7/31/2019 Construction Disputes and Their Settlement
1/19
Construction Disputes and
their SettlementBUILDING TECHNOLOGY AND
MANAGEMENT
7/31/2019 Construction Disputes and Their Settlement
2/19
Development of Disputes
Natural phenomenon!
Interpretation of contract clauses
Difference in opinion regarding the execution of
the work
Unforeseen problems
2
7/31/2019 Construction Disputes and Their Settlement
3/19
Types of Construction Disputes
Claims of Contractor against Owner/Client
Claims of Owner/Client against Contractor
Sub-contractors claims
3
Claim: Demand for something considered ones due
7/31/2019 Construction Disputes and Their Settlement
4/19
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
4
7/31/2019 Construction Disputes and Their Settlement
5/19
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
owner 5
7/31/2019 Construction Disputes and Their Settlement
6/19
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
6
7/31/2019 Construction Disputes and Their Settlement
7/19
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
7
7/31/2019 Construction Disputes and Their Settlement
8/19
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
7/31/2019 Construction Disputes and Their Settlement
9/19
Owners Claim Procedure
Engineers Comments Consultants Comments
Claims Committees Recommendation
Top Managements Approval
Claim Initiation by the Client/Owner
Excusable Delays
9
7/31/2019 Construction Disputes and Their Settlement
10/19
Modes of Settlement of Disputes
By direct negotiations between the client and the
contractor
Settlement by arbitration
Through civil courts
10
7/31/2019 Construction Disputes and Their Settlement
11/19
Direct Negotiations
Easiest and least expensive
Majority of the disputes are settled through
negotiations
Arbitration is sought after, only if direct
negotiations fail
11
7/31/2019 Construction Disputes and Their Settlement
12/19
Settlement Through Courts
Last resort
Attempted only if direct negotiation and
arbitration fails
Time consuming, to the tune of several years
Expensive
12
7/31/2019 Construction Disputes and Their Settlement
13/19
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
13
7/31/2019 Construction Disputes and Their Settlement
14/19
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
14
7/31/2019 Construction Disputes and Their Settlement
15/19
Indian Arbitration Act 1940
Arbitration without intervention of a court
Arbitration with intervention of a court
Arbitration in lawsuits
15
Provides for arbitration in the following three cases:
7/31/2019 Construction Disputes and Their Settlement
16/19
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
16
7/31/2019 Construction Disputes and Their Settlement
17/19
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
17
7/31/2019 Construction Disputes and Their Settlement
18/19
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
18
7/31/2019 Construction Disputes and Their Settlement
19/19
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
19