Deep Dive: Dispute Resolution under the revised AS 4000:2025 General Conditions of Contract
Market Insights
We previously released our summary of the key changes in the revised AS 4000:2025 General Conditions of Contract here. In this article, we take a deep dive into the customisable dispute resolution (DR) regime, which is arguably the most substantive change to the AS 4000:2025.
Overview
The DR regime is contained in Clause 42 of the General Conditions.
Under the previous AS 4000:1997, the DR procedure involved a Notice of Dispute, Conference and Arbitration. The standard did not provide for any other forms of DR.
Under the new AS 4000:2025, the DR procedure also commences with a Notice of Dispute, however, the parties can now choose which additional DR option(s) they must participate in after receiving a Notice of Dispute, and before the Dispute is referred to final DR (being Arbitration or Litigation). Arbitration is often preferred if confidentiality is a key consideration. If not, in our experience Litigation is usually selected as a less expensive option (ie, the parties pay court filing fees rather than Arbitrators’ hourly rates) noting that Litigation can also be more flexible for joining additional parties to the proceedings where necessary.
These additional DR options include:
- Negotiation (default procedure);
- Mediation (without Expert Determination);
- Expert Determination (without Mediation);
- Mediation and, if not resolved at Mediation, Expert Determination; or
- Dispute Avoidance Board.
Each of these are discussed in greater detail below.
Default procedure
The default procedure in Clause 42.2 of the General Conditions applies if the parties have not selected any method of additional DR in Item 37 of Annexure Part A – Contract details (see ‘How to Complete Annexure Part A’ below).
It is the shortest option, with the Dispute referred to final DR (if not resolved via Negotiation under Clause 42.3) within only 28 days after the Notice of Dispute is received. While this option encourages the speedy resolution of Disputes, it provides a limited opportunity for the parties to explore the issues in Dispute or consider potential solutions before commencing formal arbitration or court proceedings.
Mediation (without Expert Determination)
If the parties select the Mediation (without Expert Determination) option, the Dispute will be referred to Mediation (if not resolved via Negotiation under Clause 42.3) within 28 days after the Notice of Dispute is received.
While Mediation is facilitated by a neutral third party, only the parties can make a decision on the issues in Dispute (if they choose to do so). This process is generally less formal and less expensive than Expert Determination (discussed below).
If the Dispute is not resolved via Mediation, it will be referred to final DR within 63 days after the Notice of Dispute is received.
Expert Determination (without Mediation)
If the parties select the Expert Determination (without Mediation) option, the Dispute will be referred to Expert Determination (if not resolved via Negotiation under Clause 42.3) within 28 days after the Notice of Dispute is received.
Expert Determination is facilitated by a neutral expert with technical or specialist knowledge, who will make a determination on the issues in Dispute. The parties can elect for the Expert Determination to be ‘final and binding’, bringing the Dispute to an end without the need for final DR, or ‘interim binding’, allowing for final DR if a party is dissatisfied with the outcome.
Expert Determination can be considered a desirable option for contractors as a quicker route to a determination than Litigation or Arbitration. Parties should note that Expert Determination can be a fairly expensive process as the expert must be paid for his/her time and often substantial materials are exchanged. Parties may consider that this process is not suitable for larger or more complex claims.
If the Dispute is not resolved within 138 days after the Notice of Dispute is received or is deemed under Clause 42.10 not to have been resolved, the Dispute will be referred to final DR.
Mediation and Expert Determination
If the parties select the Mediation and Expert Determination option, the Dispute will be referred firstly to Mediation (if not resolved via Negotiation under Clause 42.3) within 28 days after the Notice of Dispute is received, and then to Expert Determination (if not resolved via Mediation under Clause 42.9) within 63 days after the Notice of Dispute is received.
The Mediation and Expert Determination option delays referral to final DR (if the Expert Determination is not final and binding) until 173 days after the Notice of Dispute is received (or earlier, if the Dispute is deemed under Clause 42.10 not to have been resolved), providing more opportunity for DR but with a greater time and cost impact.
Dispute Avoidance Board
This is a new option under the AS 4000:2025. Dispute Avoidance Boards (DABs) have been used in the industry for quite some time and are a common feature of construction contracts in other jurisdictions such as the UK.
If the parties select the DAB option, provided the DAB members have executed a Dispute Avoidance Agreement, all Disputes under the Contract will be referred to the DAB for determination.
The DAB has 2 primary functions:
- to assist the parties in avoiding or preventing issues arising under the Contract which may lead to a Dispute. This is known as the dispute avoidance function; and
- to make decisions in respect of a Dispute that is referred under the contract to the DAB for a decision. This is known as the decision-making function.
The parties specify the number and names of the DAB members in the contract, and whether a DAB Decision will be ‘interim binding’ or ‘final and binding’ (see ‘How to Complete Annexure Part A’). If the DAB Decision is ‘interim binding’ and a party gives the other party notice that it is dissatisfied with the DAB Decision within 14 days after receiving the DAB Decision, the Dispute will be referred to Final DR otherwise the decision is final and binding.
DABs can be a proactive and effective DR process, however they can also be expensive due to the ongoing involvement of experts. The parties should carefully consider whether a DAB is appropriate based on the size and complexity of the project and who the members of the DAB will be.
How to complete Annexure Part A – Contract Details
With the new DR options in Clause 42 of the AS 4000:2025, there are also new Items in Annexure Part A that the parties will need to complete if they wish to avoid application of the default procedure.
Below is a summary of the relevant Items in Annexure Part A and instructions on how to complete them depending on which DR option(s) the parties have selected.
| Item | Relevant Clause(s) | How to complete |
|---|---|---|
| Item 37 - Additional dispute resolution options | Clauses 42.2, 42.5, 42.6, 42.7 and 42.8 | Item 37 prompts the parties to select one of the four additional DR options provided for in the contract, being Mediation (without Expert Determination), Expert Determination (without Mediation), Mediation and Expert Determination, or Dispute Avoidance Board. If none of the options are selected, or multiple options are selected, then the Default Procedure in Clause 42.2 applies. |
| Item 38 - Final dispute resolution options | Clause 42.4 | Item 38 prompts the parties to select one of the two final DR options provided for in clause 42.4, being Arbitration or Litigation. If none of the options are selected, or both options are selected, then Litigation is the default. |
| Item 39 - Rules for mediation | Clause 42.9 | If the parties have selected Mediation (without Expert Determination) or Mediation and Expert Determination in Item 37, then Item 39 will need to be completed. If not, mark this Item 'Not Used'. Item 39 prompts the parties to specify the mediation rules that will govern the Mediation. The default rules are the Mediation Rules of the Resolution Institute (available for download on the Resolution Institute website: RI Mediation Rules 2016), which are most commonly used. |
| Item 40 - Rules for expert determination | Clause 42.10 | If the parties have selected Expert Determination (without Mediation) or Mediation and Expert Determination in Item 37, then Item 40 will need to be completed. If not, mark this Item 'Not Used'. Item 40 prompts the parties to specify the rules that will govern the Expert Determination. The default rules are the Expert Determination Rules of the Resolution Institute (available for download on the Resolution Institute website: RI Expert Determination Rules 2016), which are most commonly used. |
| Item 41 - Binding nature of expert's determination | Clause 42.10 | If the parties have selected Expert Determination (without Mediation) or Mediation and Expert Determination in Item 37, then Item 41 will need to be completed. If not, mark this Item 'Not Used'. Item 41 prompts the parties to specify whether the expert's determination will be 'interim binding' or 'final and binding' as discussed above. |
| Item 42 - Number of Dispute Avoidance Board Members | Clause 42.11 | If the parties have selected Dispute Avoidance Board in Item 37, then Item 42 will need to be completed. If not, mark this Item 'Not Used'. Item 42 prompts the parties to specify the number of members who will be appointed to the DAB. DABs are generally comprised of 1-3 members, depending on the Project size. The DAB is established at Project commencement, and selection involves the principal and the contractor nominating an industry expert for approval by the other party. The two nominated members usually select a third to be the Chair of the panel, and all members will sign an agreement mandating them to act fairly, impartially and equally (available for download on the Dispute Resolution Board Foundation website: DRBF Model Documents - Australia, New Zealand | Dispute Resolution Board Foundation, along with other model documents like DAB meeting minutes and dispute board process summary and guidelines). |
| Item 43 - Dispute Avoidance Board Members | Clause 42.11 | If the parties have selected Dispute Avoidance Board in Item 37, then Item 43 will need to be completed. If not, mark this Item 'Not Used'. Item 43 prompts the parties to specify the names of the DAB members the parties have selected. |
| Item 44 - Binding nature of DAB decision | Clause 42.11 | If the parties have selected Dispute Avoidance Board in Item 37, then Item 44 will need to be completed. If not, mark this Item 'Not Used'. Item 44 prompts the parties to specify whether a DAB Decision will be 'interim binding' or 'final and binding' as discussed above. As with an interim-binding Expert Determination, an interim-binding DAB Decision can be challenged if a party is dissatisfied with the outcome, by issuing a notice under Clause 42.11 referring the Dispute for Final DR. |
| Item 45 - Rules for arbitration | Clause 42.12 | If the parties have selected Arbitration in Item 38, then this Item 45 will need to be completed. If not, mark this Item 'Not Used'. Item 45 prompts the parties to specify the rules that will govern the Arbitration. The default rules are the Arbitration Rules of the Resolution Institute (available for download on the Resolution Institute website: Resolution Institute Arbitration Rules 2023), which are commonly used for domestic Projects. However, if the Project or the parties are international, then the parties might wish to use the United Nations Commission on International Trade Law Arbitration Rules (UNCITRAL Rules) which are jurisdiction neutral. |
If you have any questions regarding the new DR regime in the AS 4000:2025 or require assistance to prepare or negotiate an Australian Standard contract including the AS 4000:2025, please do not hesitate to contact the authors.
This article was written by Kate Morrow, Partner and Caitlin Newland, Associate.
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