NEC3 & 4 Dispute Resolution - W Clauses

Disputes in the construction industry are inevitable, despite our best efforts to ensure all details are meticulously addressed. Adherence to proper procedures, the use of correct forms, and rigorous quality checks are essential, but conflicts can still arise. While we hope that effective communication will enable the parties involved to resolve issues, this is not always the case. In situations where parties cannot reach an agreement, an external body may need to step in to assist with dispute resolution.

In this post, we will explore the dispute resolution provisions outlined in the NEC3 and NEC4 contracts.

The NEC

The NEC contracts are widely recognised as effective tools for avoiding disputes. Their emphasis on continuous and transparent communication helps ensure that most issues are addressed before they escalate into formal disputes. However, when disputes do occur, the NEC contracts provide clear provisions for resolution.

Clauses W1, W2 & W3

In NEC3, dispute resolution is covered under Clauses W1 and W2, while NEC4 introduces an additional provision, Clause W3. Clause W1 and Clause W3 are applicable when the Housing Grants, Construction and Regeneration (HGCR) Act does not apply—typically in situations where the works are located outside of England, Wales, and Scotland.

The NEC adopts a two-stage process for dispute resolution. The first step is adjudication, followed by either arbitration or litigation if the dispute remains unresolved. NEC4 introduces an additional step before adjudication, requiring senior representatives from each party to meet and attempt to resolve the dispute. It is important to note, however, that under Clause W2, the use of senior representatives is not mandatory, as this could conflict with the provisions of the HGCR Act, which allows either party to refer a dispute to adjudication at any time. Additionally, NEC4 offers the option to establish a Dispute Avoidance Board under Clause W3, which serves as an alternative to adjudication.

Clause W2

For the purposes of this blog, we will focus on Clause W2, which is generally the most common and applies within England, Wales, and Scotland, to provide a more detailed look at the adjudication process. Clause W2 sets out a structured timeline for referring a dispute to adjudication. The process begins with the referring party issuing a notice to the other party, which must also be sent to any named Adjudicator in the Contract Data (W2.3(1)). The referring party then has seven days from the notice of adjudication to formally refer the dispute to the Adjudicator (W2.3(2)). Both parties are required to submit relevant information to the Adjudicator within 14 days, unless otherwise agreed with the Adjudicator (W2.3(2)).

The Adjudicator is then required to issue a decision and justification within 28 days from the date the dispute was referred, though this timeline can be extended by up to 14 days with the consent of the referring party. Once the decision is issued, the referring party has four weeks to notify the other party if it intends to refer the matter to a tribunal. If no such notification is made, the Adjudicator’s decision is considered final.

The provisions within the NEC contracts provide a clear and efficient framework for resolving disputes in construction projects, helping to minimise delays and disruptions while ensuring that all parties have a fair and transparent process for resolving conflicts.