During the fulfillment of commercial contracts including those in the construction sector, often arise between the involved parties financial or other differences. To avoid resorting to complicated, lengthy and costly legal proceedings, the parties have the option to resort to one of the alternative dispute resolution methods that are essentially as follows:
- Expert Determination
During the first two methods, the differences are resolved through a conciliation between the parties and the last three by a consensus or decision of an independent expert, arbitrator or judge respectively.
Below we analyze separately the main features for each of these:
It is a private informal method that essentially constitutes or should constitute the first step in resolving a dispute: in the final analysis or negotiation it is in the daily schedule of a successful businessman, so why abandoning it when suddenly when a difference arises?The method results in a compromise through direct communication and specialized negotiation between the two parties. The presence of third parties, such as specialized experts and lawyers is possible but not necessary. In any case, the control of the process and the result is on the two litigant parties. It is less confrontational than alternative methods, which allow the parties to continue their cooperation.
It is namely for private and informal negotiation, which is structured, with the involvement of a neutral mediator who helps the parties to understand each other's positions and to reach a mutual compromise. The mediator does not act or judge anything himself and it is up to the parties to reach a compromise. Mediation is categorized into assistive and evaluative: during the first the mediator is called to bring together the two parties and to explore with them a compromise of possibilities and options, while during the second, he also expresses his personal opinion or neutral evaluation, which is of course not binding to the parties, who are free to leave the process whenever they want.
It is a formal, private method that can be made public if there is involvement of the court. It is a relatively simple procedure, suitable for cases where the difference lies basically in technical issues and possible assessment of interwoven cost. The parties, either directly or through a competent body such as e.g. the ETSC, jointly appoint an independent expert who has the power to investigate controversial issues and articulate a report whose findings logically would be binding. The submission of a dispute to an expert can be done by the agreement of the parties or in accordance with instructions of the court, if the case is reached there. The court or the parties define also the terms of the of the expert's mandate and the report delivery time is agreed between the parties and the latter.
The statute of Arbitration is a formal, private method that can be made public if there is involvement of the court. It supplements any modern judicial system. Cyprus is governed by the Arbitration Act, Cap. 4 and the On International Commercial Arbitration Law 101 (I) / 1987. It resembles more than any other alternative method to the judicial process, replacing it where necessary with expert research and judgment. In addition it mitigates in some degree the main drawbacks of the latter that are inflexible, rigid, expensive, and time-consuming. The reference is a.) Based on the so-called arbitration, which may be a term of the contract for the avoidance of future disputes to arbitration or ad hoc agreement after the occurrence of the dispute, or b.) Based on court order by decree of Articles 35-39 of the Law on Court 14/1960. One or more arbitrators are appointed either directly by the parties or by a competent body, like the ETSC, at mutual request. The arbitration through ETSC conducted under the Arbitration Rules of the Chamber, edition 2012. The arbitrator must be independent, impartial and integral giving the parties an equal opportunity to present their positions. The decision is binding and is hardly overturned by the courts: unless if there is a proven fault or misconduct on his part. With the adoption of the arbitration from the Court, the arbitration decision takes the place of the judgment or decree and as such it is executed.
It is a less formal than arbitration but is is a quick resolution method that has been mandatory adopted over the last few years in England with the Law "The Housing Grants, Construction and Regeneration Act, 1996, Part II, Section 108" which came into force in 2011. The Act provides that each and every contract relating to the construction sector should allow contracting parties the right to refer any dispute to critical process and establishes rules to govern the process. The judge, who must be a neutral person, is either chosen by the parties or appointed by a recognized body. The process can be based on submission of documents only and are subject to strict timetables: the appointment and referral is made to a maximum of 7 days after the notice of intention by one party and the judge results in the following decision within 28 days, with right of a 14- day extension, provided that there is a consent of the the part which referred the dispute. The judge must act impartially and has the power of taking an initiative to investigate the facts and ascertain the truth. The decision is considered intermediate in the sense that it can be reviewed later by a possible trial or arbitration or mutual agreement. However, the parties can agree to the decision shall be final.