Dispute clauses in Australian Standard Construction Contracts (AS4903, AS4300, AS4000, AS2124, etc) are, ironically, often the subject of dispute. Particularly since 2013, when the Victorian Supreme Court held that an unamended provision of a standard dispute clause was void for uncertainty. Also commonly disputed is whether a standard dispute clause constitutes a binding arbitration agreement and whether matters before a Court should be stayed as a result.
Proposed amendments to AS4000 (for release in late 2024 or early 2025) introduce new contract interpretation, confidentiality, insolvency, PPSR and dispute resolution clauses.
The new dispute clauses introduce options for mediation, expert determination and a dispute avoidance board by election by the parties. The conference or negotiation and arbitration options remain.
Understanding the nature and effect of the carve outs in any dispute clause can assist in the relevant circumstances to sidestep otherwise binding mechanisms in the dispute clause. Below we consider the carve out in the proposed amendments to AS4000.
The proposed new carve out in the dispute clause is headed “Interim Relief” instead of “Summary Relief”. It adopts substantially the same wording as the existing carve out, as a result, the interpretation of the carve out is unlikely to change. The current dispute clause carve out has been the subject of several judicial decisions in Victoria and WA, and more recently with the WA Court of Appeal decision in Tianqi.
The principle applied by those decisions is that the carve out concerns enforcement of amounts due under the contract which are not disputed, as opposed to enforcement of debt claim where a reasonable basis for dispute is capable of being raised in defence. The WA Court of Appeal in Tianqi held that the carve out (in AS4902) applies only to proceedings capable of summary determination, where there is no objectively triable issue capable of being raised for defending a summary judgment.
For example, if a contractor submits a progress claim and no payment certificate is issued in response and the subject contract provides that the claim amount constitutes the certified amount in the absence of a response, Court proceedings can be commenced by the contractor to enforce that debt relying on the carve out and otherwise ignore the balance of the dispute clause, binding arbitration agreement or not.
