GUEST COMMENTARY

The report confirms that collaboration in the form of party-to-party negotiation remains the preferred method of dispute resolution. This result is based on surveys done before the unprecedented challenge of COVID-19 has put all parties in unchartered territory. This new development may prove to be fertile ground for parties to further resist squarely confrontational instincts when faced with disputes on projects, and to opt for a more collaborative approach. Doing so would be consistent with the increasing wish by parties to control the outcome of disputes through negotiation and settlement.

There is uncertainty in the industry as to how courts and tribunals will react to "COVID-19 claims," and to what extent contractual force majeure, hardship, or similar provisions apply in the circumstances. Parties may wish to eschew arbitration or litigation in favor of the certainty afforded by a negotiated settlement, with or without the help of a mediator or a dispute board, a mechanism that is increasingly and successfully used on major continental European construction projects (e.g., the CERN Dispute Board for the CERN Large Hadron Collider construction, the Gotthard Tunnel Dispute Board for the CHF 10 billion construction of the Gotthard Base Tunnel, or the Dispute Board for the International Tokamak Experimental Reactor Project in France). Such mechanisms may also assist parties on ongoing projects in getting them back on track faster and mitigating COVID-19 impacts over-shadowing the parties' relationship mid-project.

Collaborative approaches will not always be suitable for resolving disputes. However, parties can also seek to gain more control and predictability as to the outcome of a dispute in contentious proceedings. For instance, they can require that tribunals be more (pro)active and seek to structure proceedings in a way that pushes tribunals to actively engage with the parties and the dispute throughout the proceedings, as is already the habit of arbitrators in several continental European jurisdictions.

Bearing in mind the main causes for disputes identified in the report, predictability and control over disputes should also receive more emphasis at the stage of contract drafting. Regardless of whether parties adopt standard form contracts, and whether they opt for a very detailed contract or the more concise type of contract that is typically preferred in continental European jurisdictions, clear rules provide for predictability and control. They also facilitate contract management, the second major cause for disputes. While even the clearest drafting will never fully eliminate the risk of disputes, solutions to the most common disputed issues need to be set out in the contract, so as to make the outcome of a possible dispute predictable. More innovative approaches to contracting that are geared towards collaboration and dispute avoidance, such as Alliancing (or "Integrated Project Delivery"), which so far are rarely applied in Continental Europe, may also gain interest and traction in circumstances where parties seek to find ways of sharing risks.

JOACHIM KNOLL
Partner, LALIVE