IT Dispute Resolution

NZIAC are experts in providing the right conflict management and dispute resolution solutions for your business.

Business continuity and successful outcomes are crucial to business, as is the desire to minimise disputes with commercial counterparties.  NZIAC can assist you with mitigating and better managing emerging disputes when they arise.

On this page you will find information on:

• the Information Technology Sector
• our IT Sector Dispute Management Survey: Avoiding conflict and improving dispute resolution for IT Projects and consequential 2019 Report
• Contract Modules: Software and Services Projects Contracts – Governance, Conflict Management and Dispute Resolution Model Clauses
• conflict management and dispute resolution for the IT Sector

Information Technology Sector

The information technology sector continues to experience exponential growth. The pandemic has increased this evolution, with private and public sector organisations under immediate pressure to pivot existing systems to home and mobile working. This has presented delivery challenges including dealing with old legacy systems and their suitability for remote use.

This evolution has played out as businesses of all types, sizes and sectors are moving to utilise primarily software driven and cost effective cloud infrastructure to automate, systemise, store, and secure the rich data interactions that are at the centre of organisation models.

Organisations continue to face many demands (ranging from customer demographic expectations, supply chain automation, the impact of government regulations and compliance, to the worldwide cyber security threat context ) to meet expectations and deliver quality and leading-edge secure technology services.

The above factors have led to a need to test or pilot new technologies and build and implement them within increasingly tight time frames. The related elements of budget, time, quality delivery, and achievement of measurable transformation outcomes dominate planning and management decision making worldwide.

The sheer scale and speed of technological advancements, combined with the pressure to deliver projects to tight timelines, means that the sector is seeing an increase in conflict and emerging contractual disputes.

Survey and Report

Following the publication of the Standish Group Chaos Report 2015, which identified that only 29% of IT projects “succeed” in meeting user expectations, NZIAC and NZDRC and subject matter expert and NZIAC and NZDRC Mediation Panel Member Gerard Doolin undertook comprehensive research to determine the key factors that contribute to the prevalence of conflict and disputes in the IT sector with a view to developing improved dispute resolution offerings which best meet the needs of all IT sector stakeholders.

This industry initiative was specifically undertaken in consultation with international and domestic industry and legal stakeholders involved daily in IT engagements. That consultation resulted in a Draft Report that was disseminated to selected respondents and other interested commentators for final comment and feedback.

In 2019, we published the Final Report titled: IT Sector Dispute Management Survey: Avoiding conflict and improving dispute resolution for IT Projects – Click here to get a copy of the Final Report (2019).

The Final Report has formed the basis for the development of bespoke conflict management and dispute resolution offerings that address the causes of IT project delivery misalignment head-on and which provide a common sense, credible and responsive approach to managing and resolving conflict in IT projects when it occurs.

There are two parts to the offerings. First, dispute avoidance through best practice contract drafting incorporating effective governance processes (the Contract Modules). Second, conflict management and dispute resolution processes and procedures designed to operate sequentially in a spectrum of processes with a best for project objective (conflict management and dispute resolution).

The conflict management procedures are designed to enable parties, acting in a spirit of mutual trust and cooperation, to identify risk events and engage in dialogue to agree on steps to avoid or mitigate the effect of any risk event.

The dispute resolution procedures are directed to those circumstances where the parties are unable to resolve matters between themselves and require the assistance of a third-party neutral to provide a managed negotiation process (mediation) or an independent and binding determination of the matters in dispute (adjudication or arbitration).

Contract Modules

Having an effective software project governance process is critical to enable a customer and supplier to monitor risk, report and discuss the progression of the delivery of a software solution, and track and resolve any deviation from the agreed project schedule and performance obligations.

Accordingly, we have developed a suite of Contract Modules that can be incorporated in an Agile (scrum) software development, implementation and services project contract or in a statement of work (or schedule) to a Waterfall software development, implementation and services project contract. Such contracts typically also include key terms in relation to intellectual property rights, confidentiality, termination rights and liability limitations and/or exclusions.

Software and Services Projects Contracts – Governance, Conflict Management and Dispute Resolution Model Clauses 
Click here to get a copy of the Contract Modules

How can they be applied?

These Contract Modules are intended to supplement standard software development and implementation governance methodologies with a unique framework and detailed provisions for the management and resolution of misalignment issues and/or contract disputes.

The Contract Modules are drafted in plain English and focus on risk mitigation. The Contract Modules are purposively directed to ensuring the resolution of misalignment and/or contract disputes in a manner that is private, efficient, cost-effective, and certain.

The provisions represent current best practice and the governance terms may be adopted or modified in whole or part to suit the specific requirements of any software development, implementation, and services project.

Conflict management and dispute resolution

Conflict management is directed at the parties identifying and notifying each other at the earliest possible time of any matter or event which could affect the progress, cost, completion, and/or impair the performance and/or quality of the project (a risk event), and engaging in dialogue to consider and agree on what steps need to be taken to avoid or mitigate the effect of the risk event, and, where appropriate, agree on compensation or other adjusted commercial positions.

The purpose of mediation is to provide an informal process of managed negotiation that has a timetable, procedural structure and dynamics that simple negotiation lacks. The object of mediation is to enable and empower parties to negotiate and resolve any dispute promptly, cost effectively and confidentially with the assistance of a mediator, rather than having a decision imposed on them by an adjudicator, arbitrator or judge.

The purpose of adjudication is to determine any dispute in a manner that is fair, prompt, cost effective, and proportionate to the amount in dispute and the complexity of the issues involved within 35 working days. The adjudicator’s determination is binding on the parties (unless and until the dispute is finally determined by arbitration, legal proceedings in a court or tribunal, or subsequent agreement between the parties).

The conflict management and dispute resolution provisions should be adopted in full unless there is any conflict with the governing law or mandatory modifications from which the parties are not permitted to derogate.