International Construction Law Review
MULTI-TIER DISPUTE RESOLUTION CLAUSES IN CONSTRUCTION CONTRACTS: A CONDITION PRECEDENT?
DR M SALEH JABERI*
Partner, ESK Law Firm
AND
DR BRUNO ZELLER**
Professor of Transnational Commercial Law, University of Western Australia
ABSTRACT
Construction contracts often feature “multi-tier” dispute resolution clauses in which arbitration or litigation is preceded by an alternative dispute resolution (ADR) mechanism. Although designed to remedy the inefficiencies of these processes, these clauses often face the challenge of enforceability. If an ADR clause is classified as a condition precedent, it has to be fulfilled before an arbitration tribunal or a court finds jurisdiction over the dispute. On the other hand, If the ADR clause is found to be directory, the arbitration tribunal or the court would be able to accept and handle the dispute even without fulfillment of the ADR process. This article analyses various condition precedents and the tests used by common law courts to classify multi-tier dispute resolution clauses as conditions precedent.
INTRODUCTION
It is useful to start this article with an understanding of the effects and necessary characters of contingent conditions which can be classified into two categories. The first category includes conditions that make the contract fully effective only upon the occurrence of a specific event. In common law, these are referred to as conditions precedent, while in civil law, they are known as suspensive conditions. The second category comprises conditions in which the contract is initially binding but becomes invalid once a specified event takes place. In common law, these
* Dr M Saleh Jaberi is an attorney at law and a partner at ESK Law Firm. He is also the author of the book “Construction Law” and is actively involved in construction contracts. (Jaberi@esklawfirm.com).
** Bruno Zeller, B Com, B Ed, Master of International Trade Law (Deakin), Ph.D (The University of Melbourne). Professor of Transnational Commercial Law, University of Western Australia. Adjunct Professor Murdoch University, Adjunct Professor Sir Zelman Cowan Centre, Victoria University Melbourne, visiting Professor Humboldt University, Berlin and Aalborg University Denmark.
Pt 2] Multi-Tier Dispute Resolution Clauses in Construction Contracts
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