Alternative Dispute Resolution in the Construction Industry: UAE Situation

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Introduction

The construction of projects and related contracts has highly increased in the UAE over the last decade. This has with no doubt has given rise to significant numbers of claims either between contractors and employers or even between contractors and sub-contractors.

These disputes are resolved either by way of conciliation or arbitration and are predominantly held in the English language, with specialist arbitrators appointed due to the technical nature of the aspects involved. Litigation is a less preferred mode of dispute resolution in the construction industry; however there are a number of Court rulings on important aspects of construction law.

As a consequence of this, focus on construction law is increasing. The articles set out herein seek to address some of the most often encountered issues in construction law related disputes.

Rational for the study

The reason for studying Alternative Dispute Resolution (ADR) methods in construction industry is to get information about the number of construction projects, the related contracts and whether they have increased largely in the United Arab Emirates (UAE) over the last decade. A number of claims arise among the contractors and owners and between contractors and sub-contractors.

The disputes are resolved by way of conciliation or negotiation and are mostly held in the English language with specialist judges appointed due to the technical nature of the aspects involved (Hinchey & Schor 2002, 63).

Court cases are a less preferred means of dispute resolution in the construction industry although there are a number of Court rulings on vital aspects of construction law. As a result of this, focus on construction law has increased. This paper will seek to tackle some of the most often encountered issues in construction law related disputes (Rhys-Jones 1994, 147; Gibbs 2007, 44)

Aim

The aim of ADR (alternative dispute resolution) development is to critically analyse the causes, impacts and sources of claims in UAE construction industries and come up with solutions to avoid or reduce those claims and to gather detailed information on national out-of-court bodies and facilitating co-operation among these bodies.

The aim of every construction project stakeholder is to complete a project that meets time, cost and quality.

Negotiation in construction industry dispute an assessment of UAE situation

Surprisingly, negotiation is often overlooked as a means of resolving disputes whenever they occur. Whenever a dispute arises under a contract, often the first reaction of the aggrieved is to instruct lawyers to send a letter of demand and then commence legal proceedings if payment is not made immediately. This approach often does not work but in most cases will only serve to put the other party on the defensive.

However, an approach from a senior representative of the aggrieved party to a senior representative of the other party to determine whether a negotiated solution can be reached will achieve a more positive result without the need to involve lawyers. In most contracts, the dispute resolution clause will require the parties to have a negotiation at the senior executive level as a precursor to arbitration or court proceedings.

It is not necessary, reasonable, to include such provision in the contract in order for them to negotiate. The parties are mostly free to negotiate a resolution to their dispute at any time at their willingness (Kangari, 1995).

With its history of resolving disputes in the majalis, the Middle East is well suited for negotiation at senior executive level as a form of ADR. It is probably not used as frequently as it should be.

There are advantages of negotiation that are there, that is if the parties act responsibly, there is minimal cost to either party other than the time of those persons involved in the negotiations. If a negotiated solution can be reached in brevity, legal costs will be avoided. These negotiations can also help the parties to preserve their contractual relationship so that they are able to do business with each other in the future.

In order for negotiation to work out, both parties need to act in good faith and be prepared to make concessions where appropriate. The parties also need to make sure that they take care to identify what is actually in dispute; otherwise the parties might be at cross purposes resulting in wasted time on both sides.

Individualists tend to view conflict as a natural part of human interaction, but one of the leading United States books on conflict resolution systems design states that disputes are inevitable when people with different interests deal with each other regularly. In Getting to Yes, the best definition on principled negotiation, the authors describe conflict as a “growth industry.”

An author of an authoritative mediation textbook from Texas noted that while conflict often has a negative connotation, in some cases it can be positive, in such that an exciting and inspiring experience and it is at the root of personal and social change. Collectivists, however, tend to view conflict as an aberration, at least where in-group relationships are concerned.

However, a survey of Korean-Americans found that the respondents looked at conflicts as a shameful inability to maintain harmonious relationships with others. The Japanese, however, abhor direct personal confrontation and, by avoiding it, they almost always operate by consensus.” Among collectivists, avoiding issues is a common, and often preferred, approach to conflict (Kumaraswamy & Chang, 1998).

Key questions

The key questions asked frequently are;

How have disputes among contactors affected employer/employee relationship in UAE construction industries?
What are the types of disputes that mostly occur in UAE construction industry?
What means do you use to solve disputes in the UAE construction industry?
What do you do in order to avoid the disputes?
Have these disputes ever occurred in the past or this is the first time they are happening?

Literature review

The study will review the pertinent literature on the subject of disputes in order to attain the objectives; a thorough review is to be conducted by studying old books, reading the journals on how disputes among contractors were solved in the past years and also by looking at conference papers to get information and find a solution to these disputes.

According to Fleming (2003, 21), the most important items to consider in ADR include; the factors that currently impede the efficient, productive, timely and cost effective performance of projects, source of disputes and practical strategies to avoid disagreements or reduce the impact of disputes, general degree of the direct and indirect costs of disputes to clients, contractors, other industry stakeholders and the community, primary principles of conflict management in the context of commercial disputes and practical dispute resolution strategies for facilitating the equitable, certain, amicable, timely and cost effective resolution of disputes.

Main study and analysis

The main aim of this study is to come up with an analysis on alternative dispute resolution method in construction industry in the United Arab Emirates so as to identify and analyze projects in which various ADR methods were used, to analyze the responses from questionnaires and interviews, to recommend compatible methods and further research and to conduct interviews with the selected representatives (Harmon 2004, 47).

Interviews with construction professionals

Questionnaires will be prepared and distributed to contractors and their employees to fill in information about the disputes, the main causes of these disputes and their recommendations or rather how they feel about these disputes and what they think should be done to reduce these disagreements in the UAE industries.

Writing the research report

Alternative Dispute Resolution in the construction industry is the main source of concern for anyone concerned with the construction process (Essex 1996, 67). Negotiation, mediation and arbitration remained the main methods for resolving the disputes but new techniques were being explored. Writing a research report inquires the introduction, background of the study, methodology, data analysis, and the conclusion. The commercial construction industry has steadily increased in complexity over the last few years (Cheung 1999, 55).

Proposed structure of dissertation

Chapter one. Introduction

This chapter will talk about the construction industry in UAE and how the contractors solve their disputes, talk about the construction projects and how they have increased or decreased in the last decade, introduce any claims made by contractors or owners and employers or between contractors and sub- contractors and how they solve their disputes and lastly introduce future plans of the construction industry.

Chapter two. An overview of disputes

At this chapter will talk about;

The UAE construction industries.
Disputes in the UAE construction industries.
Dispute resolution method.
Institutional and legal framework for dispute resolution in the UAE construction industries.

Chapter three. Types of disputes

This chapter will talk about the types of disputes that occur in a construction industry and these are; domestic/family, personal injuries, workers compensation, construction, bankruptcy, employee benefits and many more disputes that arise in the UAE construction industry from the information you get from the employees through the questionnaires.

Chapter four. Examine the relationship between disputes and contracts.

It will talk about the disputes and how they have affected the employees/ employers relationship in the construction industry.

Chapter five. Causes of disputes in the UAE construction industry

In this chapter, it will talk about the main causes of disputes for example misunderstandings, lack of communication, delay in delivery of materials, shortage of labour, financial difficulties by contractors, poor site management, slowness in decision making by client and many more causes as stated by contractors in the questionnaires. (Groton J.P, 1997, 56)

Chapter six. Methods of solving disputes

In this chapter, it will talk about all the methods of solving contraction disputes for example, mediation, conciliation, negotiation, arbitration, litigation and dispute resolution boards.

Chapter seven. Analysis of grounds for disputes

In this chapter, it come up with an analysis of the study by tables and charts and come up with a table about types of disputes and another one about methods of solving disputes as per the questionnaire.

Conclusions and recommendations

It will focus on conclusions and recommendation of the study according to the information that was got from the questionnaires that were distributed to the contractors and employees of the UAE contraction industry.

Reference

Cheung, S.O., 1999. “Critical Factors Affecting the Use of Alternative Dispute Resolution Processes in Construction.” International Journal of Project Management, 56.

Essex, R., 1996. “Means of Avoiding and Resolving Disputes during Construction.” Tunneling and Underground Space Technology, 7(1), 10-77.

Fleming, Q., 2003. Project procurement management: contracting, subcontracting, teaming. Pennsylvania: FMC Press.

Gibbs, K. C., 2007. “Dispute-Resolution Changes Coming.” ENR: Engineering News Record, 40-6.

Groton, J. P., 1997. “Alternative dispute resolution in the construction industry.” Dispute Resolution Journal, 76.

Harmon, J., 2004. “Construction conflicts and dispute resolution boards: attitudes and opinions of construction industry members.” Conflict Resolution Journal, 47.

Hinchey, J.W., & Schor, L., 2002. “The Quest for the Right Questions in the Construction Industry.” Dispute Resolution Journal, 63.

Kangari, R., 1995. “Construction documentation in arbitration.” Journal of Construction Engineering & Management, 1(2), 63-123.

Kumaraswamy, M. M. and Chang, D. W., 1998. “Contributors to construction delays.” Construction Management and Economics, 78-9.

Rhys-Jones, S. 1994. “How constructive is construction law?” Construction Law Journal 5 (147).

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