How to Resolve a Dispute Under the AS 4000
The AS 4000 provides a 3 step process for resolving disputes:
- Dispute notice: sets out the details of the dispute.
- Conference and discussion between parties: parties attempt to negotiate and resolve the dispute privately.
- Arbitration or Expert Determination: an independent adjudicator will make a binding decision to resolve the dispute.
Though this provides a structure for dispute resolution, there are several other processes and factors you should be aware of.
Informal and Alternate Dispute Resolution (ADR) under AS 4000
AS 4000 allows for an informal dispute resolution. This is essentially one of negotiation. In instances where there are minor disputes, parties can negotiate amongst themselves in order to resolve the conflict. This process saves money and time, but only if successful. Informal dispute resolutions do not guarantee binding and definite results. In these cases, more formal processes are typically favoured.
Conversely, ADR encompasses the processes of mediation, arbitration and expert determination. ADR is the most popular form of resolving disputes in the construction industry. In particular, expert determination has been gaining momentum throughout the industry.
Expert determination is the process of outsourcing help from an expert, external to your business. The disputing parties will send submissions to the expert, who will then make a binding decision on the matter. The reason this is popular in the construction industry is that building and industrial disputes are usually quite simple. These issues are perfect for expert determination. This is because arbitrating or taking court action is, to a large extent, pointless for such singular disputes.
Significance of Security of Payment Legislation Under AS 4000
AS 4000 incorporates security of payment (SOP) legislation, which bestows a statutory right upon contractors. This right ensures that they will continue to be paid for the duration of their construction contract.
Disputes in relation to SOP typically link to situations where the principal has not responded to a payment claim made by contractors. Here, the contractor may become entitled to the payment if there is no response from the principal. On the other hand, contractors may seek a private adjudicator to ‘adjudicate’ the payment owed. However, the contractor must make an accurate claim. If this is not the case, the principal will make a counter-claim to recoup the difference paid. This is a disadvantage of this process, as it could result in a never-ending loop of claims, and counter-claims.
Litigious Approach Under AS 4000
Despite the increasing popularity of ADR and negotiation, AS 4000 still allows for parties to adopt litigious approaches in resolving disputes.
To Sum Up
AS 4000 contracts are becoming popular throughout the construction industry, especially in small scale projects. Perhaps this is because AS 4000 is the least risky to contractors. Simultaneously, however, principals face a relatively high-risk profile when entering into this contract. Thus, it is important for both parties to understand the pathways of dispute resolution.
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