What is a dispute? In this enlightened age of considerate contracting and partnering, the question still arises, what is a dispute?
Many people will refer back to older cases but recently the case called AMEC Civil Engineering Ltd v Secretary of State for Transport ( 2004) BWHC 2339 (TCC); (2005) EWCA; CIV.291 is a case which has tried to make sense of a coalesced dispute. This case steamed from Arbitration but applies equally to Adjudication and litigation.
Mr Justice Jackson has assisted us with 7 propositions as to what constitutes a “dispute” for the purposes of arbitration. It is simple and easy to read and also extremely practical. Primarily the facts of the case are that in 1996 AMEC completed works which involved renovation to the Thelwall via duct. They had contracted with the highways agency to carry out the work under an ICE Form of Contract.
Five and a half years approximately occurred and structural deficiencies became apparent in and around 2002. The Contractor, AMEC was dually notified, meetings took place and the letter of claim was sent by the Secretary of State on the 6th December 2002. AMEC responded saying it was not in a position to comment on liability. Bearing in mind also the six year rule was running, when Arbitration Proceedings should have been commenced as the expiry would have blocked the action. The dispute was referred to the Engineer for a decision on December 2002 but AMEC was not sent a copy of the referring letter of the dispute to the Engineer. The Secretary of State did not provide the Engineer with a copy of AMEC’s response.
The Engineer decided AMEC had not carried out the works in accordance to the contract and then an Arbitration notice was issued by the Secretary of State. The case went before the TTC, were AMEC was challenged on the jurisdiction of the Arbitrator by stating that there was no dispute on the 11th December 2002.
Mr Justice Jackson found in favour of the Secretary of State and made an appeal to the Court of Appeal that they dismiss the appeal. Here are the 7 propositions as to what constitutes a “dispute” for the purposes of Arbitration and adjudication:
- The word “dispute” which occurs in many arbitration clauses and also in section 108 of the Housing Grants Act should be given its normal meaning. It does not have some special or unusual meaning conferred upon it by lawyers:
- Despite the simple meaning of the word “dispute”, there has been much litigation over the years as to whether or not disputes existed in particular situations. This litigation has not generated any hard-edged legal rules as to what is or is not a dispute. However, the accumulating judicial decisions have produced helpful guidance.
- The mere fact that one party (“the claimant”) notifies the other party (“the respondent”) of a claim does not automatically and immediately give rise to a dispute. It is clear, both as a matter of language and from judicial decisions, that a dispute does not arise unless and until it emerges that the claim is not admitted.
- There are a number of circumstances from which it may emerge that a claim is not admitted. For example, there may be an express rejection of the claim. There may be discussions between the parties from which objectively it is to be inferred that the claim is not admitted. The respondent may prevaricate, thus giving rise to the inference that he does not admit the claim. The respondent may simply remain silent for a period of time, thus giving rise to the same inference.
- The period of time for which a respondent may remain silent before a dispute is to be inferred depends heavily upon the facts of the case and the contractual structure. Where the gist of the claim is well known and it is obviously controversial, a very short period of silence may suffice to give rise to this inference. Where the claim is notified to some agent of the respondent who has a legal duty to consider the claim independently and then give a considered response, a longer period of time may be required before it can be inferred that mere silence gives rise to a dispute.
- If the claimant imposes upon the respondent a deadline for responding to the claim, that deadline does not have the automatic effect of curtailing what would otherwise be a reasonable time for responding. On the other hand, a stated deadline and the reasons for its imposition may be relevant factors when the court comes to consider what is a reasonable time for responding.
- If the claim as presented by the claimant is so nebulous and ill-defined that the respondent cannot sensibly respond to it, neither silence by the respondent nor even an express non-admission is likely to give rise to a dispute for the purposes of arbitration or adjudication.
This is obviously couched in language, that allows a certain degree of latitude in understanding what a dispute is but it appears on the face of it, that it is down to common sense. Adequate time must be given to consider what is placed before the Court, Arbitrator or Adjudicator before a dispute can materialise.
Sometimes there are a number of matters which are pre-existed which means a very short time is necessary to cause a dispute. That is were the Law sits at present, it is not entirely prefect, there is no number of days given, there is no magical rule or formula however all things being equal, it is an acceptable compromise to guide us on the way ahead. It will be interesting to see what the next challenge will be to a dispute and with the thought of dispute materialising you should consider in the year ahead, alternative methods of resolving disputes – conciliation, mediation, and just good old fashion negotiation.
Remember at the end of the day disputes are costly and very time consuming.