Adjudication models and their impact on Australian commercial dispute resolution

Adjunction Report

Adjudication Report

Over the last several decades the process of adjunction has become an increasingly familiar way to settle disputes within the Commonwealth of Australia. Simply put, adjunction is the process of resolving disputes using a third party adjudicator. Where, they listen to the arguments made by both sides and then render a decision. In general, it considered to be more efficient and cost effective in comparison with traditional litigation. Since Australia is managed based on a federal system that gives the states and territories more autonomy, meant that an uneven standard of settling disputes was in place. As each state / territory, would set their own standards for effectively handling various disputes. To address this issue, the Commercial Arbitration Act of 1986 established standards for arbitration that would be applied throughout the Commonwealth. Since that time, the process adjudication has been used increasingly to address a variety of commercial disputes. In the area of construction, this has led to a number of high profile cases that have had a dramatic impact upon the industry. To fully understand the overall effects of adjudication requires: that you consider the different types of models that are used and how it is affecting the adjudication process of the Commonwealth. Together, these two elements will provide the greatest insights as to how adjudication is becoming a common part of Australian legal traditions, for settling various commercial disputes that will arise.

UK Adjudication Model

The UK model for adjudication evolved out of necessity during the early to mid-1990's. What happened was the British construction industry began to see a significant slowdown, due to various procedural and judicial delays in settling different disputes. The situation became so bad, that Sir Michael Latham would chair a commission that would examine what were the issues faced by the industry and how they could be resolved. In the official report called Constructing the Team, they outlined a number of different issues and problems with the dispute resolution process. The most notable was the long delays that were seen in the industry in settling various disputes and disagreements that arise. As a result, the report recommended that adjudication would be the best way to resolve various issues that arise in the construction industry

. This would lead to the passage and implementation of Housing Grants, Construction and Regeneration Act 1996 or Construction Act. Under section 108 of the Act, any party has the right to bring forth actions that they believe should be resolved through the process of adjudication. The adjudicator is a neutral third party that will review all relevant materials, determine how they would apply to the law and make a ruling as to how the dispute should be settled. The adjudicator has 28 days to review all of the information and make a decision. Once a decision is reached, all parties are obligated to follow the rulings of the adjudicator, unless a court overturns the decision. All adjudicators can not be prosecuted for any of the rulings that they make as a part of the adjudication process.

The Effects of Adjudication on the Commonwealth

Adjudication is having a major impact upon the way that various disputes within the construction industry are settled. While, the standards are different between the states / territories, the fact of the matter is that the process is evolving to become another way of settling various disputes. The most significant innovations are with the amendments to the adjudication process in New South Wales and Queensland. Where, the requirement that all defendants are required to pay the plaintiff has closed a major loop hole and made the process relevant. As a result, over 2,500 cases were handled in New South Wales between 2002 (when the changes were made) and 2006. This is significant, because it shows how the adjudication process is becoming an effective way for settling disputes outside of the court. However, it is also important to note, that the different standards will depend upon the state / territory of adjudication. This means that some sort of universal standard should be applied to the Commonwealth. This will make the overall process of adjudication more effective, as it can provide universal standards and procedures for effective dispute resolution.

Clearly, adjudication is evolving to become a part of the dispute resolution process for the Commonwealth. The various standards are different depending upon the state / territory where the procedure is taking place. As a result, the different standards for Australian adjudication will be different from the UK model. In order, to have the most effective adjudication process requires mirroring the best elements of the UK model. One way to do this is to create universal standards of adjudication throughout the Commonwealth. This will create an effective process for settling various disputes outside of courts. It is through viewing the adjudication process in this light, which highlights how it is becoming a part of Australian legal traditions.