One of the main differences between AS 4000:2025 and AS 4000:1997 relates to the different processes and options for resolving disputes. If you are preparing an AS 4000:2025 contract, you will need to decide how the dispute resolution process should work. This post explains the different options.
The Default Option
The default dispute resolution process in AS 4000:2025 is as follows:
- The process starts by a party issuing a notice of dispute.
- Within 14 days of the notice of dispute, the parties must try to resolve the dispute by negotiation or agree on a dispute resolution process.
- If the parties cannot negotiate a resolution or agree on a dispute resolution process, either party commence litigation.
This default option will apply if none of the options in Items 37 or 38 of the Annexure Part A is selected.
This default option is very similar to the dispute resolution process in AS 4000:1997. The main difference is that litigation is the default option in AS 4000:2025, instead of arbitration.
The default option in AS 4000:2025 is also the simplest - which, for some people, will be attractive. However lawyers and others regularly involved in disputes will often choose from the other options, with a review to reducing the potential cost of a dispute (should one arise).
The Other Options
The Annexure Part A in AS 4000:2025 allows you to:
- Make arbitration the final dispute resolution process instead of litigation.
- Have the dispute referred to expert determination.
- Incorporate mediation into the dispute resolution process, before any arbitration, litigation or expert determination.
- Implement a dispute avoidance board for the project.
- Make the outcome of any expert determination or dispute avoidance board decision ‘interim binding’ or ‘final and binding’.
These options appear in Items 37 to 45 of the Annexure Part A. Each of these options is explained below. If a dispute arises in the course of the project, your choices on these items could make a big difference in terms of the amount of cost and time that will be consumed by the dispute.
Item 37 – Additional Dispute Resolution Options
Item 37 in the Annexure Part A allows you to choose from the following options:
- Mediation (without expert determination),
- Expert determination (without mediation),
- Mediation and expert determination, and
- Dispute Avoidance Board.
If you tick none of these options, the default option described above will apply (ie litigation unless the parties are able to negotiate an outcome or agree on a different dispute resolution process at the time).
Mediation (without expert determination)
If you select this option, it will mean that the parties will need to participate in a mediation before either party can commence litigation or refer the dispute to arbitration.
Mediation is effectively a negotiation that is facilitated by an independent person (the mediator). Mediation is far less expensive than expert determination, arbitration or litigation. However, because mediation depends on the parties reaching a negotiated settlement, there is no guarantee that mediation will result in the disputing resolved.
Read more about the differences between mediation and arbitration here.
Expert determination (without mediation)
If you select this option, it means that if the parties cannot resolve the dispute through negotiation, the issue will be referred to an independent expert for determination.
Expert determination is typically faster and less expensive than arbitration or litigation. It is best suited to disputes that involve technical issues, where the expert can draw on their own expertise to resolve the dispute. An example would be a dispute around the cause of a defect, where the independent expert is an engineer with expertise in the relevant field.
Expert determinations are less suited to disputes where a range of matters are involved, or whether there are disputes about questions of fact - such as where different people have different recollections of the same conversation or event.
The ability of an expert to competently decide a dispute will depend on the nature of the issue(s), the expert’s background (including whether they are legally trained), and the rules agreed between the parties for resolving the dispute.
If you select expert determination in Item 37 (whether with or without mediation), you will need to decide whether the expert’s decision will be ‘final and binding’ or ‘interim binding’ in Item 41. These concepts are explained further below.
Mediation and expert determination
This option will result in the parties having to participate in a mediation before either of them may refer the matter to expert determination.
The main benefits of this approach are that:
- mediation will give each party the opportunity to negotiate an outcome that they would be willing to accept, and to avoid the risk of an inferior outcome being determined by an independent third party, and
- if mediation is successful, the parties will avoid the cost and time involved in an expert determination process.
Dispute Avoidance Board
A dispute avoidance board is an independent board established at the start of the project, whose functions are to:
- meet with the parties on an ongoing basis, throughout the project (typically monthly), with a view to working through any issues with the parties at an early stage to avoid any issue escalating into a dispute, and
- decide any dispute that the parties are unable to resolve between themselves.
The aim of a dispute resolution board is to minimise the risk of a project ending up in a costly and uncertain dispute resolution process such as litigation or arbitration.
The obvious downside of a dispute avoidance board is the cost. The parties will bear the cost of the dispute avoidance board from the start of the project, regardless of whether any disputes arise over the course of the project. Dispute avoidance boards are typically seen as a type of risk mitigation strategy, as they can help minimise the potential for the parties to end up in a dispute.
If you decide to appoint a dispute resolution board, you will also need to decide:
- how many people board members there will be (see Item 42),
- who the board members will be (see Item 43),
- whether a decision made by the dispute avoidance board will be ‘interim binding’ or ‘final and binding’ (see Item 44), and
- whether the final dispute resolution process will be arbitration or litigation (see Item 44), assuming the decision by the dispute avoidance board is non-binding.
What’s the difference between ‘interim binding’ and ‘final and binding’
If you incorporate expert determination into the dispute resolution process or you appoint a dispute avoidance board, you will need to decide whether the decision of the expert or dispute avoidance board will be ‘interim binding’ or ‘final and binding’. (See Items 41 and 44.)
A decision that is final and binding cannot be challenged unless there are exceptional circumstances (eg fraud).
A decision that is ‘interim binding’ is binding on the parties until it us overturned. For example, if an expert decides that one party must pay an amount of money to the other, this decision will be binding on the parties until an arbitrator or court decides that the decision should be overturned. For the period between those decisions, the idea is that the parties must observe the decision.
A decision that is non-binding is not binding on either party. (This is not included as an option in AS 4000:2025.)
Item 38 - Final Dispute Resolution Option
If you appoint a dispute avoidance board or incorporate expert determination into your process, and if you elect for their decisions to be ‘final and binding’, that is how any dispute will be resolved (on a final basis). That is, a decision by the expert or dispute avoidance board, even if wrong, will not be capable of being challenged unless the decision has not been made in accordance with the contract.
Otherwise, if you do not incorporate expert determination into the process or appoint a dispute avoidance board, you will need to decide how a dispute should be resolved on a final basis, assuming it cannot be resolved by negotiation (including mediation, if applicable).
Your choices are arbitration or litigation. If you choose neither option (or both options), litigation is the default.
What’s the difference between arbitration and litigation?
Arbitration and litigation are similar in a number of respects, including that:
- the dispute will be determined by an independent person (the arbitrator or a court), and
- the process will usually involve a hearing, potentially including the cross-examination of witnesses.
Some of the differences between arbitration and litigation are:
- In arbitration, the parties pay the arbitrator’s fees. Although there are court fees in litigation, these are relatively minor and the parties are not required to pay for the judge’s time.
- In arbitration, the parties have the opportunity to agree on a specific person to act as the arbitrator. In litigation, the parties have no control over which judge will be appointed.
- Litigation is conducted in public. Arbitration, on the other hand, is conducted in private.
- In arbitration, the parties can agree on how the process will be conducted. For example, the parties could agree for there not to be a formal hearing and for a decision to be made based on the parties’ written submissions). There is generally less flexibility in litigation, and the parties will be bound by the court’s usual processes and rules.
Exceptions - Security of payment, injunctions
Regardless of how you complete the Annexure Part A, there are circumstances in which a party take action outside of the contractual process.
For example, if a dispute arises over the superintendent’s assessment of a payment claim, the contractor may apply for adjudication under the security of payment legislation.
Although an adjudication determination only has effect an interim award, it is still binding on the parties pending a final determination of the position under the contract. It is not possible to contract out of the security of payment legislation.
Independently of the security of payment legislation, clause 42.13 of AS 4000:2025 states that nothing in clause 42 prejudices either party’s right to institute proceedings to:
- seek interim relief from a court or tribunal, including to enforce payment due under the contract, or
- to seek injunctive or urgent declaratory relief.
For example, if a party considers that it is entitled to restrain the other party from doing something (such as calling on the other party’s security), they are not required to follow the process in clause 42 before applying to the court for an injunction.
Special conditions, modifications
Most parties are likely to choose from the options available in AS 4000:2025, without making too many amendments (if they make any at all).
However some parties, particularly principals who contract regularly or where larger value projects are involved, will seek to depart from the standard options, including by:
- deleting the options that do not apply, to simplify the drafting and make the clause easier to follow,
- incorporating time bars for different steps (including the timing of a notice of dispute), to ensure that any potential areas of difference are raised early and not left until the end of the project,
- requiring different types of dispute to be resolved in different ways,
- introducing thresholds for the finality of expert determinations or decisions made by a dispute resolution board – for example, if the determination or decision relates to a claim or payment of less than $[x], the determination or decision may be expressed to be final and binding, but anything above that amount will be interim binding only, and/or
- where the contract is being used as part of a larger project or program of work, seeking to bind or join the contractor to a dispute resolution process in another contract (typically between the principal and its client).
