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Is Adjudication becoming Arbitration?

On Wednesday 24 October 2018 CAASA held an interactive session with its members to discuss whether adjudication is gradually morphing into arbitration. The session was well attended and was a great opportunity to hear the thoughts of others in the industry as well as to network.

One of the reasons adjudication was created was to address the pitfalls of arbitration. Adjudication is meant to be cost effective and quick so that disputes can be resolved without too much of an impact on the works. However, these days, we are increasingly seeing adjudications running for months and months and hearings being held in an arbitration-like manner.

We raised this concern with the members present, which included attorneys, adjudicators and construction professionals and opened the floor to hear what their experiences have been.

One of the biggest complaints was that adjudicators are allowing adjudications to go on for too long. Adjudicators need to carefully balance their obligation to adhere to natural justice with the ultimate goals of adjudication – quick and cost effective. Members stated that they felt adjudicators these days are being too lenient on parties by, for example, allowing lengthy submission periods and multiple submissions. One member stated that he experienced an adjudication that ran for 9 months because of the busy diaries of the advocates involved and then the adjudicator took 3 months to publish his decision. Adjudication is supposed to involve quickly considering an issue and making a quick and binding decision so that the parties can move on and the works are least disrupted. To the contrary, other members felt that maybe a lengthy adjudication was worth it if it meant that the adjudicator’s decision was thought out and correct, avoiding the need for referring it to arbitration.

Another concern raised was that hearings are too easily being held. There is no requirement to hold a hearing in adjudication. Adjudicators are ideally to delve into the submissions and supporting documents of the parties and make a decision thereon alone. Hearings are only supposed to be held if really necessary, to obtain clarity for example. However, several of our members stated that hearings were being arranged from the get-go illustrating that adjudicators were not immersing themselves in the papers but rather choosing to host a hearing to determine the parties’ positions. Hearings should always be a last resort rather than the norm.

The third major concern raised was the increasing involvement of attorneys in adjudication proceedings. Our members stated that in their view this is one of the major causes of the two concerns addressed above. However, other members pointed out that in their experience it was a relief when attorneys were involved as it meant the submissions were orderly and set out the issues clearly, making the whole process run a lot smoother.

So what can one do to avoid these concerns interfering with your adjudication? Euan Massey of MDA Attorneys, who regularly represents contractors in adjudications, stated that in his opinion, despite some of the issues outlined above, adjudication is still the most effective means of resolving disputes in construction matters and, in his experience, rarely get referred to arbitration. Mr. Massey advised that one of the most important factors for a successful adjudication is an experienced adjudicator. An experienced adjudicator does not let the principle of natural justice get out of hand, does not hold unnecessary hearings, avoids lengthy legal arguments, sticks to the facts and adheres to the contractual time frames.

CAASA will be hosting several other interactive sessions over the course of next year. Next time come along. We’d love to hear about your experiences. Also, if you have any suggestions of topics you’d like to hear more about please email Kelly Stannard at secretary@adjudicators.co.za