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The choice of dispute resolution and its implications for proportionate liability claims

by David Levin

David Levin KC (2010) Society of Construction Law Australia Conference

David Levin KC delivered this paper at the Society of Construction Law Australia’s inaugural conference in Perth on 19 June 2010.

1. The GFC has highlighted the importance of risk assessment in investment decisions.

2. Risk assessment by parties to construction contracts may not fully evaluate the implications of proportionate liability laws.

3. At contract formation the assessment of the implications of proportionate liability legislation on possible dispute management is critical:

(a) Proportionate liability affects different parties differently: an owner as plaintiff might complain about its application whilst a contractor as defendant might benefit from its complexity and uncertainty.

(b) whilst such legislation will apply to litigation it may have no application in arbitrations.

(c) The precise drafting of proportionate liability legislation is different in most states and territories, therefore the choice of contract law may be a risk assessment issue.

(d) The question whether the proportionate liability legislative regimes are the enactment of substantive or procedural law is undecided. If merely procedural the venue of the dispute resolution may determine the proportionate liability regime to be applied, notwithstanding the contractual choice of law.

4. Thus the application of any particular proportionate liability legislation may be affected by the choice of dispute resolution mechanism, the venue of the dispute resolution and the law applying to the dispute

5. An understanding of the possible implications of the inconsistent applicationof differing proportionate liability legislative regimes is necessary in a post GFC world to (a) properly assess risk at the time of contract formation. (b) determine (when the contract offers a choice) which type of dispute resolution mechanism should be undertaken and where.

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