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Dr.

Nabil Shehadeh 1

Course Pr·og·ramme

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® Section 1: Claims - What they are and

why they occur

@ Section 2: Claims Types

~ Section 3: Claims and Contract Clauses @ Section 4: Claims Preparation and

Documentation

~ Section 6: Claims Avoidance

4' Section 7: Claims Settlement and Dispute Resolution

Dr. Nabil Shehadeh

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M.! ,.' '-anag:·. ,l.·ng" .. ·.·· Claims --. Wh·· .. >-·· .. at .

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does it me R1n' ~i _. __ ., · ,.-)~~ .,: 1.. ,~ .. , .,.,": ".~: ... : ':·:-,.:ct .""~" _._~ ~'-

\Xlll_at is a contractual claim?

\Xlll_at are methods /rneans that you know are available worldwide to resolve disputes/ claims?

List three Flble clauses under which the contractor can claim extension of time?

Contractor claims extension of time due to variation order. Please list the information that you expect to find in a contractor claim submission?

Dr. Nabil Shehadeh

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Definition of Claim

_", ,0' _" '._' .' .•••• _ •• __ . ,_._ •• _,I _ .• _. " __ ,_ _, ... ~ ~., _,' _,'" '._""._ .. _.

Claim is a general term for the assertion of a right to money, property or a remedy.

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This course is concerned ~vith claims for additional JnOl1f!)J or time which arise iauler the ordinary contract provisions .

Dr. Nabil Shehadeh

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What they are and why they occur

Claims are generally made by the Parties due to

the following circumstances :

@ Entitlement to an extension of time ~ Entitlement to additional payments

Gl Entitlement to the recovery of costs

@ Non fulfillment by one party of an obligation under the contract

$ Additional payments due to legal entitlement

Dr. Nabil Shehadeh

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Overview of Construction Claims;

Once they arise, claims tend to take on a life of their own

o They generally produce a "paper war" that can destroy personal relationships on the project

e The resulting disputes may continuously escalate to the pain t where all involved parties are irrational

3 They result in increased costs and loss of control over . the outcome

" Involved personnel waste time preparing for and participating in litigation or ADR

Dr. Nabil Shehadeh

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Model 2 (Gorton)

a Problem

4ii Stage 1: ::; ~ Stage2:

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~ Stage 3:

a Disagreement

a Dispute

a Conflict Litigation

~ Stage 4: ill; Stage 5:

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Dr. Nabil Shehadeh

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Claims T'y' ·~··/P( )e:S· .

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Dr. Nabil Shehadeh

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Claims Types

1. Constructive Changes by Owner

2. Differing Site Conditions

3. Delays

4. Defective Specifications

Dr. Nabil Shehadeh

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Constructive Changes hy Owner

Definition

ct Action or inaction by the owner constitutes an order e Owner has received a benefit

o Actual performance exceeds minimum contract standards

e Actually increased the cost of the work Types

Extra work Disruption of work

$ Acceleration of work

Over inspection

Dr. Nabll Shehadeh

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Constructive Changes by Owner

Extra Work

The owner requires work that is not in the contract The owner rnisin terprets con tract plans and specifications

- response to an RFI

- rejections (of an iteln) on submittals

- rejection of submittals

- orders of authorized representatives

Dr. Nabil Shehadeh

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Constructive Changes by Owner

Disruption of work

e Constructor's plan for performance is altered

III Contractor increases work hours, crew, or equipment • Slow response to RFI's and submittals

Dr. Nabil Shehadeh

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Constructive Changes by Owner

Acceleration of Work

Contractor is required to complete work faster than planned

Extra work orders are issued, but Owner does not increase contract performance period

Requests for additional time are denied

Dr. Nabil Shehadeh

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Constructive Changes by Owner

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Over Inspection

III

Owner exceeds the bounds of its right to inspect

@ Tolerances are enforced more strictly than the contract requttes

e Inspectors direct performance of the work in a specific way

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Differing Site Conditions

Policy: Best Practice

~ Intended to reduce bid contingencies

o Allocates the risk of site conditions to the Owner

Encourages bidders to rely on the information given

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D. :l'!:f(£e····~r·l··n·· 'g'.- ... So. .ite C:" ·0· n ~:~;+-·~·o· i1'\'S·.

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Focus is on "contract indications"

Actual Conditions differ materially from those indicated, contract documents indicate subsurface or physical conditions different from those encountered on site

Examples:

- presence of rock or boulders in an excavation where none are shown

- location of underground utilities are not where shown

- elevation of ground is higher than shown

- existence of a sub floor requiring demolition was not

shown

Dr. Nabil Shehad-eh

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Delays

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Site Access

Owner fails to obtain building permits Owner fails to obtain a right of way

ItP Owner fails to coordinate with utility companies during proj ect design

Approval of Submittals

Late approval

e Unreasonable rejection Adverse Weather

e The weather is adverse

c; The weather is unusual for the location and time of year

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Delays

Changes

Delayed issuance of a change order

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& Impact of added work on the construction schedule Suspension of Work

Stop work order Delay in inspection

e Delay in furnishing owner-furnished property Go Slow RFI response

Impacts

:.: 0- Unfavourable season

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Missed manufacturing schedule Escalation of contractor's cost

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Defective Specifications

Errors & Omissions

The contractor requests additional information or clarification

Contract provisions are found to be incorrect Answers to the requests cannot found within the contract

Defective Design

Elements of the project do not function as desired The contractor has performed in accordance with the contract

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Dr. Nabil Shehadeh

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Claims and Contract

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Dr. Nabil Shehadeh

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Claims and Contract Clauses

Legal basis of claims

There are four bases on which claims Inay be made in law:

III Contractual Claims: Under the contract conditions themselves

Land Law (Common Law) Claims: For breach of contract, when the contractor's remedy will be damages calculated in accordance with Land Law principles.

Negligence (Tort) Claims: For breach of a duty arising at C01TI1TIOn law in tort. This is a general liability, and in principle liability often depends on the defendant having, by act or omission, acted in breach of a legal duty imposed on him by law, so infringing a legal right vested in the claimant and causing hun foreseeable damage. Again, the remedy is normally an award of money damages as compensation for the damage done

Quantum Meruit Claims: On a quasi-contractual or restitutionary basis.

Claims without Legal Basis are called Ex Gratia Claims

Dr. Nabil Shehadeh

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The basis of contractual claims

Work carried out as described in, or as reasonably to be inferred from, the contract documents provides no basis for a claim. The contractor is deemed in law to be experienced and hence to be able to foresee, at the time of making the contract, what the avel·age experienced contractor could foresee as being likely to be required in the performance of that contract, Thus

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" it follows that in order to establish a contractual claim the

contractor must be able to show that the work he was required to do, or the conditions under which he was required to do it, differed in some way from what he expected, or should have expected, at the making the contract.

Dr. Nabil Shehadeh

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_._ Contractual Claims Contract Clauses

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- Clallse 5.2 Docllnle11ts 111l1tl.lally explallatory "The Several documents jon72il1g the Contract are to be taken as 112utual!J explanatory of one another, but in case of aJ71biguities or discrepancies the same shall be explained and acf!usted by the Engineer ~vho shall thereupon issue to the Contractor instructions thereon and is such event, unless otherwise provided in the Contract, the priority of the documents Jon/ling the Contract shall be as follolvs:

(1) The Contract Agree17ient/

(2) The Letter of Acceptance;

(3) The Tender

(4) Part II of these Conditions)'

(5) Part I of these Conditions; and

(6) AIry other document j07772ingpart of the Contract. JJ

Dr. Nabil Shehadeh

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Contractual Claims Contract Claus-es!

- Clallse 6.3 Late isslle of furt11er dra\~Tings and

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111 S true t1 0 n s

(( It by reason of af!Y failure or inability of the Engineer to issue, within a tiJ12e reasonable in all the circumstances) at?)! drawings) specification or instruction for Jvhich notice has been given by the Contractor in accordance with Sub-Clause 6.3) the Contractor sujJers delay and/ or incurs costs then the Engineer shall, after due consultation with the Emplqyer and the Contractor, determine:

(aJ any extension of tiJne to which the Contractor is entitled under Clause 44) and

(b) the amount of such costs) which shall be added to the I

Contract Price) and shall notify the Contractor I.

accordingly) 2-vith a copy to the Employer. JJ

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I

~ .... Contractual Claims Contract Clauses

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(The EJ7ployer shall have made available to the Contractor, before the submission by the Contractor of the Tender, such data on hydrological and sub-suiface conditions as have been obtained l?J or on behalf of the EJlployer jroJn investigations undertaken relevant to the TV-arks but the Contractor shall be responsible for his own interpretation thereof. JJ

~-, - Clallse 12.2 Ad-verse l)b_ysical conditiol1s al1d artificial obstructions

"If, boueier, during the execution of the works the Contractor encounters physical obstructions or physical conditions) other than cliJ7Jatic conditions on the Site) which obstruction or conditions nere, in his opinion) not foreseeable l?J an experienced Contractor; the Contractor shall forthwith give notice ((

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Contractual Claims Contract Clauses

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- Clause 13.1 Satisfaction of tIle el1gineer

(Unless it is legallY or physicallY impossible, the Contractor shall execute and complete the Works and remedy af!)l defects therein in strict accordance with the Contract to the satisfaction of the Engineer. The Contractor shall C017ZPfy with and adhere strictly to the Engineer :r instructions on af!)l matter, whether mentioned in the Contract or not) touching or concerning the Works. The Contractor shall take instructions onlY from the Engineer {(

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CO,fitltttctual. Claims Contract Clauses

- Clause 14.1 Constrllction prograrlll11e

(Prior to the signing of the Contract, but in a1?)! case 110t later than 28 days after the date of Letter of Acceptance) the Contractor shall subJ12it to the Engineer for his C012Sen"0 with a cop)! to the El1plqye1) a prograJ12J12e) in such forr» and detail as the Engineer shall reasonably prescribe) which shall contain) inter alia:

The order in ~vhich the Contractor proposes to cany out the Works;

The time liJ12its within which submission and approval of aIry dra~vings and a1ry Specifications as the case 112q)! be are required;

A general description of the arrangements and methods which the Contractor proposes to adopt for carrying out the Works; and

Details of the resources required to achieve the proposed priJgraJ12J72e. ((

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Contractual Claims Contract Clauses

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Clause 40.1 Suspension of work

(The Contractor shall; on the instructions of the Enginee0 suspend the progress of the Works or atry

part thereof for such time and in such manner as the Engineer J1tQY consider necessary. )) "Unless such suspension is otheruise provided for in the Contract, or necessary by reason of some default of or breach of Contract by the Contractor or for which he is responsible) or

necessary by reason of cliJ72atic conditions on the Site) or necessary for the proper execution of the Works or

for the safety of the Works or airy part thereof (save to the extent that such necessity arises fro»: any act or default by the Engineer or the Employer or 1rOJ72 af!Y of the risks defined in Sub-Clause 20.4))

Sub-Clause 40.2 shall applY)) (for EoT and Costs).

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Contractual Claims Contract Clauses

Clause 42.1 Possessio1! of site

"Saue insofar as the Contract lltClJ' prescribe:

a. The extent of portions if the Site of n/bicb the Contractor zs to be given possession 11"011t tilJte to time, and

b. The order in whicb such portions shall be made available to the Contractor

and suo/ect to a1?)' requiremen: in the Contract as to the order in which the U70rks shall be executed, the Employer wil~ with the Engineer 'S notice to commence the TJ70rks) give to the Contractor

possession of

. a. so llZtlch of the Site) and

b. sucb access as) in accordance with the contract, is to be provided b), the EJlz_pIO)Jer

as 11Zq)l be required to enable the Contractor to commence and proceed 2vith the prograJ1Z1lie referred to in Clause 14 JJ

Contractor shall not be entitled to a1!)' additional payment for taking such steps. JJ

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Contractual Claims, Contract Claus-es

Clause 46.1 Rate of progress

(( If for any reason) which does not entitle the Contractor to an extension of time, the rate to progress of the Works or any Section is at af!)! time, in the opinion of the Enginee1) too slow to cOJnpb with the Till2e for COJnpletion) whether by reference to the PrograJJ2Jne subrJzitted pursuant Clause 14 or otherwise) the Engineer shallso notify the Contractor who shall thereupon take such steps as are necessary) sub~ject to the consent of the Engineer., to expedite

progress so as to COJ1P/y with the Time for COtJpletion.

The Contractor shall not be entitled to any additional payment for taking such steps. })

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Contractual Claims Contract Clauses.

Clause 49.2 Period of maintenance: works of

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repalr etc.

"To the extend that the TVorks shal~ at or as soon as practicable after the expiration of the Defects Liability Period, be delivered to the EJlpl0'er in the condition required by the Contract, fair uear and tear excepted, to the satisfaction of the EngineeTy the Contractor shall:

corlplete the ~J)ork) if arYl outstanding on the date stated in the Taking Over Certificate as soon as practicable after such date and

execute all such ~vork of amendment, reconstruction) and reJ12ecfying defects) shn'nkage or other faults as the Engineer J12qy) dun'ng the Defects Liability Period or ~vithin 14 dqys after its expiration) as a result of an inspection made by or on beha!f of the Engineer prior to its expiration) instruct the Contractor to

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Contractual Claims Contract Clauses

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Clause 52.1 Valuation of Variations

All variations reftrred to in Clause 51 and af!Y additions to or deductions jroln the Contract Price which are required to be determined in accordance with Clause 52 (for the purposes of this Ciause reftrred to as "varied work ") shall be valued lry the Engineer as follows:

I, at the rates and prices set out in the Contract if; in the opinion of the Engineer; the same shall be applicable)

2, if the Contract does not contain aJ'!)I rates or prices applicable to the varied work) the rates and prices in the Contract shall be used as the basis for valuation so far as lnay be reasonable)

3, failing 2vhich) after due consultation by the Engineer with the Elnplqyer and the Contractor; suitable rates or prices shall be agreed upon betueen the Engineer and the Contractor;

4, in the event of disagreelnent the Engineer shall fix such rates or prices as are) in his opinion} appropn'ate and shall notify the Contractor accordingfy) with a copy to the Bllployer.

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Contractual Claims Contract Clauses

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Clause 58.2 Provisional SL1111S and nominated subcontractors

"I» respect of eve1J! Provisional S UJ7Z the Engineer shall have authority to issue instructions for the executions of work or for the suPPlY of goods) materials, Plant or services by:

a). the Contractor, in which case the Contractor shall

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be entitled to an amount equal to the value thereof

determined in accordance ~vith Clause 52}

b) a 120J7Zinated S ubcontractor, as hereinafter defined, in which case the SUJ7Z to be paid to the Contractor therefor shall be determined and paid in accordance with Sub-Clause 59.4J)

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Co;ntractual: Claims Contr-act Clauses

Clause 59. 2 Nominated sub-contractors: objections to nomination

"The Contractor shall not be required by the Employer or the Engineer_, or be deemed to be under any obligation) to eJnploy any nominated

Subcontractor against whom the Contractor mqy raise I reasonable objection) or who declines to enter into a subcontract ~vith the Contractor')

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Contractual Claims Contract Clau . s· . f?>;, s· .

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- Clallse 53.1 Notice of Clail11s

(~.if the Contractor intends to claiJn any additional

payment pursuant to any clause of these conditions or otheniise, he shall give notice of his intention to the E11gi11ee0 with a copy to the El7tplqyeJ) within 28 days after the event giving rise to the clail?2 has first arisen. )J

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Contractual Claims Contract Clauses

- Clause 53.2 COl1telnporary Records

"i.tbe Contractor shall keep such contemporary records as 112QY reasonably be necessary to _support any clazJn he tJtay subsequentlY wish to tJtake. Without necessarily adtJ2itting the Employer:r liability) the Engineer shal~ on receipt of a notice under Sub-Clause 53.1) inspect such contemporary records as are reasonable and lnqy be material to the claint of which notice has been given. The Contractor shall pertJ2it the Engineer to inspect all records kept pursuant to this Sub-Clatlse and shall supp!J hiJ1t with copies thereof as and when the Engineer so instructs. J)

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Contractual Claims Contract Clauses

- ClaLlse 53.3 Sllbstantiatio11 of Clainl.s

(:.the Contractor shall send to the Engineer an account

giving detailed particulars of the amount claiJ?zed and the grounds upon which the clail?z is based TVhere the event giving rise to the cfaiJ?z has a continuing effeC0 such account shall be considered to be an interim account and the Contractor shall, at such intervals as the Engineer J1zQY reasonably require) send further interim accounts

giving the accumulated amount of the clail1z andany further grounds upon which it is based JJ

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Contractual Claims Contract I Clauses

- Cia-use 53.4 FailLlre to C0111ply

"If the Contractor fails to complY with aIry of the

provisions of this Clause in respect of any cJail?] which

he seeks to Jnake) other than a cfailn under clause 12) his entitlemen: to pqyJnent in respect thereof shall not exceed such amount as the Engineer or atry arbitrator or arbitrators appointed pursuant to Sub-Clause 67.3 assessing the clailJ? considers to be. verified by contemporary records (whether or not such records uere brought to the Engineer~ notice as required under S ubClause 53.2 and 53.3). In the case of clazins under Clause 12) failure by the Contractor to conp/y with atry of the provisions of this clause shall invalidate such

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Table 5.1 - Grounds for extension of time

GROUND FOR EXTENSION OF TIME CLAUSE

Variations ordered under clause Increased quantities referred to in clause Exceptional adverse weather conditions

Other special circumstances of any kind whatsoever

Engineer's failure to issue any necessary drawings or instruction Adverse physical conditions or artificial obstruction Instructions under clauses 5 or 13 (1)

Engineer's delay in giving consent to contractor's proposed methods of construction etc.

Facilities for other contractors

Suspension of progress of the works

Failure to give sufficient possession of site

Delay consequent upon forfeiture of a nominated sub-contract

Dr. Nabil Shehadeh

51(1) 51(3) 44(1) 44(1)

7(3) 12(3) 13(3) 14(6)

31(2) 40(1) 42(1) 59B(4) (b)

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Claims Preparation and Documentation

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Claims Preparation and Documentation

e

Most of the submissions lack a lot of documents, programmes, and professional analysis

Substandard format and structure of such submissions makes it difficul t to follow

Logically organized claim, with sufficient accompanying details and explanation as to the legal and factual basis of the claim and of the calculation of the alleged damages so as to permit proper review and evaluation.

The standard and volume of details required will largely depend on a number of factors, including the contractor and consultant's standards, project nature and details and the nature

and complexity of the claim

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Dr. Nabil Shehadeh

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Evidence

Although the contracts provide for the making

of financial claims by the contractor and for

their settlement under the contract provisions,

it is for the contractor to substantiate his claim

by means of proper evidence so as to

demonstrate and prove to the satisfaction of

the engineer his entitlement to the amount claimed. 'He who asserts mus: prove) is a basic legal 1 .. maxim, and the standard of proof is that on the balance of probabilities.

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Facts

The actual facts on site must be considered to determine whether the occurrence affected any operation critical to the contractor's

. completion time. It is not enough for the contractor to s110w that, according to his plans as set out in a progress which is relevant.'

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Claims Preparation and Documentation

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The following are guidelines for improving the structure and format of the claims reports. These guidelines are split into 2 main sections: CONTENTS and FORlv1AT.

1. CONTENT

1.1 Tender Details

m Copies of the following documents related to each claims heading lit Cost breakdown for tender rates.

EI Clarifica tiODS and Addenda.

f.IIDetails of any Discounts

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1.2 Contract Documents

II Copies of parts/pages of contract documents related to each claim heading

II Drawings (showing number and revision)

taSpecijicatiol1 (showing reference number and page number)

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Claims Preparation and Documentation

1.3 Programme

1m Contractual PrograJ72JJ2e (tender stage).

~ Detailed Base Programme-Clause 14 (post contract

award).

iii PrograJ12Jne Revisions

51 Conditions on PrograJ12JJ2e, listed by Contractor

Bill Consultant's Report 011 the Detailed Base prograJ12J12e

11m Mint-ttes of J12eetirzg and correspondences related to the base programme and any revisions.

Iffil Schedule of Dates (relevant to the contract or claims)

W Progress of TVork - Planned and Actual (S-Curve) lllii As-built CPM PrograJl1J72e.

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Claims Preparation and Documentation

1.4 Resources

Site Overhead - Planned and Actual: identification of site resources associated with a particular event (monthly and cumulative S-Curve)

Project Direct Resources (equipJJzenlj labour; material} - Planned and Actual (monthly and cumulative S-Curve)

Contract Cash FI01JJ - Planned and Actual (monthly and cumulative S-Curve)

Records of any delays in the receipt of materials, equipJlient and labours.

Production Rates COIJparison: between planned production rates and actual production rates.

1.5 Contractual Background

List of all Contract Clauses that relates to each claims headings. Extracts of all relevant Conditions of Contract clauses. This to include clauses that both the contractor and consultant referred to in their argument .

Details 0 f any non-standard contract clauses . Cause and Effect .Analysis

Well-defined Claim! Heading. e.g. Disruption, Delay, Acceleration, etc.

Compliance with the Claims Notice. Compliance with all Government Regttlations.

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Claims Preparation and D;o;cume.ntation

1.6 Documentation

Chronological Record of Correspondence: including date issued and date received.

Copies of Relevant Correspondence in a Chronological Order

Drawings Registration Log: to include title of drawings, revisions etc

Technical S ubJ7Jittais Log: to include the description of each submittal, date of submission, date of approvals.

Details of all Notices to ClaiJ7J and Verbal/TV ritten Instructions.

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Claims Preparation and Documentation

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1.6 Documentation (cont)

III Copies of any of the following records that is relevant to the

case:

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a. Resources (labour and plant) Allocation

b. Site diaries

c. Time sheets

d. Cost records

e. Photographs

.f Project Organisation Structures (for contractor and consultant),

key personnel details e.g. positions, contacts etc.

K MonthlY Progress Reports (Summary/Executive Level). b. Minutes of Meeting (regular and special)

i. Partial/Substantial Completion Certificates.

I Variation Orders Record: with backup computations, correspondence, etc.

k. Poyment Records: advances, requisitioned, paid, retention. /. Procurement and Delive7Jl Notes: delivery schedule, delivery tickets, invoices.

171. Laboratory Test Results: that was carried out at pre-tender stage and at construction stage.

n. Site 5 ajery Record

o. NOC Record: at design stage and at construction stage.

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Clai P · d

Iaims ·_··'r-ep:a_jtat1on ano

Documentation

1. Doculnents Reference: each record should be: linked to each individual claim's heading; properly referenced and dated; marked with consultants/Liaison Engineer

agreelnent/ disagreement on the record.

II. Doculnents Classification: a typical classification for the dOCU1TIents coding is the following:

a. Sender/ receiver

b. Reference
c. Date
d. Type of dOCU1TIent
-- e . Contents
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'G. By subject.
r
\'- .... By issue (factual/legal)
r
y By YO, Dispute or Claim No
\, By Keywords
y
f. Programme activity number.
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Claims Preparation and Documentation

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2. FORlv1AT

2. 1 Executive S t!1nlnary 2.2 Table of Contents

2.3 List of Exhibits (charts, graphs, drawings, photographs, etc)

2.4 List ofDocttJltents/Records Index (refer to documents coding under documentation above)

2.5 Introduction

2.6 Factual Narratives/ Statemenr ojClaiJ12: in this part reference is to be made to any and all pieces of documents, exhibits and relevant contract documents. Cause and Effect .Anaiysis is to be included in this part ..

2.7 Cost Anafysis: details of specific areas of damage and items of cost. Summary sheets supported by the factual information.

2.8 TiJJ2e AnalYsis: in this part planned and as-built programme to be included. Defining the approach in applying the CPM is also required.

2.9 Conclusions

2.10 Recommendations 2.11 Index

2.12 Appendices

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Claim AL. V' ···0···· id··· .anc .. ·e···.·

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A claim avoidance program can preserve OwnerContractor relations & save time and money

Owners, contractors, engineers, and architects should establish claim avoidance strategies for before, during, and after construction

As a minimurn, claim avoidance strategies should include training of personnel and development of procedures to handle disputes as they arise

Claim avoidance means that disputes don't arise or they are settled at the earliest time and at the lowest level

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Ultimate Goal is to eliminate all potential for claims to arise

e

Contract documents must be thoroughly detailed, complete, coordinated, and understandable

Contractor lTIUSt be wholly competent, capable, and honest

Contractor's understanding for the project requirements must exactly match the owner's expectations

Construction must go exactly as planned

Admirable though unrealistic goal

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Implement a "Claim Avoidance Program""

A good claiJ71 avoidance prograJ12 can approach this goal through the irlt_PleJ72entation of proper strategies d~tring the .. following stages:

. :~j

e Design Phase

CD Procurement Phase -Construction Phase

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Design Phase

Focus is on providing detailed, cOJ7tplete, coordinated, and U1tdersta11dab Ie contract docuJ?zents

Carefully screen AlE consultants

& Short list at least six consultants with recent relevant experience ~ Require detailed information about each to be submitted for

evaluation

- specific proj ect information

- project participant information

- financial capability

- description of organization

- capacity to engage in new work

- key staff & point of contact for your project

- quality control measures

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Die,~-s···1ig ... [.··10. P,-··'h···· .ase

." J:.1. .,' .1,.1, . . .' a '

Carefully screen AlE consultants (cont.)

9 0 btain at least five recent references and contact them

Convene a team to evaluate every candidate

Evaluate all submitted information and select the best qualified candidate

Negotiate an acceptable contract for the design services

Know your contract

e Obtain a design and cost schedule and monitor it rigorously

Timely provide information and support to the designer Carefully review and critique design progress at several stages

Obtain periodic estimates of construction costs and time

e

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Design Phase

Obtain an accurate cost estimate

W'hen the documents are ready for procurement, enlist an independent estimator to prepare a detailed construction estimate

Obtain-an independent review of the contract documents

- completeness

- coordination

- constructability

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Procurement Phas.e

I

Focus is to obtain c01nbetent contactors who understand the full scove of

work ~ ~ ~:;J

<: Procurement Types & Sealed bidding

o Best value selection

Pre-qualify bidders to the maximum extent possible co Request details of previous experience

Q Determine labour, equipment and supervisory resources " Determine capacity to assume new work

Encourage and arrange for pre-bid site visits

o Contractors have a different viewpoint from owners & AlE's

o Many potential problems can be identified and resolved before receiving bids

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Procurement Phase

Conduct a pre-bid conference

Cl! Prominently display the place and time in the procurelnent documents

I) Allow sufficient time for contractors to identify questions

Draw the bidders' attention to any special contract

prOV1S1ons

. ..

- site restncuons

- acces s limi ta tions

- nOIse restricnons

- utility relocation requirements

Encourage and answer contractors' questions during the meeting and at any time before bid due date

- provide timely answers in a tender addendum

- extend the time for submission of bids, if appropriate

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Respond completely to bidder inquiries

!J Take time to thoroughly investigate the questions

Carefully integrate the response into the design-utilize you're AlE

It Identify all required changes to the procurement

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- documents

Clearly describe changes

iii Notify all bidders of the procurement documents

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Focus is 011 identifyil1g & resofvingpotel1tiaf cfail'll events b ro 1'l2D t111

..L ~ _,.

Obtain all pe17'l2its, right-qf-ways, easeJ'lzents, and utilitJ!

COJllJllitJJ2ents btfore issuing a notice to proceed

Know your contract

~ Know what your responsibilities are - coordinate utility relocations

- obtain building permits

- obtain right-of-way or easements

- furnish materials or equipment

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Construction Phase

.- .:~~

...

o Know the contractor's responsibilities and enforce them

- project scheduling

- submittals

- daily reports

• Understand the scope of work

- elements required by law arcade

- elements required by function, purpose, or

design

- elements that may be altered or deleted

- elements that must be added by contract

modification

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Construction Phase

-,

'-.;- ~

Know when your action or inaction may constitute a change to the contract

e Responses to RFI's Inay constitute a change - understand the question

- understand what the contractor believes is in

the contract

- request & evaluate the contractor's proposed solution

- determine if the contractor's solution is a change in scope

- obtain the AlE's response

- give direction to the contractor- if it is a

change, then issue a change order

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..

Note and comments for revisions on submittals may constitute changes

- Presumably a submittal represents the contractor's interpretation of the minimum contract requirements

- Review you're AlE's comments to detect potential

changes

Issuing extra work orders without an allowance for additional contract time may result in acceleration

Slow response to RFI's and submittals may result in delay or disruption

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Construction P'has{~~

"Buzz" words that indicate the emergence of a claim

* Acceleration * Constructive Changes

- overtime

- unwrrtten requests

- additional work

- extra shift

- slow down - over inspection

- speed up - incorrect interpretation

- early completion - defective specifications

* Differing Site Conditions * Delays

- subsurface

- different soils

- excessive groundwater

- higher elevations

- hidden/concealed

- Buried

-late approvals

- late deliveries

- no access

- interference

- disruption '

- bad weather

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Construction Phase

:l

Manage potential claim issues proactively

It Talk with the contractor as soon as any potential claim issue is detected

::'i • If the contractor's position has some merit, then

recognize the change and negotiate a settlement

"

GI> If you clisagree, then try to resolve the issue promptly

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Be prepared

Train your staff

- basic construction management skills

- basic contract principles and application to

construction events

- planning, scheduling, and schedule monitoring

- cost estimating and cost control

- negotiation

- partnerlng

- claim avoidance and claim management

Anticipate contractor claims and watch for the signs

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Construction Phase

:'

Keep accurate records

f) Despite all the precautions, there may still be claims

$ In addition, many claims are not identified until the project is nearing completion, and the contractor finds that it is over budget

iii . Complete and accurate records can quash many claim or at least facilitate settlement

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Claims Settlement and Dispute Resolution (Alternative Dispute Resolution- AD·R)

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Definition

"

@ Alternative Dispute Resolution ADR : is a term that refers to a variety of techniques for resolving disputes without litigation.

o Many specialized rules and procedures have been developed in cooperation with interested organizations and industries to facilitate these dispute resolution processes.

-:;

....

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Contractual Stipulation

Amicable Settlement

" Where notice of intention to commence

~; arbitration as to a dispute has been given in accordance with Sub-Clause [ ], arbitration of such dispute shall not be commenced unless an attempt has first been made by the parties to settle such dispute amicably. Provided that, unless the parties otherwise agree, arbitration may be commenced on or after the fifty-sixth day after the day on which notice of intention to commence arbitration of SUC11 dispute was given, whether or not any attempt at amicable settlement thereof has been made.

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Advantages of ADR

SPEED

CHOICE AND EXPERTISE OF IMPARTIAL NEUTRALS

INFORMALITY

FLEXIBILITY

PRIVACY

ECONOMY

GIVES PARTIES CONTROL OF THE PROCESS

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Perceived Disadvantages of ADR

-"',:.

'I will disclose my hand' : disclose some important aspect of argument which will then aid the other side in the event that the mediation is not successful

'There is pressure to settle': as the mediations process goes on the pressure to settle builds

'I will give the impression of weakness or liability': ADR or mediation demonstrates a weakness in the case

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Types. of ADR

'. 'i

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,

e Negotiation

411 Conciliation $ Fact-Finding o Adjudication • Mediation

o Arbitration

• Med/Arb

~ J\1ini - Trial

e Summary Jury Trial

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Dispute Resolution Processes

.. -~ ;.

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Negotiation

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Definition: A process by which disputants communicate their differences to one another through conference, discussion and compromise, in order to resolve them.

Most frequently used dispute resolution technique. Requires a strategy of communication and commitment During negotiations the contractor should be prepared to provide all written evidence to establish the validity of the claim and to arrange for the relevant personnel to attend a meeting

The contractor should consider carefully and determine an acceptable 'settlement figure' for the claim

If a claim s rej ected by the engineer, his reasons for the rej ection should be considered

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Negotiation

, . . .

0- Phase 2:
e Phase 3:
III Phase 4:
GI Phase 5:
~ Phase 6:
@ Phase 7:
eo Phase 8: Negotiation is basically a developmental process with

eight distinct, but often

overlapping phases:

61 Phase 1: agreeing where to meet

setting the agenda exploring the differences narrowing the differences outlining the Final bargain detailing the Final bargain ritualizing the outcome executing the outcome

. _j '>

;

.. )

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Fact - Finding

. ;

o Definition: An investigation of a dispute by an impartial third person who examines the issues and facts in the case, and may iSSlle a report and recoffilnended settlement.

• This effort might be undertaken in I

connection with a dispute resolution process

administered by a court, by a private I

corporation for internal investigation.

o Oral or recorded testimony, documents and physical evidence may be obtained and reviewed to determine the facts.

@ The outcome is reported back to the party or entity that commissioned the fact fmding.

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Adjudication

G Definition: A statutory tool to solve disputes.

An adjudicator is eitl1er mentioned in the contract or appointed by both parties. Deals witl1. all manner of disputes

~ Provides a very tigl1.t timetable. Adjudicator appointed within seven days of referral. Reach a decision within 28 days of referral

~ Decision is binding. Reference may be made to court / arbitration, but in the meantime, the parties must comply with it and make any payments directed.

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.. 'l

~ Definition: An intervention in dispute negotiations by an impartial third person, with the purpose of helping dle parties to reach their own solution.

@ The mediator's role is advisory

& Mediator may offer suggestions but resolution of the dispute rests with the parties themselves

Q) Mediation proceedings are confidential and

.

private

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Conciliation

&l Definition:: Often used interchangeably witl1 Mediation as a method of dispute settlement whereby parties clarify issues and narrow differences througl1. t11e aid of a neutral facilitator.

e The parties may agree to exclude or vary any of tllese Rules at any time by agreement with the Conciliator

~ T11e Conciliator will be guided by principles of objectivity fairness and justice

e Mediation usually refers to a facilitative process while conciliation is evaluative

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Arbitration

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o Definition: T11e submission of a dispute to one or lTIOre impartial persons for a final and binding decision .

.. The arbitrators may be attorneys or business persons with expertise in a particular field

• The parties control the range of issues to be resolved and many of the procedural aspects of the process.

e Less formal than a court trial. Hearing is prlvate.

o Parties agree to be bound by the decision of their arbitrator

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Arbitra tion

THE PROCESS (RULES) OF ARBITRATION

SECTION 1: Reference to Arbitration and Appointment of Arbitral Tribunal

Rule 1: Notice to Refer

Rule 2: Appointment of Arbitral Tribunal . Rule 3: Terms of Reference

Rule 4: Notice of Further Disputes or Differences

SECTION 2 : Powers of the Arbitral Tribunal Rule 5: Powers to Control the Proceedings

Rule 6: Power to Order Concurrent Hearings Rule 7: Power at the Hearing

Rule 8: Power to Appoint Assessors or to seek outside advice

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A .. /- rbitratio .. ,fl.··· ,

._- .. ' .. , ", - . -.

THE PROCESS (RULES) OF ARBITRATION

I I I

SECTION 3 : Procedure Before the Hearing Rule 9 : TIle Preliminary Meeting

Rule 10 :Pleadings and Discovery

Rule 11 :Procedural Meetings

Rule 12 :Preparation for the Hearing Rule 13 :Conduct of the Arbitration

SECTION 4 : Procedure at the Hearing Rule 14 .The Hearing

Rule 15 :Evidence

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At bitra tion

THE PROCESS (RULES) OF ARBITRATION

SECTION 5: Mter the Hearing Rule 16 : T11e Award

Rule 17 : Appeals

SECTION 6: The Place of Arbitration Rule 18 : Place of Arbitration

SECTION 7: Procedural Matters Rule 19 : Language

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Arbitration in UAE

Arbitration: Law, Language and Place,

"The law governing the procedure and administration of any arbitration instituted pursuant to Clause (X) shall be the law of the United Arab Emirates and of Dubai. The language of the arbitration shallbe Englisb_ (Arabic -subject to mutual agreement) and the place of arbitration shall be Dubai"

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.Arbitration in UAB:

--UAE Code of Civil Procedure

C11allenge and Nullification - Article 216

It is possible to Challenge and/ or nullify an arbitral award on specific procedural grounds only

Time Frame for Issuing an Award- Article 210 T11e time limit for issuing an arbitral award is six rnonthsv'This can be extended up to another six months or more by mutual agreement.

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. Arbitration in DAE

.. UAE Code of Civil Procedure

Enforcement - Article 217

An award need authentication of the court of First Instance for it to be equivalent to a Court Judgment and to be enforceable.

During the authentication, UAE courts cannot consider the merits of the arbitrators' findings (Article 217)

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Arbitration in DAE

.Forcign Arbitration Clauses with Dubai

- Government Bodies

TIns is set out in Articles 36 of Law No.6 of 1997 which states: No contract where Dubai Government or any of its departments is a party shall contain a provision for arbitration outside Dubai courts, or that any dispute regarding arbitration or its procedures shall be the subject to any laws

or rules other than the laws, rules and regulations prevailing in Dubai Emirates

.~

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Arbitration in UAE

Foreign Arbitration Clauses with Dubai

Government Bodies

.. ~

II 1958 N ew York Convention on the Enforcelnent of Foreign Arbit~al Awards provides for arbitration agreements to prevail over actions in the Court and for arbitral awards to be enforced in over one hundred countries throughout the world, including the major trading nations.

"

iii Although the UAE Cabinet approved entry into the N ew York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards in 2003, the DAE Government has not implemented the legislation.

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.Arbitration in DAE,

Dubai International Arbitration Centre (DIAC)

First created in 1994, as the "Centre for Commercial Conciliation & Arbitration" by the Dubai Chamber of Commerce & Industry (DCC!) and on July 2002 a decree was issued changing its name.

Was set up in order to supply facilities for conducting commercial arbitration, promoting the settlement of disputes by arbitration, as well as developing a pool of arbitrators in the law of practice of international arbitration

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.Arbitration in UAE

Dubai International Arbitration Centre (DIAC)

The services it offers include

" Overseeing the arbitral proceedings of

commercial disputes

• Appointing arbitrators

e Choosing the venue for the arbitration

$ Fixing the fees of arbitrators and conciliators @ Provide information in relation to arbitrators

and mediators.

e Keeps a directory of experts

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Med/Arb

11) Defmition: Employs a neutral selected to serve as both arbitrator and mediator in a dispute. It combines tl1_e voluntary techniques of persuasion and discussion, as in mediation, with an arbitrator's authority to issue a final and binding decision, when necessary.

Vi Combines informal and formal procedures

., Dispute is first submitted to mediation. If, after mediation, the parties are unable to reach an agreement, the neutral renders a decision on the merits of the case, applying the pertinent law to the facts developed during mediation

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Mini- Trial

..

\ .. ;

a. Definition: A structured settlement process in which senior executives of the companies involved meet in the presence of an impartial third person (panel) and, after hearing presentations of the lnerits of each side of tl1e dispute, attempt to formulate a voluntary settlement.

@! Suitable for large cases.

@ Each side has the opportunity of a formal

. .. ~

.

presentation.

The presentations are typically guillotined to half a day or one day per party, sometimes with a further opportunity of reply ..

Q The panel form a realistic view as to the strength of each parties legal case, with a view to negotiating a settlement.

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Summary Jury Trial

Cll Definition: Summary presentations by counsel in complex cases before a jury impaneled to make findings wluch are advisory, absent the agreement of the parties otllerwise.

@ Each party presents their case to a limited panel or jurors. TIle presentations shall be abbreviated so as to allow for a shortened trial.

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Summary

.1

"

I. I

e Arbitration: The submission of a dispute to one or more impartial persons for a final and binding decision.

iii Conciliation: Often used interchangeably with Mediation as a method of dispute settlement whereby parties clarify issues and narrow differences through the aid of a neutral facilitator.

It Fact-Finding: An investigation of a dispute by an impartial third person who examines the issues and facts in the case, and may issue a report and recommended settlement.

G Mediation An intervention in dispute negotiations by an impartial third person, with the purpose of helping the parties to reach their own solution. '

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Summary

Ii

Med/ Arb Employs a neutral selected to serve as both arbitrator and mediator in a dispute. It combines the voluntary techniques of persuasion and discussion, as in mediation, with an arbitrator's authority to issue a final and binding decision, when necessary.

Mini-Trial A structured settlement process in which senior executives of the companies involved meet in the presence of an impartial third person and, after hearing presentations of the merits of each side of the dispute, attempt to formulate a voluntary settlement.

Negotiation: A process by which disputants communicate their differences to one another through conference, discussion and compromise, in order to resolve them.

Summary Jury Trial Summary presentations by counsel in complex cases before a jury impaneled to make findings which are advisory, absent the agreement of the parties otherwise.

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ADR

Comparison Table

NEGOTIATI MEDIATIO ARBITRATI LITIGATIO
ON N ON N
Definition An attempt to A neutral A formal The court
reach third party procedure in system
agreement assists the which renders a
through give- negotiations, arbitrators judgment or
, and-take in but does not render a decision
informal render a decision (can based on
discussion binding be binding or relevant law
decision nonbinding) and the facts
Cost Lowest cost Low cost Moderate cost High cost
method method method method
Time High degree Moderate Time control Time control
of control of degree of time depends on depends
time factors control third parties on court
system
Privacy and Highly private Moderately Relatively Open to
confidentialit and private and private and public and
y confidential confidential confi den tial press
exposure
Control Greatest Good control Third-party Judicial
control and and flexibility control and system
flexibility of of reduced control and
proceedings proceedings flexibility of reduced
proceedings flexibility of
proceedings
Decisions Parties reach Objective Experts Judge and
decisions third-party decide jury render
based on facts .. technical decision
opimon IS
- introduced to issues and based on the
the decision- evaluate facts and the
making evidence law
process Dr. Nabil Shehadeh

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Claims Management

Question & Answers (Tel: Mobile- 7723626)

Dr. Nabil Shehadeh

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