Whilst most acknowledge that adjudication is quick, few would argue it is cheap. It has become an industry in its own right and developed its own case law, which means many parties feel obliged to invest in representation to guide them through the process. Given that the majority of disputes referred remain in the £10k to £50k range, the costs incurred can be disproportionate to the value of these smaller disputes, and, unlike litigation or arbitration, the successful party cannot recover its costs from the unsuccessful party.
Gap in the market
There is clearly a gap in the market for genuinely quick and cheap dispute resolution, a gap which the RIBA has attempted to fill with the launch late last year of its Fixed Fee Short Form Mediation (FFM) and Third Party Opinion (TPO) dispute resolution schemes. Both are designed to be short in timescale and low in cost, and are aimed at the 'sort of low-level impasse that should not delay or derail a project, but all too often does', after the RIBA observed that most of the issues raised with it involved either single issue disputes or relatively low value disputes.
Who are the schemes for?
Both can be used in disputes between members of RIBA and their clients, between an employer and a contractor, between a contractor and a sub-contractor or between members of the RIBA, but are only suitable where the parties have a genuine wish to settle. The latter is of course true of all mediation; if the parties are more interested in being proved right than in settling the matter, a consensual process such as mediation will not succeed.
The schemes are co-ordinated by a RIBA administrator to whom the parties must apply with a brief submission setting out the nature of the dispute. In the case of FFM, the parties are limited to a single side of A4, in the case of TPO, the submission may be two sides of A4. The mediator, under the FFM scheme, and the independent professional, under the TPO scheme, are nominated by the administrator.
The mediation is conducted by telephone and lasts no more than an hour, although the parties may continue the mediation independently without the mediator. If a settlement is reached, the parties will sign a binding agreement, the contents of which are confidential.
The independent professional providing the TPO limits to 10 sides of A4 any documents in support of the two sides of A4 previously submitted. He will then decide the procedure for producing the opinion, which could involve a telephone discussion, a meeting or a site visit. There is a five hour time limit for producing the opinion. This timescale may be extended by agreement of the parties if it will not be possible to produce an opinion within the limit.
Cheap and effective method
The FFM is intended for use on disputes up to the value of £15k, with a maximum fee of £575. The costs of the TPO will not exceed £500 plus VAT. These options represent a genuine attempt by the RIBA to produce a cheap and effective method of dispute resolution for its members and others within the industry, and it should be commended for that. Whether they find favour amongst its members remains to be seen, but given the minimal cost involved, those with a low value dispute could do worse than give them a try.