Blog Author: Peter Hibberd, past JCT chair
Conflict and disputes in construction are never far away. Although neither should arise in a perfect world, JCT provides for what appears inevitable, whilst seeking to avoid them.
Since its inception, JCT has sought to minimise conflict and disputes by providing clear, fair contract provisions that assist administration and help reduce misunderstandings. Matters integral to conflict and dispute avoidance.
JCT 2024 continues this objective, where the provisions ‘collaborative working’ and ‘notification and negotiation of disputes’, originally introduced as optional supplemental provisions in JCT contracts in 2009, have been moved respectively to Article 3, and Section 9 ‘Settlement of Disputes’ (references throughout are to DB Contract).
The optionality provided at that time was appropriate for maintaining a degree of choice. Optionality has now been removed, with the provisions embedded in the main body of the contract to add greater weight and to hasten behavioural change. A change that delivers the behavioural shift encouraged by the Construction Playbook (HMG 2022).
The other change in the area of dispute resolution, is the facilitation of an insertion by the Parties, of an adjudicator nominating body of their own choosing.
It may appear that these changes are not significant, but they feed into a wider picture, as is evidenced by the RICS’s ‘Conflict Avoidance Process (CAP)’ 2025, and the Conflict Avoidance Coalition’s Pledge. They are important because of the negative impact conflict has on productivity. This article is only concerned with conflict in the sense that there is a conflict of opinion, which is a difference or dispute relating to the contract. Although both can lead to dispute resolution, awareness of the distinction will help identify the best approach.
‘Notification and negotiation of disputes’ or differences is an important part of the resolution process, but it is also concerned with their avoidance. Similarly, this provision should not be seen in isolation because notices (cl. 1.7) can arise under various contract provisions, and their issue or non-issue be the basis for a difference or dispute. These provisions deal with specific requirements e.g. notice of delay or likely delay (cl. 2.24), notice of loss and/or expense (cl. 4.20). Their purpose is to avoid or, at least, reduce problems. The notices for delay, and loss and/or expense, for example, are part of a claims process within contract administration and where such claims are frequently dealt with without difficulty.
However, where this proves unlikely, the existence of ‘Notification and negotiation of disputes’ under section 9 requires action. The clause states ‘With a view to avoidance or early resolution of disputes or differences each Party shall promptly notify the other of any matter that appears likely to give rise to a dispute or difference.’ A proactive response is desirable in an attempt to head off any dispute or difference, which might otherwise escalate through the dispute resolution process. It is an early warning provision which has the same underlying principle as the ‘Early warning’ clause that exists in the JCT Framework Agreement.
The Contract Particulars (cl. 9.1) require the Parties to identify their nominees who would meet as soon as practicable for direct, good faith negotiations to resolve the matter. This clause requires the nominees to be senior executives of the organisations and stresses the importance of early intervention. Where the dispute or difference cannot be resolved by them, there is still the possibility of mediation (cl. 9.2) and any request by a Party should be seriously considered.
These provisions provide early warning of possible problematical issues, and the establishment of clear communication channels to manage and settle them amicably without escalation to formalised means of dispute resolution. Furthermore, they reduce the potential for wider forms of conflict.
However, notwithstanding the processes of negotiation and mediation, adjudication is always available because they are subject to Article 8 (adjudication). There is both a contractual right and a statutory right to adjudicate, which means it also applies to contracts not covered by the statutory right i.e. residential occupier.
The processes of negotiation and mediation require a genuine desire to settle, which then provide an effective means to resolve matters speedily and economically. Nevertheless, because adjudication is always available, it raises the possibility that someone might take the view that such provisions lack effective legal sanction and ignore the negotiation provision. Is that wise? Such a view runs counter to the idea that there is sincere desire to avoid conflict and resolve a dispute and certainly would look anomalous where such an organisation profiles its collaborative philosophy or is a signatory to the Contract Avoidance Pledge. Anyone not taking such provisions seriously puts their reputation and future trading relationship at risk. A sufficient incentive, regardless of legal sanction.
Should the early warning notice under clause 9.1 not bring about a resolution, then adjudication, as mentioned, is still available. After adjudication, there is the possibility of arbitration, as long as the Contract Particular has been completed so as to apply. Where it does not, then such matter could proceed directly to legal proceedings.
Whether it does, depends on how collaborative the Parties really are.