What does it mean:
- TeamX can only address hours in handling the dispute, not the
quality or
- dispute can only address hours not the quality
The statement "Disputes handled by TeamX can only address the hours, not the quality" is poorly written. Regardless, only option 1 makes sense.
Rather than addressing something, disputes are about something. Only entities address a dispute, whether it is by discussing it, litigating it, ruling on it, or otherwise processing it (for purposes of billing, time management, and so forth). Accordingly, although the statement makes no sense, notions premised on "what a dispute can address" are to be ruled out.
An acceptable wording of option 2 is "only disputes regarding hours, not quality, may be addressed by TeamX", thereby paraphrasing option 1.
Specifying what "surprising" interpretation you got from the court interpreter might have prompted us to ponder points or subtleties that otherwise are going unnoticed.