While the new schemes are not the same, they are very similar in nature. It is not clear whether, or to what extent, the two professional bodies liaised with each other before publishing their separate CAP schemes.
ICE and the New Engineering Contract (NEC)
ICE has published new Clauses to be used in its NEC4 contracts, which are designed 'to resolve disagreements at an early stage by using a conflict avoidance panel'.
New optional contract provisions are provided for contracts incorporating Dispute Resolution Option W1 and Option W2. It is said that the clauses can be used in any of the NEC main contract or subcontract forms.
The CAP is a panel selected by the parties or nominated by the conflict avoidance nominating body 'to provide a recommendation to resolve disagreement between the Parties'.
The Parties are to cooperate in the identification, notification and avoidance or resolution of 'any disagreement that may lead to a dispute'. The clause then states that 'where necessary, a 'dispute' is to be referred to the CAP but, in the context of the other provisions, that may just mean a 'disagreement''.
Within a week of a notice of disagreement being given by one of the Parties, the Parties are to meet to define the disagreement and 'the outcome sought' from the CAP.
The CAP is then to meet the parties for a 'scoping meeting', within one week of appointment, to 'establish and agree on a process that suits both Parties and is appropriate to the disagreement'. The CAP 'decides any matter on which the Parties cannot agree'.
Within one week of the scoping meeting, the referring party submits a referral to the CAP and the other party with 'brief particulars of the disagreement, the relief sought and the basis for claiming the relief sought'. The responding party is to submit a response within one week of receiving the referral.
Within two weeks of the response, the CAP is to notify the Parties of 'its recommendation for resolving the issue'.
Importantly, it is provided that the process can be changed by the agreement of the Parties and the CAP.
If the Parties are satisfied with the recommendation of the CAP, the 'recommendation is implemented. Once implemented, the recommendation is legally binding on the Parties'.
The Parties 'may agree to refer a dispute over the recommendation of the CAP to the Senior Representatives'.
Each party bears in equal shares the costs of the CAP and the fees of the conflict avoidance nominating body.
The RICS Conflict Avoidance Process Rules
The RICS Conflict Avoidance Process (CAP) is 'intended to help parties to resolve emerging and established issues or disputes by providing an impartial expert assessment of the matters on which they disagree'. It is stated that a typical 'assessment' will be set out in a 'fully reasoned, written report containing practical recommendations for settling the disagreement. These recommendations may include innovative solutions not available in adversarial dispute resolution'.
The CAP Rules 'explain the process and approach that parties and the CAP Panel should consider adopting'.
The CAP Panel under the RICS scheme is to be comprised of one or three persons who are qualified and experienced in the subject matter on which the parties disagree.
The CAP Panel is to work with the parties 'to identify the issue(s) on which they disagree, and to establish the timetable and procedure to be followed'. The CAP Panel is to 'take evidence from the parties and may also undertake an inquisitorial role to gather information, which will be used to inform the CAP Panel's Report and recommendations'. Unless otherwise agreed by the parties, the CAP Report will not be binding on the parties but 'parties are encouraged to accept the CAP Panel Report as binding'.
The RICS Rules set out in detail how the CAP Panel is to be appointed, the powers of the Panel and the conduct of the proceedings. They also address important matters such as conflict of interest and confidentiality. Importantly, they provide that all information and submissions provided in connection with the process are 'without prejudice', irrecoverable and inadmissible as evidence in any subsequent legal proceedings.
Each party is to bear its own costs and expenses in relation to any referral of a matter to the CAP Panel and bear in equal shares the remuneration and expenses of the CAP Panel.
A commendable effort to avoid lengthy and costly disputes?
Any attempts to avoid lengthy and costly disputes in the construction sector are to be welcomed. Accordingly, RICS and ICE are to be applauded for their initiatives.
Unless the parties agree otherwise, the ICE scheme is generally more prescriptive in the timescales set down for various actions, which are no doubt set to ensure that the recommendation is produced as soon as reasonably possible. The RICS rules are written with more flexibility as to timeframes, with much to be agreed during the process.
It is worthy of note that the NEC scheme proceeds on the basis that the parties meet the cost of having that body appoint the CAP, while the RICS scheme indicates that no fees are payable by the parties to RICS which 'will recover its administrative costs from the CAP Panel'. It is not clear if RICS will publish details of what those costs are and who that body may appoint from time to time as members of CAP Panels.
These new conflict avoidance schemes are likely to be more suited to larger construction projects where the nature and impact of 'disagreements' can be very significant in terms of additional cost and delay. If operated successfully, one additional benefit is that they may be able to prevent the souring of relationships which can arise in other processes, such as adjudication.
Some may be concerned about the possible introduction of another process where there may already be detailed escalation provisions in particular construction contracts, while others may be concerned by what some may regard as a lack of clarity concerning whether any 'assessment' or 'recommendation' is to be based strictly on the terms of the contract.
Many in the sector will recognise, too, that some 'disagreements' can have implications for persons beyond two parties who might submit their disagreement to a CAP. It's not clear to what extent the new schemes might be used so that any resolution applies to all relevant parties in the supply chain who may be affected by a disagreement. It could be that, while that may be a worthy aspiration, experience suggests it is difficult to achieve in practice.
