Mediation Disguised In The Dispute Process For Public Works In Qatar

The majority of contracts in Qatar are lump sum fixed-priced contracts where there is no provision for variations exceeding 10 or 15 percent or recovery of loss on price escalation for instance. Although these contracts maintain the principle features of the International Federation of Consulting Engineers (“FIDIC”) forms of contract, there are many subtle changes from the FIDIC philosophy. Although it is advised by FIDIC not to alter the General Conditions, but use the particular conditions, clients articulate their own requirements using the General Conditions. These changes eventually imbalances the even risk allocation between the parties. Contractors entering into contracts on the basis of these forms are well aware that they are not real FIDIC but FIDIC based locally treated versions. These standard forms with a taste of FIDIC have been extensively adopted since a long time in the administration of public works in this region and their history goes far back in 1980s.

In these standards, disputes shall in the first place be referred to and settled by the engineer. A period of 90 days is allowed for his decision, which shall be final and binding upon the employer and contractor until completion of the works. It is not a matter for the contractor to stop work even in disagreement with the decision or whether the party’s intent is to refer the case to court. If the engineer fails to comply with 90 days allowance or if the employer or contractor has a reason to dispute the engineer’s decision, either party may refer the dispute to the Competent Court of Justice, subject to a notice of intent again. The contractor may only refer the matter in dispute to the court within 6 months from the issue of maintenance certificate, termination, abandonment or breach of the contract whichever is the earliest. Such a court reference does not however invalidate the contract and is the local civil law that governs proceedings to take place in Arabic language, unless the court decides otherwise. Parties have no choice other than the path to courts. Although these courts are regarded as reliable, courts may eventually rely on court-appointed experts in the context of highly technical issues.

Arbitration is not so promoted in public works but the Chamber of Commerce and Industry is instrumental in setting up arbitral rules for disputes. However, there is no clear reason as to why the parties are reluctant to pursue arbitration although Qatar is a state having signatory to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Apart from the above provisions, however parties sometimes refer the disputes to what we call Claims Compensation Committee as a shortcut for justice. The jurisdiction retained with this committee to adjudicate construction disputes is not clear to many practitioners, however.

Disputes can no longer be seen as disputes between contractor and employer. The reality has many facets. They could be contractor vs engineer, contractor and engineer vs employer, contractor vs engineer’s representative, contractor, engineer and engineer’s representative vs employer etc. More or less the same entity in public works operates in capacity of the employer and the engineer, although they are two different personnel in strict contractual sense. As such, the dispute clause that is available in any typical infrastructure project generally considers both the employer and engineer as a one party to the dispute. This may be why this dispute clause is all about disputes between employer or engineer and contractor. Although the majority of disputes are related to the amounts/values and so is the quantity surveyor to first debate in such issues, this dispute clause is silent in terms of QS input and his capacity. Of course, the quantity surveyor operates under the regime of engineer’s representative, so that any dispute between the contractor and quantity surveyor is a dispute between the contractor and engineer by definition.

Under circumstances, a tendency is to look for alternatives, one of which is amicable settlement. This is not exactly the same we find typically in FIDIC conditions but it gives extra opportunity for the disputants to revisit the issues with their in-house expertise, independent and neutral, and arrive at a consensus at the employer’s level. This is an important step especially in the public interest and is a resultant concern about the interrupted progress, escalating cost of arbitration, doubt about the dual role of the Engineer and the propensity to obtain interim awards and temporarily-binding decisions and top of all the political concerns. What the parties need is therefore some thing that works well, indeed works faster, cheaper, and in a much less contentious manner than traditional arbitration tribunals. Parties strongly believe in a process in which the parties retain the right to decide the outcome of their dispute, rather than a court order or an arbitral award.

In all cases the employer refers the matter to a third neutral/s who will first evaluate the case independently and recommend a solution or option that best fits the party’s requirements, yet within a contractual framework. They are permanently based in-house, whose role is either facilitative or evaluative, or a combination depending on the case. They do not operate in a vacuum but with technical, legal, financial and other departments hand in hand. There is no prior agreement for neutral to intervene, but eventually make recommendations rather than decisions, to which the parties may either accept or reject. There is no requirement for notice of intent to refer the matter to the neutral.

Parties are now getting used to seek a nominee as such to review the disputed issues and consider this opening as an extra ‘contractual’ opportunity to get their disputes settled at the employer’s level. Such an arrangement in fact avoids the formalities in arbitration or litigation in toto. Almost all the cases have been successfully handled within a contractual framework as mentioned, taking all the circumstances into detail consideration, resulting in fair assessment acceptable to all the parties. Accuracy, accountability, short response time, cost and time savings, increased awareness on the issues, and increased dependency could be a reflection of success, as a dispute mechanism.

These neutrals forming part of their evaluation have been used to refer the matters to Contract Affairs department in cases where the contract is silent or in dilemma and refer to other departments whenever desirable prior to establish and communicate their opinions. They often revisit the cases on the request of the departments and are flexible enough to reverse their positions depending on the facts in issue that befits the situation, not to satisfy an individual party but to ensure the ‘right thing’ prevails, both in terms of eligibility and quantum.

Unlike arbitration, they are not generally undertaken within the confines of procedural rules or subsidiary legislations. Instead, they closely resemble expert inputs and accepted norms of the building trade. They give advisory opinions also when parties need guidance on a technical matter that is preventing a further dispute. Therefore, the neutrals may function as a preventing device permanently installed for the duration of the contract. When a dispute does arise, it is given early attention and addressed contemporaneously which avoids the commonly encountered situation of the engineer as well as arbitrator being too busy to address a voluminous claim. Because of the familiarity with the project, facts are better understood by them in administering the dispute. This is important when in many projects, the same staff rarely remains till completion which often deprive the arbitrator the benefit of their first-hand know-how of events. With such individuals on hand, greater certainty prevails and the materials relevant to the issue can be dug out. Parties who act in good faith are likely to comply with a recommendation just as they would accept a decision anyway.

The function of this neutral is therefore versatile from forming strategic direction to the establishment of atmosphere conducive for ‘talks for talks’ up to administering the procedural steps in liaison with project managers, technical staff and other internal subordinate staff in collating details and evaluating them. These neutrals interpret commercial and contractual issues in line with the contract documents, principles of quantity surveying and accepted norms, customs and traditions of the construction industry and form opinion as to contractual eligibility, validity and quantum of claims in terms of cost, time and otherwise. They critically appraise the public interests involved within the issues if any under investigation, conduct sensitivity analysis of each approach to ultimate outcome using logic and reasoning. They promote amicable settlement that brings disputants to a win-win situation and solicit legal advice where necessary. Finally they compile the decisions into a Memorandum of Understanding and ensure they truly reflect the final resultant understanding and set forth the rationale, hypothesis and parameters underlying such decision, eventually promoting reflective practice.

This mechanism also eases out the dilemma of the engineer’s representative in three distinct roles; as the agent in protecting the interests of the employer, in an independent role when acting as a valuer and a certifier and in a consultative capacity between employer and contractor. Because of these contrasting roles in the same project, the contractors have been suspicious of impartiality bearing in mind that the engineer’s representative is remunerated by the employer acting under a separate agreement with the employer to which the contractor is not a party. As such, this internal independent body avoid problems associated with the involvement of engineer’s representative traditionally in the settlement process.

The main feature of this approach is that the parties need not invoke the dispute clause so that they do not feel a formal and confronting sense of a dispute, yet the process is taken place internally. This effort of ‘internalizing’ the dispute process is under ‘trial and error’ at the moment, despite of whether they are called neutrals, referees or nominees, for the purpose of this discussion. However, the recommendations are neither binding nor final. Even if their recommendation is contractually ‘non-binding’ it does not appear to impair the efficacy of the recommendation. Parties are free to either accept or reject the options, altogether showing many characteristics of mediation with an evaluative orientation, although the mechanism is not a fully fledged standard mediation in strict theoretical sense.

                       

Chandana Jayalath

Dr. Chandana Jayalath has been a Chartered Quantity Surveyor working in the State of Qatar, with his latest exposure in the settlement of commercial and contractual issues, claims and disputes in public infrastructure projects.  MORE >