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 dispute resolution process in AS 4000:2025 is as follows:
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 Annexure Part A in AS 4000:2025 allows you to:
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 in the Annexure Part A allows you to choose from the following options:
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).
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.
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.
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:
A dispute avoidance board is an independent board established at the start of the project, whose functions are to:
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:
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.)
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.
Arbitration and litigation are similar in a number of respects, including that:
Some of the differences between arbitration and litigation are:
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:
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.
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: