Legal disputes in the construction industry now take on average over a year to be resolved, due to the economic downturn, new research shows.
EC Harris found that in 2012/13 construction disputes took on average 12.8 months to be settled compared to 10.6 months the previous year – an increase of 20%.
EC Harris’ third annual study into global construction disputes also found that one in five joint ventures led to disputes relating to the venture. Party-to-party negotiations were the most common methods of resolution, followed by mediation and then arbitration.
One the highest profile disputes in the UK during 2012 involved the construction of the Shard in London.
The dispute between steelwork companies Cleveland Bridge UK and Severfield-Rowen Structures first came to light in early 2010, but was only resolved in January 2013 following a lengthy dispute that ended up in the High Court.
Mike Allen, global head of contract solutions at EC Harris said:“Construction projects are increasing in complexity, so when a dispute materialises its duration is not necessarily linked to its value, and so complex disputes can take equally as long to unravel, which is resulting in many disputes spanning a year or more.”
He added: “Joint venture agreements are becoming more prevalent, particularly where a project is of such a large size and scale or where there is a need because of licensing requirements for a local JV partner. These JVs are causing a significant number of cases, so more needs to be done in order to ensure that the JV itself does not end up in dispute.”