It is obviously preferable to avoid disputes arising in the first place. This chapter looks briefly at three areas of dispute avoidance:
2) Schemes aimed at minimising and managing risk
3) Alternative dispute resolution (ADR) filter mechanisms
The parties to a potential dispute can seek to avoid their disagreement becoming a full-blown dispute by negotiating. Discussions aimed at resolving differences are perhaps one of the most obvious methods of dispute avoidance.
A common thread can be seen in steps taken in various industries around the world aimed at avoiding disputes arising, i.e., schemes aimed at minimising and managing risk. These steps include the following.
* ensuring that contractual documents are clear, precise and fair;
* maintaining accurate records;
* anticipating potential problem areas;
* defining problems when they arise.
Schemes to lessen the risk of disputes arising
One example of schemes to reduce the risk of disputes is partnering. This is a concept used originally in the construction industry. The aim is to establish a working relationship between the contracting parties involved in a project: through co-operation and teamwork the parties should achieve their mutual goals. Good faith is obviously a vital component.
Resolving disputes before they escalate
Contracts can include provisions for dealing with disputes as they arise, in an effort to stop them escalating:
* Dispute Review Boards (DRB). A number of respected professionals are nominated prior to the commencement of the project. These professionals familiarise themselves with the project and keep abreast of developments as work proceeds. Disputes are referred to the DRB for a non-binding ruling. If that does not resolve the dispute, the matter is referred to a further dispute resolution process.
* A Standing or On-Site Neutral. This is a similar concept involving an industry professional / expert in whom both parties have confidence and who will serve in an informal capacity to resolve disputes by, for example, conducting neutral fact-finding exercises.
* Multi-step ADR. One example of this is the 'wise men' procedure used in the oil and gas industry. The wise men will be respected executives in the companies concerned (but who are...