Contracts must have clauses on solving disputes: expert

Qatar’s successful bid to host the 2022 World Cup will bring about a surge in construction contracts, but not without the potential for a significant rise in the number of disputes being referred to arbitration or courts, a senior industry expert has said.

Wayne Clark, director (Dispute Management) at Hill International Qatar, said steps should be taken now, rather than later, to include sensible dispute resolution provisions in the contracts.

“All future construction projects in Qatar, particularly the large array of mega projects envisaged for the 2022 World Cup should have these,” Clark said.

The adoption of these measures would greatly reduce the instances of parties fighting each other in arbitration or in the courts, he said.

“I was recently involved in a major multi-party project in Qatar that ended badly. The contracts did not contain dispute resolution provisions like mediation or dispute boards. As a result we had a miscellany of termination, bankruptcy, arbitration and litigation,” Clark recalled.

Construction disputes leading to liquidation or termination, and even contractual delays are not uncommon in Qatar, although recent contract terms now encourage dispute avoidance or early dispute resolution.

“The primary reason why parties to construction contracts so often find themselves locking horns is, in my opinion, people - the human factor.

“I sincerely believe that had these contracts contained mediation or dispute board provisions there would have been a very different, and much

happier, ending,” he added.

Poor communication, egos, attitudes, unrealistic expectations, entrenched positions and at times personal agendas lead to breakdown in relationships, which in turn lead to barriers being created, barriers that prevent disputes from being resolved in a sensible manner, Clark said.

Mediation, according to him, is also relatively inexpensive, is usually quick and has proved to be highly successful.

“Mediation is a common sense form of extended negotiation. If parties were to seriously engage in sensible negotiations from the outset, there would never be the need for third party intervention to resolve their disputes,” he said.

Then there’s the dispute boards, which differ from other forms of dispute resolution procedures, in that a board is established at the beginning of a project and engages with the parties even before the disputes arise.

“Dispute boards not only help the parties resolve their differences, they actively try to prevent disputes from occurring in the first place,” Clark said.

If, despite the dispute board’s efforts, the parties cannot, or will not, agree to settle their differences, the dispute board will convene a formal hearing and provide either a binding decision or a non-binding recommendation.

According to him, the US-based Dispute Resolution Board Foundation (DRBF) claims that 98-99% of disputes reviewed by its dispute boards are settled without the need for referral to either arbitration or the courts.

Photocaption: Clark: ‘all contracts should have clauses for either mediation or dispute boards’