The secret to writing a proper construction notice of dispute lies within the details.
Disputes are a part of the construction business. In the unfortunate case, a construction claim is not resolved and escalates into a dispute, this is the article for you.
How to initiate a construction dispute? Usually, an official notice of dispute is issued by the authorized person to the official address of the other party. The stipulations of the contract must be strictly followed to avoid wasting time and resources and to avoid legal nuisance.
You may also refer to our review on Document Crunch, the AI platform, for reviewing contracts with the intent of reducing risks and disputes.
- Each project is unique
- Writing the construction notice of dispute
- Directing the notice of dispute
- Letterhead and subject
- Letter body for the construction notice of dispute – Introduction
- Letter body for the construction notice of dispute – First Paragraph
- Letter body for the construction notice of dispute – Second Paragraph
- Letter body for the construction notice of dispute – Third Paragraph
- Letter body for the construction notice of dispute – The Conclusion
- Done with the letter, now what?
To learn more about arbitration and alternative dispute resolution, please read on Alternative dispute resolution (ADR) and it’s advantages and disadvantages and What is Binding Arbitration? Is it better than Court?
Each project is unique
Each project contract and particulars are unique, therefore, before initiating a dispute, the contract clauses must be reviewed vigorously and strictly followed. For the sake of this article, it will be assumed that the project contract is a typical EPC contract for projects designed by the employer and executed by the contractor.
Also, it will be assumed that the parties are unable to resolve their claims amicably and a dispute is inevitable.
Thus, the FIDIC Redbook will be the point of reference for this article. Please leave a comment or drop us an e-mail if you have a specific question or request on disputes arising out of other forms of contract such as the FIDIC Full spectrum of conditions of contract (Yellow, White, silver,,etc), NEC, and bespoke contracts.
We emphasize the fact that each project is unique and one should be careful when handling a dispute process.
Below is a link for free notice of dispute in editable word format. Do not worry, we do not spam.
As an experienced Claims and disputes consultant, I strongly recommend using proper contractual correspondence and understanding how to present your case. One of the best guides (Amazon Link) on claims effective writing and response, provides excellent support, even if you are not experienced in the topic.
Writing the construction notice of dispute
The first rule of arbitration is not to go into arbitration! Only if all amicable resolution attempts have failed, then escalating the claim/ conflict into a dispute becomes feasible.
A construction notice of dispute must consist of the following, as applicable:
- Addressing the letter as per the contract.
- Clear subject line.
- All attachments (if any, must be numbered and referenced).
- Letter body and contractual reference.
- Moving forward.
Directing the notice of dispute
The notice of dispute must be addressed to the other party as per the official address and person specified in the contract.
Most contracts include the address of each party and notice requirements. These might include; sending them by fax or courier, stamping and returning..etc.
From personal experience, many companies fall into the trap of sending the notice of the dispute to the person whom they have been dealing with the most instead of that specified in the contract.
Letterhead and subject
The following basic items must be included (see the free example provided in the link above):
- Total number of pages
- The total number of attachments.
- Unique reference number.
- Address of the other party exactly as per the contract. Usually consists of the legal company name (no abbreviations!), registered telephone number, P.OBOX, and area location.
TIPDisputes usually run for some time after the original people invloved in it leave the company or are relocated to other projects. To avoid date confusions, always, use month name format. Example: 13-Nov-2020 .
The full project name as per the signed contract must be added to the letterhead. In addition, the person to whom it’s directed must be added. Example: Attention: Eng. John Smith.
Afterward, the subject must clearly state that this letter serves as notice. Example:
Subject: Notice of Dispute – Contract Agreement Clause 20.1 (Disputes and Arbitration).
Letter body for the construction notice of dispute – Introduction
Start the letter with “Dear Sir” or “Dear Madam”. You may change this as you wish.
Start the letter by referencing the contract agreement along with the contract reference number and signature date. If you have no contract signed, refer to the official document binding the parties together such as a Letter of Award (LOA) or Service work order.
Afterward, refer to the claims officially submitted by you and several discussions or settlement attempts carried out by the parties.
Examples of items to be referenced in the introduction:
- Signed contract agreement.
- Signed LOA or Work Order (If no contract agreement exists)
- Previous letters, E-mails, or even discussions (if no other evidence exists) related to the subject of the dispute. The reference must include the unique reference number of each piece of evidence along with the date, in chronological order.
- Previous meetings regarding the dispute.
- The attempts to previously resolve this dispute amicably.
Letter body for the construction notice of dispute – First Paragraph
Always assume that the person reading the letter is new to the subject and has no idea what’s going on. This will give you the upper hand later on as all your documents will be clearly structured with consistency in the details.
Presenting the case clearly is a big part of the job.
In this section, you will briefly reiterate the contents of the above-referenced items. The purpose of this paragraph is to show how the dispute started, the several letters exchanged on the subject, and what was their purpose.
Letter body for the construction notice of dispute – Second Paragraph
In this paragraph, you should clearly state your demands. Make sure to refer to the letters or e-mails previously issued on this subject. For example:
The party (Which is you), requests the other party (name/ description of the other party) to reimburse the first party as follows:
- Release of withheld retention money, totaling $1,000,000.
- Cost compensation as per the below table:
|Head of Claim
|Head office overheads
Letter body for the construction notice of dispute – Third Paragraph
In this section, you will briefly sum up the items described above and reiterate your request for the other party to comply with their contractual obligations. Afterward, refer to the contractual grounds to which the dispute is raised in full.
Example (It is a bit tedious but necessary):
Clause 21.6 [Arbitration]
Unless settled amicably, and subject to Sub-Clause 3.7.5 [Dissatisfaction with Engineer’s determination], Sub-Clause 21.4.4 [Dissatisfaction with DAAB’s decision], Sub-Clause 21.7 [Failure to Comply with DAAB’s Decision] and Sub-Clause 21.8 [No DAAB In Place], any Dispute in respect of which the DAAB’s decision (if any) has not become final and binding shall be finally settled by international arbitration. Unless otherwise agreed by both Parties:
(a) the Dispute shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce;
(b) the Dispute shall be settled by one or three arbitrators appointed in accordance with these Rules; and (c) the arbitration shall be conducted in the ruling language defined in Sub-Clause 1.4 [Law and Language].
The arbitrator(s) shall have full power to open up, review and revise any certificate, determination (other than a final and binding determination), instruction, opinion or valuation of the Engineer, and any decision of the
DAAB (other than a final and binding decision) relevant to the Dispute.
Nothing shall disqualify the Engineer from being called as a witness and giving evidence before the arbitrator(s) on any matter whatsoever relevant to the Dispute.
In any award dealing with costs of the arbitration, the arbitrator(s) may take account of the extent (if any) to which a Party failed to cooperate with the other Party in constituting a DAAB under Sub-Clause 21.1 [Constitution of the DAAB] and/or Sub-Clause 21.2 [Failure to Appoint DAAB Member(s)].
Neither Party shall be limited in the proceedings before the arbitrator(s) to the evidence or arguments previously put before the DAAB to obtain its decision, or to the reasons for dissatisfaction given in the Party’s NOD under
Sub-Clause 21.4 [Obtaining DAAB’s Decision]. Any decision of the DAAB
shall be admissible in evidence in the arbitration.
Arbitration may be commenced before or after completion of the Works. The obligations of the Parties, the Engineer and the DAAB shall not be altered by reason of any arbitration being conducted during the progress of the Works.
If an award requires a payment of an amount by one Party to the other Party, this amount shall be immediately due and payable without any further certification or Notice.
Letter body for the construction notice of dispute – The Conclusion
The conclusion consists of TWO parts.
In the first part, state that you intend to carry on with the dispute as per the stipulation referred above if it remains unsolved. This is by stating the body to which the dispute will be referred in accordance with the contract such as DIFC or The American Arbitration Association.
In the second part, give the other party one more chance to settle the dispute.
This is by stating that you are willing, in the interim period, to meet up with the other party to discuss the release or payment of the money claimed by you. It is important to make it clear that you are proceeding with the dispute but will be willing to listen to the other party as you proceed.
Done with the letter, now what?
Contact the experts and make sure all your documentation is in place and readily available in soft and hard copy format. We always advise taking an expert opinion on the merits of your case before issuing a notice of dispute.
All the best!