Mauritius is in the process of enacting legislation to provide Statutory Adjudication in the construction industry in order to facilitate the speedy resolution of construction disputes to seek to eliminate financial problems that currently adversely beset the construction industry. Until that Act comes into effect the current means of resolving disputes, absent negotiated agreement, is probably arbitration or litigation in which the time taken for determination can adversely affect the party that asserts it is owed money. That can even result in a company becoming insolvent due to being denied payment of monies genuinely owed to it. That is not acceptable in an ordered society. Introduction of such an Act is made against the remarkably successful statutory adjudication in UK, which has been repeated in Hong Kong, Singapore, New Zealand and Australia.
Following my recent invitation by MARC, to a Mauritius conference, I was invited to share my experience of the success of the strategic use of construction adjudication based on my own experience and of others in the United Kingdom. The views expressed in these brief notes are mine, as a neutral, as seen from my resolution experience. I am a full time dispute neutral, principally in International Arbitration of construction contracts, capital engineering equipment and oil industry infrastructure. I previously arbitrated UK domestic construction arbitration, since displaced by statutory construction adjudication introduced in UK in 1996.
Disputes are necessary for the development of an ordered Society. Disputes of a minor nature affect us all in our everyday life and we become experienced in dealing with them as we personally develop our business skills. There are many different ways of resolving disputes, some more acceptable socially than others.
Disputes in our business life are generally wasteful of resources and disruptive of our trading ambitions; disputes can often damage relationships with trading partners and clients, sometimes fatally. The important thing is that we learn and we adapt to the particular needs that arise in avoidance of disputes and their management, if and when they occur.
Dispute avoidance must start with dispute risk identification and management at the conceptual stage in the formation of contracts. Dispute avoidance is founded in policy decisions made at contract drafting stage. Money spent on lawyers and advisers at the initial creation of a contract is money better spent, and is less expensive, than when disputes arise later. Identification and expression of where the contractual risk lies in a project and how it will be managed will reduce risk and may avoid delay, punitive costs and the inevitable loss of management time spent on disputes which time is then not available for fulfilling the essential management of normal trading. As a result further losses may arise through the diversion of management attention away from the project as it proceeds. Costs of management time are rarely recoverable through dispute resolution.
Canary Wharf, a mega London development, made provision for adjudication, by naming adjudicators within all of its contracts. The mere presence of a named adjudicator, within the contract, to whom any party could refer a dispute at any time, historically acted as an incentive to party to party resolution of differences of opinion, which were inevitable in projects of that size and complexity. As a result only really complicated issues came to adjudication, benefitting from the rehearsal of the dispute between the parties, and the short sharp focused consideration by an experienced adjudicator.
On even more complicated contracts, such as PFI Hospitals, it has been UK practice to appoint a panel of neutrals and experts to a standing Dispute Board chaired by an arbitrator who would on first notice of a dispute identify the specialism necessary and appoint a panel comprising a neutral chair and one or two experts in the subject of the dispute. The pool of experts would include people with construction, mechanical, electrical, radiography, clinical and medical expertise. Dispute Review Boards or Dispute Advice Boards are still not yet sufficiently common in UK, but are used worldwide for major contracts.
It is my belief that there is no dispute resolution process that is universally appropriate for all disputes. I believe that disputes should be structured and managed such that the dispute resolution process is tailored to suit the particular needs of the parties and the nature of the dispute itself. The best practice I believe may be generally viewed as a stepped structured process ranging from party negotiation at senior board level, early non-binding expert evaluation, mediation, statutory adjudication where available then arbitration.
Mauritian Statutory Adjudication in the construction industry
In the event that the enacted statutory adjudication follows the UK model, adjudication of disputes will be imported by law into every construction contract as a binding precedent, subject to agreement otherwise by the parties, preceding any other binding dispute resolution such as arbitration written into the contract. In the event that one party is not satisfied with the adjudication decision made it may then refer the dispute anew to arbitration, or litigation, depending on the choices having been made in the contract. It is sensibly a requirement that the dispute between the parties has been crystallized as there is no time available for responses and replies to new points raised during the adjudication. Subject to limited rights of extension the decision is required within 28 days of referral.
The experience in the UK, in as far as it has been made public, is that if the paying party does not comply with the adjudicator’s decision, the successful party will seek enforcement in the appropriate court. In UK the appropriate court is the Technology and Construction Court (TCC) who will enforce the payment decision subject to there not having been any lack of jurisdiction or breach of natural justice. The TCC may even recognise that the decision reached may have been rough justice, but it will enforce the decision on the basis that the dispute may become a matter for a more detailed consideration in an arbitration; the intent of the Act of preventing unjustified withholding of money having been satisfied. The court enforced decision means that the money has to be paid. What has made statutory adjudication so successful in UK is the essential willingness of the TCC to enforce adjudication judgments, absent evidence of lack of jurisdiction or breach of natural justice.
I predict that, subject to care being exercised in the appointment of adjudicators and the positive support of Mauritian Courts dealing with enforcement in the spirit and intent of the Statutory Adjudication Act, Mauritius will achieve positive experience of construction disputes being resolved by adjudication. My concern about care in appointments, is that adjudication, in my opinion and experience, may be likened to arbitration on roller skates. The duties and responsibilities of the adjudicator are the same as those of an arbitrator when appointed. The appointed adjudicator has a very tight time constraint in which to reach a binding decision on the evidence presented by the parties.
Many appointing bodies in UK had to revisit their initial accredited list of adjudicators as a result of the courts refusing to enforce some decisions where due process had not been complied with arising out of a lack of fundamental arbitral experience by the adjudicator. My advice, for what it is worth, to aspirants in dispute resolution management, is to be flexible and tailor the resolution process to suit the needs of the parties and the particular dispute.
To those of you who will be appointed as adjudicators in Mauritius, I send my best wishes; take care when speed skating through a 28 day adjudication.