Construction Dispute Resolution Options

Disputes are an unfortunate but often inevitable aspect of construction projects, where complex contracts, tight timelines and multiple stakeholders create fertile ground for conflict.

Fortunately, there are a range of dispute resolution options available to parties to construction contracts, each varying in formality, cost, and efficiency.

In this article, we explore the most commonly used dispute resolution methods in the construction industry, highlighting their key features, advantages, and potential drawbacks.

Court proceedings - litigation

Where a construction contract selects court proceedings as the method of dispute resolution, parties may issue proceedings in the Technology and Construction Court (‘TCC’) – a specialist division within the Business and Property Courts of the High Court.

Litigation through the TCC provides a formal, structured, and legally binding process for resolving disputes. Proceedings are governed by the Civil Procedure Rules (‘CPR’) and accompanying Practice Directions, with CPR Part 60 and Practice Direction 60 addressing the specific rules for TCC cases. Further practical guidance is available in the TCC Guide, which outlines how such claims should be managed and heard.

A case may be brought in the TCC if it involves technically complex issues or where trial by a specialist TCC judge is considered appropriate. Paragraph 1.3.1 of the TCC Guide includes a useful (non-exhaustive) list of dispute types typically suitable for the TCC.

In terms of jurisdiction, claims valued over £500,000 are generally heard in the High Court, while lower-value claims may proceed in the County Court. However, the High Court may accept lower-value cases where specific features, such as complexity, importance, or public interest, justify it. Paragraph 1.3.2 of the TCC Guide includes a list of qualifying factors.

If a party fails to participate in proceedings, the other party may apply for default judgment. Any judgment issued, whether following a full trial or by default, is legally binding and enforceable, subject to any right of appeal or application to set it aside.

While court proceedings offer the benefit of a definitive resolution, they are often time-consuming and costly. Additionally, under the principle of open justice, most court hearings are held in public, and the outcomes form part of the public record, unless exceptional circumstances justify privacy.

Arbitration

Where a construction contract includes an arbitration clause, the parties agree to resolve disputes outside the court system, through arbitration. This process involves appointing a neutral third party arbitrator to hear the dispute and issue a binding decision, known as an arbitral award.

In the UK, arbitration proceedings are governed by the Arbitration Act 1996, which provides the legal framework for arbitrations seated in England, Wales, and Northern Ireland. The Act gives parties considerable autonomy over the process, limits court intervention, and supports the efficient resolution of disputes.

Arbitration can be flexible and tailored to suit the needs of the parties, which can make it more cost-effective and faster than litigation. Parties may agree on procedural rules, appoint arbitrators with relevant technical expertise, and choose a timetable that fits the complexity and urgency of the dispute.

Arbitral awards are final and binding, with limited grounds for challenge. Importantly, they are also widely enforceable internationally.

A key advantage of arbitration is its confidentiality. Unlike court proceedings, arbitration hearings are private, and the details of the dispute and outcome are not part of the public record.

At the time of writing, the Arbitration Bill is awaiting Royal Assent. The Bill proposes updates to the Arbitration Act 1996 in line with the Law Commission’s recommendations, aiming to modernise the legal framework and strengthen the UK’s position as a leading global centre for arbitration.

Adjudication

Adjudication is a form of Alternative Disputes Resolution available to parties to qualifying construction contracts, in which an impartial Adjudicator makes an interim binding decision which is subject to final determination by a Court or Arbitrator.

The right to refer a matter to Adjudication is statutory right in any qualifying construction contract. The Housing Grants, Construction and Regeneration Act 1996 (‘the Act’), at s.108(1) gives “A party to a construction contract… the right to refer a dispute arising under the contract for adjudication under a procedure complying with this section”.

Adjudication is more common in the construction sector than in any other commercial sector and the number of referrals to Adjudication continues to grow on an annual basis.

The main advantages of Adjudication include speed and cost. Most Adjudications are concluded within 28 days of referral. The reduced cost of Adjudication is often a key reason for parties choosing to Adjudicate rather than to litigate or arbitrate.

The main disadvantages of Adjudication also include speed and costs. The Adjudication scheme is geared to generate interim binding decisions quickly and, consequently, the justice dispensed in the Adjudication forum is often ‘rough justice’. There is also an issue in relation to costs recovery, with successful parties in Adjudications often failing to recover their costs.

It is possible to enforce and/or to challenge Adjudication decisions by way of application to the Technology and Construction Court (‘TCC’).

Expert Determination

Expert determination is a form of alternative dispute resolution where an independent, technically qualified expert is appointed by the parties to assess the dispute, review relevant information, and issue a decision.

This process requires the parties’ prior agreement to submit their dispute to expert determination, often set out as a contractual term in construction agreements.

Expert determination is particularly well-suited for disputes involving complex technical issues that demand specialist knowledge.

The procedure is flexible, with parties free to define the expert’s terms of reference, including timelines and procedural rules, to fit their specific needs.

Decisions made by the expert are generally binding, unless otherwise agreed beforehand. However, unlike court judgments or arbitral awards, expert determinations are not directly enforceable. If a party refuses to comply, the other party must pursue enforcement through a breach of contract claim in court proceedings or arbitration.

Typically, expert determination offers a quicker and more cost-effective resolution compared to litigation or arbitration.

Mediation

Mediation is a voluntary form of alternative dispute resolution where an independent mediator helps the parties communicate and negotiate to reach a mutually acceptable settlement. Unlike a judge or arbitrator, the mediator does not make decisions or impose outcomes.

This confidential process encourages open dialogue, enabling parties to explore creative solutions tailored to their commercial interests while aiming to preserve ongoing business relationships.

Mediation is typically faster and more cost-effective than litigation or arbitration, making it a popular choice for resolving construction disputes efficiently and collaboratively.

Pre-Action – Negotiation

The Pre-Action Protocol for Construction and Engineering Disputes (‘the Protocol’) applies to all construction and engineering disputes, including claims of professional negligence against architects, engineers, and quantity surveyors.

A central aim of the Protocol is to encourage parties to actively seek resolution of their dispute before resorting to court proceedings. It promotes early engagement, clear communication and consideration of appropriate forms of Alternative Dispute Resolution (‘ADR’) as a means to avoid the time and cost of litigation.

To support this aim, paragraph 9 of the Protocol requires the parties to hold a pre-action meeting. This meeting is intended to be used by the parties to clarify the key issues, identify the underlying causes of the dispute and explore whether the matter can be resolved through negotiation or ADR, ultimately reducing the need for formal legal action.

Need Legal Guidance?

This article is intended to provide a high-level overview of the main dispute resolution options available to contracting parties in the construction sector.

If you require expert advice on dispute resolution strategies, whether during contract negotiation or amid an ongoing construction dispute, we can support you.

We understand that every contract and dispute is unique and we focus on delivering practical, tailored, and innovative solutions designed to achieve the best possible outcomes for our clients.