How are construction and engineering disputes typically resolved in your jurisdiction (e.g. arbitration, litigation, adjudication)? What alternatives are available?

Construction

Norway Small Flag Norway

If the parties are unable to resolve the dispute through negotiations, the NS contracts provide for different dispute resolutions, depending on the contract and the economic value in question.

Disputes concerning large values are often referred to arbitration in the contact, unless the parties have agreed upon litigation.

There are no specialised courts for construction disputes in Norway. Construction and engineering disputes are typically handled through ordinary litigation, but the parties may require expert lay judges.

Judicial mediation is often carried out before litigation is commenced. Judicial mediation is a court-led mediation where the case can be concluded in the form of an in-court settlement. The purpose is for the parties to avoid litigation with the help of a judicial mediator, who is often a judge.

Another alternative is mediation outside of the court system, with an agreed mediator. This can be beneficial in large and complex construction disputes, where the parties can agree to use a mediator specialised within the field.

Sweden Small Flag Sweden

It is very common for construction and engineering disputes in Sweden to be resolved by arbitration. The dominant standard forms (AB 04 and ABT 06) contain arbitration clauses for all disputes over a certain threshold amount (ca. EUR 650,000).

There are no specific courts or judges in Sweden specialising in construction disputes. Nor are there any statutory provisions on binding adjudication or similar for construction disputes.

The relevant levels of court for civil law matters, including construction contracts, are the district courts, the courts of appeal and the Supreme Court. Almost all court decisions are available through various databases. There is no formal doctrine of binding precedents. However, the Supreme Court’s judgments are a source of law and generally must be followed by the district courts and the courts of appeal.

Hong Kong Small Flag Hong Kong

Commonly, construction contracts in Hong Kong will contain a ‘tiered’ dispute resolution process, usually involving discussion and mediation, followed by arbitration. Arbitration is a particularly popular mechanism for resolving construction disputes in Hong Kong, which is home to a leading arbitration centre, the Hong Kong International Arbitration Centre (HKIAC), as well as many skilled legal and non-legal professionals specialising in construction and engineering disputes. Mediation and arbitration have been Hong Kong Government policy for many years. Hong Kong is a pro-arbitration and pro-enforcement jurisdiction.
Arbitrations seated in Hong Kong are governed by the Arbitration Ordinance (Cap. 609) which very closely follows the UNCITRAL Model Law. One of the Arbitration Ordinance’s guiding principles is that, subject to the observance of the safeguards that are necessary in the public interest, the parties to a dispute should be free to agree on how the dispute should be resolved.
The High Court of Hong Kong has a specialist Construction and Arbitration List for hearing construction disputes and challenges to arbitral awards, headed by a dedicated judge.
There currently are no statutorily imposed adjudication processes in Hong Kong which could be compared to those imposed by security of payment regimes in other jurisdictions. The Hong Kong government has discussed potential security of payment legislation (“SOPL”) for the construction industry, but there is currently no indication of when, if at all, this may be passed. See Question 14 above.
However, parties can agree (either in the contract or by later agreement) to use adjudication to resolve disputes. The HKIAC publishes template procedure for this purpose, but parties are free to agree to apply any other rules.

United Kingdom Small Flag United Kingdom

Construction disputes are typically resolved by adjudication. This is a 28-day procedure, with the emphasis on obtaining a speedy decision in order to aid the parties’ cash flow. The decision of an adjudicator is temporarily binding, until the dispute is finally resolved by court proceedings, arbitration, or by agreement. In reality adjudicators’ decisions, despite being reached very quickly, often become binding by default as it is uncommon for either party to refer the dispute to final determination.

The industry has its own specialist court, the Technology and Construction Court, which is a division of the Business and Property Courts. Disputes referred to court are usually heard within 12 months.

Arbitration is less commonly provided for in domestic projects but is still commonly found in international projects. Institutional rules commonly referred to are ICC and LCIA.

Other methods used include mediation and (less commonly) expert determination.

United States Small Flag United States

Construction and engineering disputes in the United States can be resolved through litigation or through alternative dispute resolution (i.e., mediation or arbitration). Most disputes are handled through either administered or non-administered arbitration and there are numerous different arbitration rules commonly used in construction contracts in the United States (e.g., American Arbitration Association, JAMS, International Institute for Conflict Prevention and Resolution or International Chamber of Commerce). The benefit to using arbitration in the United States is the ability to obtain a decision maker knowledgeable about construction and, in many instances, the ability to shorten the time for a decision on the claim. Stepped disputes clauses are typical in construction contracts, often requiring direct party-to-party negotiations and mediation prior to commencing litigation or arbitration.

Other alternative dispute methods exist in the United States, such as mini-trials or early neutral evaluations; however, these alternative dispute methods are infrequently used in the construction industry. Beside mediation and arbitration, most claims are handled by litigation in the state and federal courts.

Serbia Small Flag Serbia

Domestic arbitral award are considered as equal to court final and binding judgment. Further, Serbia is a contracting party to the New York Convention on recognition and enforcement of arbitral award, thus all arbitral awards rendered in the territory of another Contracting Party State shall be recognised and enforced without a re-examination of the merits of the case.

Arbitral award has to, however, fulfil the following conditions:

  1. It has to be rendered by a competent court of arbitration;
  2. It has to be rendered with respect to the parties’ right to participate in the arbitral proceedings (with special consideration on appropriate delivery of relevant documents)
  3. It has to be final;
  4. That none of the following reasons set out below are applicable to it:
    a) arbitral tribunal has exceeded given authority;
    b) there has been a breach of arbitration agreement;
    c) the arbitral award was based on a false statement of a witness or expert or on a forged document or the award
    d) the subject of dispute is not arbitrable;
    e) the recognition of the arbitral award would be against Serbian public policy.

The procedure of recognizing and enforcing a foreign arbitral award may take up to two years, based on the complexity of the case, the location of the assets and the cooperation of the debtor, etc.

Updated: April 24, 2018