Alternative Dispute Resolution

FIDIC Briefing Note

June 2019
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Contents
Background ............................................................................................................................................. 2
Alternative Dispute Resolution ............................................................................................................... 3
Rationale ............................................................................................................................................. 3
FIDIC recommends: ......................................................................................................................... 4

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Background
The international engineering federation FIDIC (the International Federation of Consulting Engineers)
believes that its member associations and their members should strive to achieve the highest degree
of quality and standards.

FIDIC has always had policy statements that it expects its members to follow to ensure high
standards of service in the infrastructure industry. These standards are reflected in FIDICs contracts,
policy work, events and committees.

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Alternative Dispute Resolution

As development projects have become larger and more complex over the last three or four decades,
the incidence of disputes and their complexity have both increased. Whether the disputes flow from
inadequacies in briefing, the procurement processes or in the management of the construction
process itself, they are often so complex that few, it any, individuals can comprehend a dispute
entirely.

The fact that a dispute arises indicates that the parties to the dispute are in conflict. Attempts to
resolve the dispute which strengthen the conflicting positions of the parties are likely to be counter-
productive, especially if they become excessively legalistic. Difficulties flow from the inherent
complexity of the documentation and from the inevitability that no documentation can ever be
absolutely complete and unambiguous, and from the behaviour of advocates and experts. These
difficulties tend to delay the execution of remedial measures, often leading to increased cost and the
waste of resources, to the detriment of both the client and society.

In the adversarial mode, hardening of attitudes occurs very quickly. It is by then often too late to use
ADR methods if they have not already been written into the contract as a compulsory procedure.
Even then it can be too late to soften entrenched positions.

There are a number of models for dispute resolution designed to diminish adversarial behaviour.
They go by the collective description of Alternative Dispute Resolution, and include Negotiation,
Adjudication, Mediation, Conciliation, Dispute Review Board, and Mini-trial. There is some variation
in definition, so that what might be termed Mediation in one country might be termed Conciliation
in another, but the difference is not important to the principle. In this context, both Litigation and
Arbitration are, in contrast, adversarial.

All the alternative methods can be described as consensual, as opposed to the judicial nature of
litigation and arbitration. They also readily permit resolution of multi-party disputes.

There are cases in which judicial methods may be more appropriate than consensual, such as a case
where a legal or engineering impasse has been reached. Whilst, litigation and arbitration are
methods which provide a final and binding result, it should be emphasised that the outcome of
mediation or conciliation may be more compelling if a settlement agreement can be reached
between the parties which can be enforced by the courts in the event of subsequent default. The
outcome of litigation or arbitration on the other hand is uncertain — one of the parties, who is
convinced otherwise, will turn out to be ‘wrong’. There may be no ‘correct’ legal answer.

In many countries, leading jurists are actively encouraging the use of Alternative Dispute Resolution
processes for the resolution of complex disputes and discouraging both litigation and arbitration. In
particular, disputes arising from the construction of development projects lend themselves to
Alternative Dispute Resolution procedures.

Rationale
If all attempts at dispute avoidance fail and a dispute arises, then adversarial behaviour in resolving
the dispute is usually counterproductive, especially when it is complex. It usually delays the
execution of remedial measures, increases legal costs, creates adversaries and thus wastes resources
unnecessarily. It also saps the energies of the parties in dispute unnecessarily, diminishing their

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ability to function effectively in the future. Both outcomes are detrimental to the parties, in
particular, and to society, in general.

FIDIC recommends:
- Member associations support the development of Alternative Dispute Resolution
procedures which diminish the adversarial environment procedures arising from disputes.
- Whatever the procedure for resolution, the consultants’ professional indemnity insurers
must be fully informed and their participation in negotiations accepted by all parties.

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International Federation of Consulting Engineers (FIDIC)

World Trade Center II, Geneva Airport P.O. Box 311 CH-1215 Geneva 15 - Switzerland
Tel. +41 22 799 4900 - Fax +41 22 799 4901
Arthur: Graham Pontin, Head of economic and strategic policy
Email: fidic@[Link] [Link]

Disclaimer
This document was produced by FIDIC and is provided for informative purposes only. The contents of this
document are general in nature and therefore should not be applied to the specific circumstances of
individuals. Whilst we undertake every effort to ensure that the information within this document is complete
and up to date, it should not be relied upon as the basis for investment, commercial, professional or legal
decisions.

FIDIC accepts no liability in respect to any direct, implied, statutory, and/or consequential loss arising from the
use of this document or its contents. No part of this report may be copied either in whole or in part without
the express permission in writing.

Endnotes

ALTERNATIVE DISPUTE RESOLUTION | FIDIC Briefing Note