How to resolve a Dispute in a Construction?

1. INTRODUCTION

This procedure explains the detailed procedure for dispute resolution which can be followed between Licensors/Owner and EPC contractors for the Project. 

2. Definition

“DISPUTE” means a dispute, difference or claim between the Parties as to the construction of the CONTRACT or as to the matter or thing of whatsoever nature arising under or in connection with the CONTRACT, including any claim in tort, under statute of for restitution based on unjust enrichment or for rectification or frustration, and includes any dispute or difference as to any decision, determination or instruction of the OWNER, and includes any dispute or difference relating to the formation, existence, interpretation, validity or termination of the CONTRACT, whether the dispute or difference arises before or after the Final Acceptance Date or termination of the CONTRACT or the MAIN CONTRACTOR’s engagement thereunder.

“DISPUTE NOTICE” means written information on the description of DISPUTE, when parties fails after such attempts to resolve the DISPUTE, raised by either MAIN CONTRACTOR or OWNER to the IPMT along with a copy furnish to the other concerned parties.

“PARTY (or Parties)” is composed of the MAIN CONTRACTOR and OWNER.

“OWNER” means the Client. 

“PMT” means the Internal Project Management Team of the OWNER.

“MAIN CONTRACTOR” means the CONTRACTOR under the CONTRACT as applicable.

CONTRACT” means the agreement between the MAIN CONTRACTOR and the OWNER.

“WORK” means the work and services to be performed by the CONTRACTOR, as appropriate.

3. Procedure 

3.1 Dispute Resolution Board

3.1.1 The MAIN CONTRACTOR or OWNER, if any, shall report directly the Dispute to the IPMT through written Dispute Notice.

3.1.2 Within fourteen (14) days of receipt of the Dispute Notice, the PMT may call the Dispute Resolution Board for a meeting informing the date and venue within prior three (3) days invitation notice by telegraphic or other written means to all concerned parties provided however that the meeting will not fall on the Dispute Resolution Board Regular Monthly Meeting. Each of the Representative(s) must be duly represented including Owner’s Representative if the Project Director may not be required during this first attempt of dispute resolution. 

The Dispute Resolution Board shall be arranged by PMT to be consisting of respective party representative such as:

a) PM of OWNER

b) PMT Representative

c) OWNER Senior Representative

Upon arrangement of the Dispute Resolution Board Representatives, the IPMT may arrange together with the Board on a date and venue for a monthly regular meeting.

3.1.3 The PMT shall preside over such meeting. The Minutes of the Meeting, incorporating other comments from all concerned parties, will be prepared and issued by PMT to all Representatives three (3) days prior to the date of the meeting.

3.1.4 All decisions required on the Dispute Resolution Board meeting shall be decided by simple majority.  In the event that either one of the MAIN CONTRACTOR, or OWNER’s Representative, is not represented (in person, by telephone, or otherwise as described herewith), then the meeting shall be temporarily adjourned and rescheduled for such time and such location not less than one week later, considering the decisions of the absent representative shall have the same force and effect as a unanimous decision of the Dispute Resolution Board, unless the absent representative is demonstrated by the causes beyond reasonable control.  Written notice of such second meeting shall be given to all representatives by PMT.  Should any of the representative(s) be unable to attend a Dispute Resolution Board meeting, he may, at his sole option, elect to announce his vote on any matter to be decided at such meeting by giving written notice of such vote to the PMT in advance of such meeting.  The PMT may make binding decisions without a meeting by a unanimous consent signed by all of the Representatives. 

3.1.5  Subject to the terms of this procedure, the PMT shall:

(i)  Establish the policies of the Dispute Resolution Board meeting;

(ii) Decide all matters affecting the relationship between the PMT/OWNER as a whole and any Representative(s), the Customer or Third Party, if any;

(iii) In the event of a dispute, allocate changes to any MAIN CONTRACTOR's Scope of Work and costs    thereof;

 (iv) Establish panel board policy for negotiation of contracts and amendments thereto (except with regard to collective bargaining agreements, if any, which are the sole prerogative of the individual Representatives);

(v) Resolve disputes among the Dispute Resolution Board Representatives regarding Scope of Work and costs thereof;

(vi) Administer in a reasonable and consistent fashion the principles expressed in this Procedure.

(vii) Establish subcommittees if required necessary, staffed with relevant personnel of each Representative(s) to study and make recommendations to the Dispute Resolution Board on various aspects of the Project such as finance, legal affairs, technical co-ordination, etc., and to implement decisions of the Dispute Resolution Board.

3.1.6 At any case that the Dispute Resolution Board may agree to the engagement of such independent technical, financial or legal consultants as may be deemed by the Dispute Resolution Board to be desirable during the course of negotiation and implementation of the Contract.  In the event the Dispute Resolution Board agrees to engage such technical, financial or legal consultants, the Dispute Resolution Board shall agree at the same time on what basis the costs of such technical, financial or legal consultants shall be divided among the Representatives.

3.2 Project Director

3.2.1 Despite of such resolution process undertaken by the Dispute Resolution Board through the IPMT within fourteen (14) days, the concerned parties, MAIN CONTRACTOR and/or OWNER, still does not agree or the dispute has not settled and resolved, the dispute shall be automatically referred or directed to the attention of the Project Director. 

3.2.3 The PMT shall prepare a detailed report, resulting from the Dispute Resolution Board meeting(s) held during the resolution of the dispute, to the Project Director.  The Project Director with his full authority and discretion may decide immediately based on detailed report and/or review, revisit or reopen the dispute and call for a meeting at anytime within seven (7) days upon received of the detailed report from the IPMT.  The meeting as maybe required necessary shall be attended by all the Representatives of the Dispute Resolution Board. After such review, study and meetings, the Project Director, within the seven (7) days, shall decide on the disputed issue(s).

3.3 CONTRACT Terms and Condition

3.3.1 In the event that the dispute has not resolved, which means that each of the MAIN CONTRACTOR has not agreed, the dispute will be treated as a dispute under the terms and condition of respective CONTRACT of each MAIN CONTRACTOR.