10.21 Carefully crafted mechanisms for dealing with disputes should be included in the JV arrangements such as those set out below:
● the appropriate levels of authority to be granted to representatives within the JV (in terms of value and materiality);
● where disputes should be escalated to more senior representatives of the participating bodies; and
● the process to be adopted for resolving disputes at all levels (e.g. resolution by senior management, escalation to mediation/arbitration, etc.).
10.22 Public bodies have sometimes proved reluctant to invoke dispute procedures for fear of escalating the difficulty and souring the JV relationship. If however problems are left unresolved instead of being dealt with, they are likely to cause greater trouble in the longer run. Difficult issues should therefore be faced, not avoided, and where they cannot be resolved at management board level, then they should go through the agreed escalation procedure.
10.23 Characteristically this may involve the issue being taken, perhaps through an intervening stage, to the chief executive of the private sector participant and their equivalent in the public sector body. If this fails to resolve it, some sort of independent mediation process may be useful (and should be considered when the dispute resolution procedure is drafted in the contract). Only if this fails should some form of arbitration or legal proceedings be used. Where real deadlock is reached over core JV matters and it becomes impractical for the JV to continue its business, then the deadlock and, possibly, exit provisions may need to be invoked (see Chapter 8 for provisions that may reflect some of the routes to resolution mentioned above such as escalation or external advice).