ADJUDICATION – WHAT’S THE FUSS?

Hill International

 

Adjudication has arrived in Ireland – there have already been many training courses and seminars on the subject, but what’s the fuss about and just how might it work?

 

Hill International

 

BACKGROUND

Statutory (i.e. governed by the law of the land, rather than through contract or an informal arrangement) Adjudication was developed in the UK. It was a result of Government reports identifying disputes as leading to problems with cashflow and increased construction costs. Cashflow issues and the cost of disputing through courts had led to the demise of many small businesses and sub-contractors.

Under the snappy title of the “Housing Grants and Construction Regeneration Act, 1997”, a ’28 day’ process of dispute resolution was introduced. Under this process anyone involved in a construction contract could resolve their dispute through Adjudication, regardless of the contract wording.

The process involves the submission of claims, responses to those claims and potentially a number of back-and-forth document submissions as each party addresses the assertions of the other. There will sometimes be an oral ‘hearing’, but more often the decision of the adjudicator is made in writing on the basis of written submissions.

The process is less formal than court, doesn’t require judges and barristers or expert witnesses, and is theoretically complete within four weeks (though often extended), allowing cash, “the lifeblood of the industry”, to flow and projects to continue. Generally, it seems to have been widely perceived as successful, and has been emulated around the world, including Australia, Singapore and Malaysia. Even the Gulf state Qatar has examined its possibilities.

Adjudication’s been described as ‘rough justice’ due to its informality and speed of decisions. However, it’s been widely supported by the UK courts.

Though decisions of adjudicators have been disputed, often on grounds of ‘jurisdiction’ – whether the adjudicator has the right to determine a matter on which they decide – they’re generally upheld.

IRELAND

In Ireland, there’s been talk of bringing in statutory Adjudication for around ten years. Some have argued against it formally, stating that to bring in a system, which allows for non-contractual informal dispute resolution might conflict with Ireland’s Constitution. Others have argued that the Adjudication is superfluous in any case, as the use of conciliation is widespread and already popular and successful.

Nevertheless, after Minister for Business and Employment, Senator Ged Nash signed the Act last year, requiring that every applicable construction contract entered into after 25th July this year is, under statute, subject to Adjudication.

The Act in Ireland means that anyone can refer a ‘payment dispute’ in a construction contract to Adjudication. There are some significant differences between Irish Adjudication and others, notably that in Ireland there’s a state appointed panel of adjudicators headed by Professor Dr Nael Bunni, and that disputes must relate to payment.

WHAT HAPPENS NOW?

It’s taken over ten years to reach this stage, so there’s been no hurry to get here. Some feel that there may be reluctance to be the first to put a head above the parapet, and there will most likely be court challenges to the first adjudicator’s decisions.

Nevertheless, it seems there is some appetite among solicitors who advise clients, to try out the Adjudication.

It’s now quite normal in Belfast to refer a dispute to Adjudication and obtain quick yet semi-formal and legally binding resolution to a dispute, rather than chance a less formal system such as conciliation, which is non-binding.

In December this year, Hill International will join up with a number of experts in Adjudication to examine and explain, through a workshop type scenario, the process of a typical Adjudication, from the crystallisation of the disputed matters to the Adjudicators decision. The workshop will examine how the process works, the strategic decisions parties are face with and will provide a set of sample documents and information to assist the audience in their understanding of the process.

HILL INTERNATIONAL

More information at www.hillintluk.com/wp35

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