Many in the construction sector are hesitant to dwell on dispute resolution clauses. After all, when your goal is to build something together, anticipating conflicts at the outset of the relationship can feel unseemly. But this hesitance relies on a misconception of what dispute resolution is: it isn’t the anticipation of conflicts, but instead the development of proactive systems to work through those conflicts with minimal disruption much in the same way that change orders or design modifications are managed in the ordinary course. Proactive management of the dispute resolution process thus is not only consistent with a collegial working relationship but is imperative to achieving the environment of collaboration and partnership that are at the core of so many projects.
There are a myriad of popular form contracts in the construction sphere, including AIA and ConsensusDocs domestically and, internationally, the JCT, NEC, and FIDIC suites. The benefit of relying on such contracts is obvious: their mechanisms and allocations of risk are widely understood, relieving the parties of the need to debate routine provisions. But dispute resolution, although often considered such a provision, is anything but routine. The dispute resolution clause can be one of the most important provisions in a contract, and even minor changes can significantly impact the course of a project and the cost, duration, and inconvenience of any resulting disputes. Jurisdictional and geographic variations can further modify the impact of even standard language. In fact, dispute resolution clauses are one place where it is most important for a contracting party to be proactive in ensuring that its interests are met. Although the benefits of form agreements are manifest, it would be ill-advised to sign off on a dispute resolution provision without at least considering its material terms. There is no one-size-fits all solution, but the following are some of the key issues that warrant consideration.