adjudication

Dr. Sherif EL-Haggan ([email protected])

Contract Administration & Arbitration Bureau (CAB) ١

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FIDIC Middle East Contract Users’ Conference

Abu Dhabi 24 – 25 February 2010

Dispute Resolution - Latest Developments(Adjudication)

Dr. Sherif EL-HagganFCIArb, London / Ph.D., Sheffield University

Founder/Director, Contract Administration & Arbitration Bureau (CAB)Professor, The American University in Cairo

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Adjudication

ContractualStatutory

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Contractual Adjudication - Dispute Boards

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1996 � FIDIC adopted Dispute Adjudication Board

(DAB) � replaces the Engineer’s quasi arbitrator

role (ICE Clause 66 + FIDIC Red Book Clause 67).

The Dispute Board (DB) concept originated in the 1960’s

in the USA in the form of a Dispute Review Board (DRB).


Contract Administration & Arbitration Bureau (CAB) ٢

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Types of Dispute Boards

• Dispute Review Board � DRB

• Dispute Adjudication Board � DAB

• Combined Dispute Board � CDB

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Dispute Review Board (DRB)

The DRB issues ‘Recommendations’ with respect to any

dispute referred to it.

If no party expresses dissatisfaction with a

Recommendation within a stated time period, the parties

contractually agree to comply with the Recommendation.

If a party expresses dissatisfaction with the

Recommendation within such time period, that party may

refer the dispute to arbitration or the courts.

Pending a ruling by the arbitral tribunal or at the court, the

parties may voluntarily comply with the Recommendation

but are not bound to do so.

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Dispute Adjudication Board (DAB)

The DAB issues ‘Decisions’ with respect to disputes

referred to it.

The parties must comply with Decisions without delay.

If a party expresses dissatisfaction with a Decision within a

stated time period, it may refer the dispute to arbitration or

to the courts.

If no party expresses dissatisfaction with a Decision within

the stated time period, the parties contractually agree to

remain bound by it. ٨

The DAB has 4 main functions:

• Visit the site periodically & become familiar with

project.

• Keep up to date with progress & problems.

• Encourage the resolution of disputes.

• When a dispute is referred to it, prepare a

Decision in timely manner.


Contract Administration & Arbitration Bureau (CAB) ٣

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The existence of a readily available mutually acceptable

impartial board promotes agreement.

Participants do not want to lose their credibility with the

DAB by taking extreme positions.

Accumulation of claims is minimized.

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The process encourages a win-win rather than a win-

lose philosophy.

Decisions not implemented may form the basis for

negotiated settlements.

DAB Decision is a condition precedent to the

commencement of arbitration proceedings.

The Decision is admissible in evidence in arbitration.

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Reasoning is an essential part of the decision.

May persuade the parties that the DAB studied all

relevant matters & reached a conclusion similar to that

which may be expected from an arbitrator.

The Reasoning

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They also serve who only stand & wait

Members serve even when they wait & become an

instrument of dispute avoidance or at least minimising the

outbreak of disputes.

Quotation from one of John Milton’s sonnets (1673)


Contract Administration & Arbitration Bureau (CAB) ٤

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FIDIC 1999 SuiteMulti-tier Dispute Resolution

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1. Engineer endeavours to reach agreement

(mediator?)

2. Engineer’s Fair Determination

3. Adjudication

4. Amicable settlement � mediation?

then, if necessary,

5. Arbitration

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Statutory Adjudication

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Adjudication was given a boost following Sir Michael

Latham’s attention to two serious problems:

1. poor cash flow due to delays in payment by employers

2. arbitrary unsubstantiated withholding of monies

Constructing the Team (1994)(Sir Michael Latham)

Housing Grants Construction & Regeneration Act

(1996)


Contract Administration & Arbitration Bureau (CAB) ٥

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The 1996 Act entitles a party to require that a dispute

be immediately referred to adjudication.

Courts decided that summary judgement could

be used to enforce an adjudicator’s decision.

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Provided the adjudicator:

1.has jurisdiction &

2.has conducted the adjudication fairly

chances of a decision being set aside are remote

Adjudication succeeded in preventing the party which

is in the stronger position from abusing that position

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Cases

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Macob Civil Engineering -v- Morrison Construction Ltd.

An adjudicator’s decision is enforceable by summary

judgement and shall not be stayed by a challenge that the

dispute is referable to arbitration.

Outwing Construction Ltd. -v- H. Randell & Son Ltd.

An adjudicator’s decision properly made should be complied

with fully and promptly,


Contract Administration & Arbitration Bureau (CAB) ٦

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A & D Maintenance & Construction Ltd. -v- Pagehurst

Construction Services Ltd.

The courts can not open up an adjudicator’s decision if the

adjudicator is properly appointed and stays within his remit.

Grovedeck Ltd -v- Capitol Demolition

The court held that the adjudicator had no jurisdiction

because the contract did not fall within the definition of

construction contract as defined in the Act.

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Bloor Construction -v- Bowmer and Kirkland

If an arbitrator makes a clerical error, accidental slip or

omission when making his or her award, the arbitrator on

application of one of the parties is empowered under The

Arbitration Act 1996 to make a correction.

It was held by the court that an adjudicator would have a

similar power even though no such power was referred to

in the Act or the Scheme For Construction Contracts.

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Fastrack Contractors Ltd -v- Morrison Construction Ltd

The main contractor contested the adjudicator’s jurisdiction

on the basis that there was no dispute.

It was the court’s view that a dispute arose when a claim

had been notified and rejected. A dispute could be about

what sum was due rather than whether a particular amount

was due.

The court held that the adjudicator had jurisdiction as a

dispute existed between the parties.

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Homer and Burgess Ltd -v- Chirex (Annan) Ltd

The adjudicator’s award was not wholly unenforceable and

the court had to decide whether it should itself decide how

much of the adjudicator’s decision should be paid or refer it

back to the adjudicator.

On balance the court considered time would be saved in

referring the matter back to the adjudicator.

adjudication

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