The majority of projects investigated in the study have defined dispute resolution mechanisms (78 projects out of 115 for which data was available, i.e., 68%). The prevalence of each type of mechanism is shown in Table 1 below.
Table 1: Prevalence of dispute resolution mechanisms explicitly defined in PPP contracts, based on 115 projects
Mechanism | Examples found* | Percentage* |
Escalation to senior management | 31 | 27% |
Expert determination | 29 | 25% |
Dispute Resolution Board | 25 | 22% |
Mediation | 37 | 32% |
Domestic arbitration | 62 | 54% |
International arbitration | 19 | 17% |
*As there may be more than one mechanism used per PPP contract the total examples/percentage is greater than the number of projects with data available
Many projects were able to solve their issues using the earlier escalation mechanisms stipulated in the PPP contract. An example of this is illustrated in the Central Berkshire Waste Case Study. Multiple projects which were investigated as part of the data collection process, however, had no dispute resolution mechanisms detailed in the PPP contract (as common in some civil law jurisdictions) and consequently disputes were escalated to the relevant court.
A preferred method for project parties is to pursue settlements through facilitated discussion and mediation. This is done to avoid progressing detailed claims on a winner takes all basis, such as through court proceedings or arbitration. A private, collaborative approach enables parties to reach amicable settlement where both parties compromise and thereby also avoid expensive and potentially acrimonious formal dispute resolution mechanisms which may damage the parties' working relationship. This process may also allow discussion and exploration of the different methods of financial compensation and funding available through the various payment models in place. The data showed only 9% of disputes are settled by mediation. However, this is likely skewed since mediation proceedings are typically confidential and so data is less accessible.
Although many disputes in PPP transactions are resolved before they reach court or arbitration, the data indicates that as high as 65% of disputes are still settled through court proceedings or arbitration. This data may also be skewed as there is typically more data available on higher profile arbitration and court proceedings.