Adjudication | Alternative Dispute Resolution
Alternative Dispute Resolution, (‘ADR’) describes a process adopted for the resolution of many civil disputes and is aimed at achieving a Resolution of the issues between the parties, generally without the protracted and expensive involvement of a civil court.
Following Halsey v Milton Keynes General NHS Trust and Steel v Joy [2004] EWCA Civ 576, parties will be expected to engage in ADR or have a reasonable answer for refusing to do so, failing which, cost sanctions may be imposed on the refusing party.
Accordingly, all available forms of ADR should be explored when a dispute arises to select the appropriate format according to the circumstances.
Adjudication is a form of ADR; other forms include Arbitration and Mediation.
Many business-to-business Contracts contain a clause, known as an ‘Adjudication Clause’, requiring that any dispute(s) arising within the terms of that contract should be determined by adjudication, the manner of implementation of which will be set out in detail.
Frequently, the Adjudication Clause will provide that even upon the dissolution, discharge, termination or expiry of that contract, such clause will remain enforceable thereby maintaining the continuing right to enforce it.
However, many disputes fall to be resolved by one of the forms of ADR where no previous provision has been made in anticipation of such a situation.
Guidance in respect of the conduct of all such disputes can be taken from the Arbitration Act 1996 (‘the Act’).
A benefit of adjudication is the flexibility it allows the parties. The directions contained within an adjudication clause will, to a large extent, dictate the procedure and the parties may, within such a clause, choose whether the Adjudicator’s decision will be regarded as binding or merely advisory.
Stuart Southall of KANGS outlines some of the procedures attached to an Adjudication.
The Relevant Law | The Arbitration Act 1996
The Act provides:
‘1 General principles.
The provisions of this Part are founded on the following principles, and shall be construed accordingly—
(a) the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense;
(b) the parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest;
(c) in matters governed by this Part the court should not intervene except as provided by this Part.’
It is clear therefore, that the Act is designed to support dispute resolution in the preferred manner of the parties whilst ensuring the safeguards it provides.
The Act requires observance of such safeguards as follows:
‘4 Mandatory and non-mandatory provisions.
(1) The mandatory provisions of this Part are listed in Schedule 1 and have effect notwithstanding any agreement to the contrary.
(2)The other provisions of this Part (the “non-mandatory provisions”) allow the parties to make their own arrangements by agreement but provide rules which apply in the absence of such agreement.
(3) The parties may make such arrangements by agreeing to the application of institutional rules or providing any other means by which a matter may be decided.
(4) It is immaterial whether or not the law applicable to the parties’ agreement is the law of England and Wales or, as the case may be, Northern Ireland.
An agreement to resolve a dispute does not need to be in writing but the Act makes provision for what constitutes ‘writing’ as follows’
‘5 Agreements to be in writing.
(1) The provisions of this Part apply only where the arbitration agreement is in writing, and any other agreement between the parties as to any matter is effective for the purposes of this Part only if in writing.
The expressions “agreement”, “agree” and “agreed” shall be construed accordingly.
(2) There is an agreement in writing—
(a) if the agreement is made in writing (whether or not it is signed by the parties),
(b) if the agreement is made by exchange of communications in writing, or
(c) if the agreement is evidenced in writing.
(3) Where parties agree otherwise than in writing by reference to terms which are in writing, they make an agreement in writing.
(4) An agreement is evidenced in writing if an agreement made otherwise than in writing is recorded by one of the parties, or by a third party, with the authority of the parties to the agreement.
(5) An exchange of written submissions in arbitral or legal proceedings in which the existence of an agreement otherwise than in writing is alleged by one party against another party and not denied by the other party in his response constitutes as between those parties an agreement in writing to the effect alleged.
(6) References in this Part to anything being written or in writing include its being recorded by any means.’
The Act defines an Arbitration Agreement as:
‘6 (1) ….an agreement to submit to arbitration present or future disputes (whether they are contractual or not).
(2)The reference in an agreement to a written form of arbitration clause or to a document containing an arbitration clause constitutes an arbitration agreement if the reference is such as to make that clause part of the agreement.’
Schedule 1
Mandatory Provisions
As referred to in paragraph 4 above,the Act stipulates that scheduled sections shall ‘have effect notwithstanding any agreement to the contrary.’
The ‘scheduled sections’ list is comprehensive and includes the following:
- ‘‘sections 9 to 11 (stay of legal proceedings);
- section 12 (power of court to extend agreed time limits);
- section 13 (application of Limitation Acts);
- section 24 (power of court to remove arbitrator);
- section 26(1) (effect of death of arbitrator);
- section 28 (liability of parties for fees and expenses of arbitrators);
- section 29 (immunity of arbitrator);
- section 31 (objection to substantive jurisdiction of tribunal);
- section 32 (determination of preliminary point of jurisdiction);
- section 33 (general duty of tribunal);
- section 40 (general duty of parties);
- section 43 (securing the attendance of witnesses);
- section 66 (enforcement of award);
- section 73 (loss of right to object).’
Commencement of Proceedings
The party wishing to refer the dispute to an Adjudicator will be required to serve written notice of such intent on the other party showing, inter alia:
- names and addresses of the involved parties,
- addresses where documents must be served;
- the nature of the complaint(s) constituting the dispute:
- the nature of the remedy being sought:
- the proposed Arbiter, where there is no definitive Adjudication Clause.
Generally, a strict timeline will govern the commencement and progress of the adjudication. However, in the event of delay or unforeseen event the Act provides:
‘ 12 Power of court to extend time for beginning arbitral proceedings, &c.
(1) Where an arbitration agreement to refer future disputes to arbitration provides that a claim shall be barred, or the claimant’s right extinguished, unless the claimant takes within a time fixed by the agreement some step—
(a) to begin arbitral proceedings, or
(b) to begin other dispute resolution procedures which must be exhausted before arbitral proceedings can be begun, the court may by order extend the time for taking that step.
(2 )Any party to the arbitration agreement may apply for such an order (upon notice to the other parties), but only after a claim has arisen and after exhausting any available arbitral process for obtaining an extension of time.
(3) The court shall make an order only if satisfied—
(a) that the circumstances are such as were outside the reasonable contemplation of the parties when they agreed the provision in question, and that it would be just to extend the time, or
(b )that the conduct of one party makes it unjust to hold the other party to the strict terms of the provision in question.’
Additionally, with regard to commencement of proceedings, the Act acknowledges that:
’14 Commencement of arbitral proceedings.
(1) The parties are free to agree when arbitral proceedings are to be regarded as commenced for the purposes of this Part and for the purposes of the Limitation Acts.
(2) If there is no such agreement the following provisions apply.
(3) Where the arbitrator is named or designated in the arbitration agreement, arbitral proceedings are commenced in respect of a matter when one party serves on the other party or parties a notice in writing requiring him or them to submit that matter to the person so named or designated.
(4) Where the arbitrator or arbitrators are to be appointed by the parties, arbitral proceedings are commenced in respect of a matter when one party serves on the other party or parties notice in writing requiring him or them to appoint an arbitrator or to agree to the appointment of an arbitrator in respect of that matter.
(5) Where the arbitrator or arbitrators are to be appointed by a person other than a party to the proceedings, arbitral proceedings are commenced in respect of a matter when one party gives notice in writing to that person requesting him to make the appointment in respect of that matter.’
The Act provides for the appointment of one or more arbitrators as follows:
16 (1) The parties are free to agree on the procedure for appointing the arbitrator or arbitrators, including the procedure for appointing any chairman or umpire.
(2) If or to the extent that there is no such agreement, the following provisions apply.
(3) If the tribunal is to consist of a sole arbitrator, the parties shall jointly appoint the arbitrator not later than 28 days after service of a request in writing by either party to do so.
(4) If the tribunal is to consist of two arbitrators, each party shall appoint one arbitrator not later than 14 days after service of a request in writing by either party to do so…..’.
Remedies Available Upon Resolution
The parties may agree beforehand upon the powers exercisable by the Arbitrator(s).
However, where no such agreement exists, the Act provides that:
‘(3) The tribunal may make a declaration as to any matter to be determined in the proceedings.
(4) The tribunal may order the payment of a sum of money, in any currency.
(5) The tribunal has the same powers as the court—
(a) to order a party to do or refrain from doing anything;
(b) to order specific performance of a contract (other than a contract relating to land);
(c) to order the rectification, setting aside or cancellation of a deed or other document.’
How Can We Kangs Help?
Whilst ADR is generally appreciated for its likelihood to produce a cheaper and speedier resolution and flexibility in execution, as with all litigation, its efficiency will be dependent upon the co-operation and constructive conduct by both parties.
As stated previously, the preferred form of ADR will be dependent upon the nature of the dispute and any governing contractual clauses designed to be implemented in the event of a dispute.
The Team at KANGS Solicitors is accustomed to guiding clients through all aspect of ADR and provides our clients with a professional service of the highest order when endeavouring to achieve the most favourable outcome available, whatever the nature of the dispute.
If you are, or anticipate becoming involved in Civil Proceedings of any nature, it is essential that you seek immediate professional assistance.
Enquires are welcome via telephone 0333 370 433 or email at info@kangssolicitors.co.uk.
