Overview of the TIC Dispute Resolution Process

IRAs and Dispute Resolution Boards (DRB) play an important role in resolving disputes under the TIC. 

As shown above, by the time a dispute is referred to an IRA, it has usually been the subject of extensive discussions between the Principal, Contractor and the Administrator. The parties will refer a dispute to the IRA because they seek an independent and timely written recommendation with reasons, which will either resolve the dispute or allow the parties to take the further steps outlined in the above flowchart.

This page summarises key features of the IRA process. Please refer to the DRB page for more information on the DRB process. Capitalised terms, which are not otherwise defined, have the meaning given in the TIC General Conditions of Contract (General Conditions) and the Issues Resolution Advisor Agreement (IRA Agreement), current at the time of publication.

Alternative IRA roles

The TIC contemplates two alternative IRA appointments, occurring:

1. when required, only after a notice of dispute is issued, for the purpose of resolving a specific and discrete dispute (if Alternative 1A in Item 43A is selected) (Ad Hoc IRA), or
2. upon commencement of the Contract, to assist the Contractor and the Principal in avoiding or preventing disputes from arising and to consider all disputes referred to it for the duration of the project (if Alternative 1B in Item 43A is selected) (Project IRA).

While it is expected that the IRAs will consider and make recommendations in respect of individual disputes in a broadly similar manner, a Project IRA will visit the Site periodically, attend Site meetings and carry out field observations of the progress of the Work Under the Contract (see Clause 49.7(c) to (e) of the General Conditions, which apply to Project IRAs only). Accordingly, a Project IRA is expected to have a greater degree of firsthand knowledge and experience on particular projects than an Ad Hoc IRA.

Overview of the IRA procedure

The above flowchart summarises the essential process in Clause 15 of the IRA Agreement. The timing between the steps described is to be inserted by the parties before executing each IRA Agreement. Any amendments to the process agreed by the parties and the IRA, should still meet the objective of the IRA process to be conducted efficiently.

The IRA process is expected to be conducted efficiently (as confirmed by the template IRA Agreement’s reference to ‘business days’ and ‘weeks’ for the performance of the steps that it sets out, and its statement that the parties should ‘endeavour to meet or better’ that indicative timetable). This is reinforced by Clause 49.2 of the General Conditions, which states the expectation that all issues will be resolved by the Date of Practical Completion. While this is not possible for a dispute arising in respect of a Final Certificate, in other cases, the parties and the IRA should strive to give effect to this intention.

The IRA’s recommendation is expected to be provided within a reasonable (and relatively short, that is, ‘weeks’ as set out in Clause 15 of the IRA Agreement) time of referral of a dispute to the IRA, to allow the parties either to accept it (resolving the dispute) or reject it and move to the next stage of the dispute resolution process.

Eligibility

Under Clause 49.4(c) of the General Conditions, a person is prohibited from being appointed as an IRA if that person (which includes the person’s employer: see Clause 49.4(c) of the General Conditions and Clause 7 of the IRA Agreement):

1. has an ownership interest in any entity involved in the Contract, or a financial interest in the Work Under the Contract except for payment for services of the IRA
2. was previously employed by, or had financial ties to, any party involved in the Work Under the Contract within a period of 2 years prior to award of the Contract, except for fee-based consulting services on other projects
3. has had a professional or personal relationship with any key member of any entity involved in the Work Under the Contract which, in the opinion of the Principal or Contractor, could suggest partiality
4. has had prior involvement in the Work Under the Contract of a nature which, in the opinion of either party, could suggest partiality
5. is employed or engaged by any entity involved in the Work Under the Contract unless the written approval of both parties is given, or
6. discusses during the term of the Contract employment or engagement by any entity involved in the Work Under the Contract after the Work Under the Contract is completed.

Further, to be eligible, an IRA must be experienced in works similar to the Works, interpretation of Contract documents and resolution of construction disputes, must have expertise relevant to the nature of the dispute (or alternatively engage appropriate specialist advisors) and be neutral, act impartially and be free of any conflict of interest (see Clause 49.4(a) to (c) of the General Conditions).

Disclosure of conflicts

When approached about a potential appointment, an IRA must complete a Disclosure Statement.  The Disclosure Statement must:

1. contain a resume of experience
2. contain a declaration:

1. describing all past, present, anticipated and planned future relationships, including indirect relationships through the nominated IRA’s primary or full-time employer, to the project and with all parties involved in the Contract, including Subcontractors, design professionals and consultants, and
2. disclosing close professional or personal relationships with all key members of parties to the project.

If any matter affecting the IRA’s eligibility or capacity to act independently, impartially and without bias arises during the term of the IRA’s appointment, the IRA must immediately disclose this to the parties (Clause 7 of the IRA Agreement).

IRA procedures

Make a recommendation about the dispute

The IRA’s role is to consider and make a recommendation about the particular dispute referred to it: Clause 49.8 of the General Conditions and Clause 3.1 of the IRA Agreement. 

Unless requested by the parties to do so, it is not the IRA’s role to consider different or other issues. It is also not the IRA’s role to act as a mediator; the IRA is appointed to consider and make a recommendation about a dispute.

The IRA is expected to make a recommendation within a reasonable time of a dispute being referred to it.  See the comments above about timing.

Communications with the parties

All communications with the IRA outside of IRA meetings are required by Clause 49.7(f) of the General Conditions to include both the Principal and the Contractor. Discussions between the IRA and one of the parties to the exclusion of the other are not permitted, nor should an IRA invite a party to provide it with submissions or documents that the other party does not see. Clause 49.7(f) of the General Conditions requires that all parties remain fully informed of the others’ positions.

Relevant considerations

The IRA is to consider and determine whether, in its view, there is a basis for the claim(s) the subject of the dispute under the Contract (see section 4 of the Broad Outline of Process in the IRA Agreement). 

Once the IRA is satisfied that a contractual basis or entitlement for the claim(s) the subject of the dispute has been established, the IRA may then determine a methodology for the valuation or determination of quantum of such claim(s). It is expected that the IRA will endeavour to determine matters of entitlement and quantum in accordance with the contract wherever possible. Examples of claims where an IRA may be required to determine matters of entitlement and quantum other than in accordance with the contract are set out at Clause 47.1(c) of the General Conditions.

The parties and the IRA are able to adapt the procedures applicable to the IRA process to suit the particular dispute at hand. However, the IRA is obliged to carry out its obligations with due care and diligence and in compliance with the Contract and the IRA Agreement: Clause 3.4 of the IRA Agreement.

Form of Report

Clause 49.8 of the General Conditions requires the IRA to provide its recommendation to the parties in writing.  It must contain the reasons for the IRA’s recommendation.

As such, to assist the parties to resolve the dispute(s), it is expected that the IRA’s recommendation will take the form of a written report which explains in reasonable detail the IRA’s reasoning in a manner that enables the parties to understand how the IRA arrived at its conclusions.

It is expected that the IRA will provide its recommendation based on the material provided to it and discussions during Site visits (if any) and meetings. Any calculations, assumptions, documents or reasoning should be referred to in the IRA’s recommendation.

Case Studies

The below case studies have been anonymised (with certain details changed) and are provided for illustrative purposes.

Case Study 1 – Inadequate disclosure

During the IRA process, it came to the parties’ attention that the IRA’s employer organisation had previously consulted with a party on the project about an issue that was relevant to the dispute. 

These matters were not disclosed in the Disclosure Statement and prohibited the individual from being appointed as IRA. 

It is critical that Disclosure Statements are properly completed and capture any potential conflicts of both the individual IRA candidate and their employer organisation.

Case Study 2 – Dispute decided on basis not advanced by parties

The Contractor claimed for delay costs for a cause which was not a compensable cause under the General Conditions. The IRA agreed there was no entitlement on the basis claimed by the Contractor but went on to suggest that another basis of claim was available and decided the claim on that basis (despite neither of the parties advancing that position). The IRA’s recommendation was subsequently rejected.

The IRA’s role is to decide the dispute referred to it by the parties and not other issues or disputes.

Case Study 3 – Recommendation not in required form

Following a meeting of the parties, the IRA circulated an informal email which included dot points said to form a ‘recommendation’ for the parties to continue discussions.

Inadequate reasoning was included to support the dot points, and it was not clear to the parties how the IRA had arrived at them.  The parties requested that the IRA provide a formal written report setting out its reasoning.

A recommendation is to be in writing and contain the reasons on which it is based.  Failing this, the parties may not understand how the recommendation has been reached and have no option but to reject it.

Case Study 4 – Dispute not decided in accordance with Contract

The IRA delivered a formal written report to the parties deciding multiple delay and suspension costs claims which formed the dispute.

The IRA’s recommendation commented that as there were multiple claims arising from a single set of facts, it was difficult to discern contractual entitlement. The IRA recommended that the Principal pay the Contractor an amount out of ‘fairness’.

An IRA is required to make a good faith attempt to determine entitlement in accordance with the Contract and the IRA Agreement and should not award amounts where contractual entitlement has not been established.

Who to contact

For further information on this fact sheet, please contact [email protected].