The View From the Arbitrator's Chair
John O’Brien has a fundamental belief that in life people can generally be separated into two distinct groups, those with integrity and those without. He has found that this aspect has given rise to many of the disputes his firm has been involved in over the years
JOHN'S VIEW IS that a significant number of sub-contractors — and indeed main contractors — have carried on their business for many years with an unhealthy reliance on trust rather than on contract. In times of continuity of work or in a construction industry boom, arrangements based on trust and past history have worked reasonably well where symbiotic working relationships take precedent over dispute. About us
The Irish construction industry crash and subsequent recession brought in its wake a rash of disputes where parties pulled back to the respective contractual positions they initially signed up to, or to a contractual arrangement they understood at the time of contract. While we found there were genuine disputes on entitlement, we also found that there were also many ‘fuzzy’ disputes created by parties to survive the downturn.
Artificial disputes are manufactured simply to avoid payment in an attempt to maximise profits
Says John O’Brien: “We have seen an increasing number what I call ‘artificial’ disputes, where one party simply owes money to another under contract, but has not got the requisite funds to meet the contractual obligation to pay, as that party is itself owed money or simply cannot sell the asset(s).
“If this party admits that he has not got the money to meet his liabilities, then his company may be forced into receivership or liquidation and any chance of recovery is to a great extent lost. The party who owes the money simply ‘invents’ a dispute to buy his company valuable time. He then procrastinates through the negotiation and conciliation processes in the hopes that his own financial position improves to a point where he can meet his liabilities.”
Other artificial disputes are manufactured simply to avoid payment in full, in an attempt to maximise profits.
Main contractors identify two sources of revenue on construction contracts. The first and obvious source is the employer which has contracted them, and the second source — at least where the main contractor has little regard for future relationships — is made up of contractually naive sub-contractors. Advantage is often taken.
If you are a contractor, you need to be absolutely aware of what you are contracted to do and what your duties and obligations actually are. He adds that a contractual claim is an expected process under any contract and should not automatically end in dispute.
“Many cases are doomed because parties fail to consider properly if in fact an entitlement exists under the contract,” he says. “A disgruntled party can be blinded and become entrenched in personal pride, pursuing notional ex gratia or ‘equitable’ payments to recover his losses, where these really have no merit under the contract. He simply has not done what it was he was supposed to do."
John insists that unless entitlement is firmly established from the outset of a dispute, the claimant may be throwing good money after bad by pursuing a notional entitlement.
“If you are in fact to blame, admit it to yourself first, then admit it to others, then take your medicine, accept your losses and move on with your life. The alternative could be a very expensive waste of time.”
Once entitlement is established the client has a formidable force on their side
And if John feels a client needs to receive this kind of message, he will advise them honestly and bluntly: “What we do involves being very straightforward in our advice on this.”
John believes that the success of John Farage O’Brien lies in the company’s ability to start from a firm base, to ascertain if an entitlement exists, and to quantify the likelihood of recovery.
Once entitlement is established, however, the client has a formidable force on their side. John Farage O’Brien sets about building the case from the ground up, founded on clear facts supported by hard evidence. The company sets out to maximise the client’s chance of success in the negotiating forum, and in all cases has succeeded in this.
The company’s success record is enviable — and envied.