties

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Reference

o

Joy, PK, Handbook of Construction Management,MacMillan India

o Patil, BS, Civil Engineering Contracts and

Estimates, Universities Press

o Gahlot, PS and BM Dhir, Construction Planning and

Management, New Age International

o Gupta, BL and A Gupta, Construction Management

and Machinery, Standard Publishers

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