Definition

In an APC context, dispute resolution procedures are the structured processes by which parties to a contract or professional engagement attempt to settle a disagreement. They range from consensual, non-binding methods such as negotiation and mediation, through the interim binding process of adjudication, to the final and binding processes of arbitration and litigation. The RICS guidance note on Conflict Avoidance and Dispute Resolution in Construction provides an overarching framework for selecting the appropriate procedure.

Why this matters for Conflict Avoidance, Management and Dispute Resolution

  • Each procedure carries different cost, time, confidentiality and enforceability implications that directly affect client outcomes.
  • Adjudication is a statutory right in construction contracts under the Housing Grants, Construction and Regeneration Act 1996 — candidates must be able to explain it precisely.
  • Understanding the procedures allows a surveyor to manage client expectations and act early enough to preserve options.
  • RICS assessors expect candidates to demonstrate a clear mental map of the procedures in order of escalation.

Key principles

Negotiation

Negotiation is the first and most informal procedure: the parties attempt to reach a settlement directly, without a neutral third party. It is the fastest and cheapest option and preserves the commercial relationship most effectively. In practice, most disputes are resolved — or at least narrowed — through direct negotiation before any formal process is invoked.

Mediation

Mediation is a voluntary, confidential and non-binding process in which an independent mediator facilitates negotiation between the parties. Any settlement is reached by the parties themselves and recorded in a binding agreement. Proceedings are conducted on a without-prejudice basis. The RICS Dispute Resolution Service (DRS) and the Centre for Effective Dispute Resolution (CEDR) both offer mediation services. The Pre-Action Protocol for Construction and Engineering Disputes encourages parties to consider mediation before issuing proceedings.

Adjudication

Adjudication is a statutory right in most construction contracts under the Housing Grants, Construction and Regeneration Act 1996. An adjudicator must reach a decision within 28 days of referral (extendable by consent). The decision is temporarily binding — enforceable immediately — but can be revisited in arbitration or litigation. Its speed and low cost relative to arbitration make it the dominant dispute resolution mechanism in construction.

Arbitration and litigation

Arbitration is a private, final and binding process governed by the Arbitration Act 1996. It is slower and more expensive than adjudication but the award is final and enforceable internationally under the New York Convention. Litigation through the courts is the most formal option, subject to the Civil Procedure Rules, and is generally the last resort in construction and property disputes due to cost and the public nature of proceedings.

Relevant RICS guidance and legislation

  • RICS guidance note, Conflict Avoidance and Dispute Resolution in Construction — framework for procedure selection.
  • Housing Grants, Construction and Regeneration Act 1996 — statutory adjudication.
  • Arbitration Act 1996 — governs arbitral proceedings.
  • Pre-Action Protocol for Construction and Engineering Disputes — requires genuine dispute resolution attempts before proceedings.
  • RICS Rules of Conduct (effective 2 February 2022) — competence includes advising clients on the most appropriate procedure.

Ethics and Rules of Conduct angle

The RICS Rules of Conduct require members to act in clients' best interests and to provide a high standard of service. Guiding a client through the dispute resolution ladder — starting with negotiation, escalating only where necessary — is an expression of both competence and responsibility. A surveyor who recommends arbitration when mediation would achieve the same outcome at a fraction of the cost has not served their client well. The principle of proportionality is central to ethical decision-making in this area.

APC-style Q&As

Q (Level 1)Name the main dispute resolution procedures in order of formality.

The main procedures, from least to most formal, are: negotiation, mediation, adjudication, arbitration and litigation. Each escalates in cost, formality and binding effect.

Q (Level 1)What does it mean for an adjudicator's decision to be "temporarily binding"?

A temporarily binding decision must be complied with immediately, even if the losing party intends to challenge it. The challenge — by arbitration or litigation — can only be pursued after the decision has been implemented. This pay-now, argue-later principle is central to adjudication's role in maintaining cash flow in construction.

Q (Level 2)A client asks whether to pursue adjudication or arbitration. What factors would influence your advice?

The key factors are time, cost and finality. Adjudication delivers a decision within 28 days and at relatively low cost, making it ideal where cash flow is at stake or a swift resolution is needed. Arbitration takes longer and costs more, but produces a final and internationally enforceable award. If the dispute involves complex technical issues requiring expert evidence over an extended hearing, arbitration may be more appropriate. I would also check whether the contract specifies a particular procedure before advising on alternatives.

Q (Level 2)When is mediation most effective as a dispute resolution tool?

Mediation works best where the parties have an ongoing commercial relationship worth preserving, where the dispute involves multiple overlapping issues that can be traded off, or where the parties' underlying interests are more compatible than their stated positions suggest. It is least effective where one party is determined to set a legal precedent or where an urgent enforceable decision is needed.

Q (Level 3)A contractor has received an adjudicator's decision requiring payment of £180,000, but disputes its correctness. It asks whether it must pay. How would you advise?

(example) I would advise the contractor that it must pay immediately. An adjudicator's decision is temporarily binding and enforceable in the courts regardless of whether the contractor considers it correct. Refusing to pay exposes the contractor to enforcement proceedings, in which the courts almost always uphold adjudication decisions without reviewing their merits. The correct course is to pay the £180,000 now and, if the contractor wishes to challenge the decision, to pursue that challenge through arbitration or litigation under the contract's final dispute resolution provisions. I would also advise the contractor to review the decision carefully with legal and surveying advisers before committing to a challenge, as the cost and time of final proceedings must be weighed against the sum at stake.