CAASA CHAIRMAN'S NOTES

I was fortunate to attend (virtually) the Pinsent Masons 2021 lecture recently, given by Rosemary Jackson QC titled “An epidemic of tick box mediation, and mediation in a pandemic”. Although the essence of the lecture dealt with mediation she asked a fundamental question - should a tiered dispute resolution be mandatory, i.e. the mediation process must be exhausted before referring the dispute to adjudication, similarly before referring the dispute to arbitration?. Or should the tiered dispute resolution process be flexible enough to provide various options with the parties able to select the one that best suits their purpose? If so then the drafting of the escalation clauses is of critical importance.

I am sure that most of us have experienced a dilatory party who refuses to participate in the mediation process, or if he does, only pays it lip service, such that it is clear that he has no intention of reaching any settlement. In such a case does mandatory mediation serve any party’s interest?    We have all heard of the instances where a party has been brought screaming and kicking to mediation, only to reach a settlement in a relatively short space of time. However these occurrences should be considered outliers rather than the norm.

Of course the parties are always free to amend the provisions of the contract by agreement.  However, since most construction disputes involve payment in some form or another, the party with the money will try and drag out the resolution of the dispute for as long as possible. This in the hope that the other party will be liquidated, or drop their claim, or ultimately accept an offer far below their actual entitlement.    

For mediation to be successful both parties must participate fully, in good faith, with the sincere  intention of settling. Anything else, as Rosemary states, is just a tick box exercise.

What about adjudication? Should the parties have the option to skip adjudication and move straight on to arbitration or litigation, and a final and binding decision? My answer is a qualified no, on 2 fronts.  

Firstly, qualified in the sense that adjudication needs to be as it was intended. To quote: “The “right” answer in adjudication is secondary to the parties having a rapid answer. As stated many times, adjudicator’s decisions will be enforced by the courts regardless of errors of fact or law. Adjudication is the temporary resolution of any dispute and dissatisfied parties should take steps to resolve the substantive dispute, rather than waste time and money on opposing enforcement. In any case the part of the decision containing the error could not be severed. It would have meant the correction of a mistake of fact, and the court would not embark on such an exercise. The test is whether the adjudicator’s decision is something that was in his jurisdiction to decide.”

Secondly, the appointment of suitably qualified adjudicators with extensive construction experience, and a detailed understanding of the adjudication process.

Statutory adjudication in the UK requires the adjudicator to provide his decision within 28 days of receipt of a referral notice. This period can be extended, but only to a limited extent, very few adjudications last longer than 6 weeks.
There are many adjudication bodies in the UK able to nominate experienced adjudicators to decide a construction dispute. When an adjudicator is nominated he commits to abide by the relevant rules and time periods. Training and the assessment of adjudicators is ongoing.

The success of this approach is evidenced by the relatively few adjudication decisions that are referred to arbitration.  
I suggest that, in a mature construction market such as the UK, where the various forms of ADR  are practiced and well understood, allowing the parties to decide themselves which method to adopt, will usually work.  

I also suggest that in the SA construction market we have a long way to go, and that educating employers, engineers, contractors and subcontractors on the various forms of ADR and “horses for courses”, is of paramount importance.
These are the reasons why CAASA came into existence – to conduct adjudications as intended, to provide a pool of suitably qualified and experienced adjudicators, and to educate and inform industry stakeholders.  

N  MILNE
Chairman