A417EX Breaking Rope

For those who are new to the Middle East region the concept of the Majlis can be somewhat bewildering or even mysterious.  For those involved with construction disputes the concept of a high value dispute being settled in the Majlis is alien, possibly counter intuitive, and often misunderstood to be some sort of crude negotiation similar to what one might encounter in an Arabic Souq.

At Deloitte I have the pleasure of working for some of the Middle East region’s most important clients. A recent engagement has provided a fascinating insight into what is required to facilitate the amicable settlement of construction disputes between informed and sophisticated clients in the Majlis. Far from the process being crude, it required detailed analysis, position papers, legal opinion as well as internal meetings to discuss and agree the strategy.The process and preparation is no doubt starting to sound familiar to some as it is similar to what one would do when participating in Mediation albeit that there need not be an independent 3rd party or facilitator in the Majlis scenario.

In some countries Alternative Dispute Resolution (ADR), and in particular Mediation, has become an intrinsic part of the formal Litigation process by way of active case management by Judges with the parties possibly facing costs sanctions if they do not comply. Of course the negotiation and settlement of disputes is still common worldwide. In 2009 Kings College London published the results of a survey of UK Technology & Construction Court cases which identified that up to 65% of were settled by negotiation.  The same survey identified that 35% had been settled by Mediation. Those who settled by Mediation indicated it had resulted in significant cost savings. The potential cost benefit of avoiding a formal dispute process such as the Litigation or Arbitration is therefore self-evident.

Faced with such potential savings it can be seen that Mediation has the potential to be one of the most efficient and cost effective forms of ADR especially for those seeking to settle construction disputes in the Middle East. For those of us providing professional services this should be seen as an opportunity and not a threat as what better way to provide your client with high value advice than when it is being used in a forum where the overriding objective is to avoid a formal dispute process along with the associated costs and other potential issues such as business disruption etc.

There are of course costs associated with Mediation but from a client’s perspective these are easier to manage with there being a greater degree of cost certainty with caped or maximum fee type arrangements being easier to negotiate given the discreet nature of the work and mutually shared goals and objectives. I would certainly encourage all clients to consider this form of dispute resolution as after all with the Middle East summer now upon us I am sure we would all prefer to be in the Majlis as opposed to the Souq.

by: Zane Hedge, Director and head of construction disputes, Deloitte Forensic, Middle East

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