How a new model law can provide oven-ready adjudication

A really good idea invariably begins life as a half-witted, daft idea worthy of the rubbish bin. The lead-up to the birth of statutory adjudication in May 1998 got all of these labels, and more. It even prompted a 200-page book called A Plea for Sanity. The seven or so authors were all high-flyers; gurus in the world of dispute resolution. All were busy, respected arbitrators. None wanted this brat called adjudication anywhere near their in-tray, or yours. And, to this day, I don’t know how it came to be that in May 1998 the brat was born, becoming law for every commercial building contract in the land. Now, 25 years on, it’s the only game in town and I am looking at a document by the International Statutory Adjudication Forum (ISAF) called The ISAF Model Law on Statutory Adjudication.

ISAF is new. A meeting of top lawyers in Singapore in September produced the founder members. They hail from Hong Kong, Singapore, Japan, Australia, New Zealand, Malaysia and the UK. ISAF is a ready-made document for any country to put before its legislature in an oven-ready state for adoption. Mind you, it could be adopted as the dispute machinery for any individual construction contract, bridge, road, wharf or new town today. It’s ready to go. Ideal for World Bank work.

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Those founder members of ISAF all have statutory adjudication in place already, some for several years. They have deployed adjudication first-hand. They are simply saying: Come on, Country X, Y or Z, do pick up what commerce invented – because it damn well works.

I like this document. It is 32 pages devoted to the entire machinery of construction contract adjudication. It was written by English counsel Karen Gough – actually, it was written in plain English by Karen Gough, for constructors. She probably, of course, reached out to adjudicator practitioners. And it is spot on. I heard myself saying, “This is easy to understand.”

The founder members of the International Statutory Adjudication Forum  are simply saying: Come on, Country X, Y or Z, do pick up what commerce invented – because it damn well works

There is a clear explanation of what is a construction contract. Even better is a simple opt-in/opt-out paragraph that determines whether residential occupier work is included or not. Then the section on commercial payment rules has the simple overriding principle that the builder must send their interim or final account value with chapter and verse and the payer must reply with their value. In other words, “Are we at odds?” It’s a “pipe up or pay up” machine. If the payer says nothing in reply to the payment application by the builder, then that application is payable, no argument. ISAF has made it simple.

It is even knowledgeable enough to plainly boot out “pay when paid” devices. The sanction for non-payment is the right to suspend works. That nerve-racking arena is again laid out plainly. No one can fail to understand this important move, nor the importance of prompt payment. The heart of ISAF is cash flow.

ISAF then comes to adjudicating disputes. A million years ago, when the Construction Act was a mere bill in parliament, I asked for a “preamble” to any adjudication. My plea must have accidentally been dropped behind a Westminster filing cabinet. Now ISAF has come up with a somewhat similar idea; hooray.

First (as in the Construction Act) a “notice of adjudication” is issued by the claiming party. It gives details as you might expect. The next step is new; it is called a “preliminary response”. The respondent has seven days from receiving the notice of adjudication to have their say, meaning write down their objections to the claims. By one means or another, we then, it’s likely, have formalised a “dispute”. Triggered now is a request to a nominating body to select an adjudicator.

Pause here. My request to ISAF is to give some thought to these folk called ANBs (adjudicator nominating bodies) who run adjudicator panels. They drift into a patronage system. Panel members rely on their ANB appointments, crumbs from the table; it is a relationship which doesn’t fit comfortably with the vital ingredient of adjudicator independence. There is a whiff of background influence. Tricky territory, but let’s get this appointment system onto the table. ISAF at this stage only makes a passing remark about ANB selection task.

ISAF has opted for 35-day adjudication. No problem. We UK adjudicators have learned that 28 days us a tad tight. Given ISAF’s prelim system and recognition of a referral, then response, then reply, it all fits in. In any case, my experience is that if the adjudicator asks for more time, the parties almost always consent.

It’s notable that ISAF has included the right to claim party and party legal costs as well as the adjudicator’s fees. The adjudicator will allocate all that via discretion.

Confidentiality is an ISAF feature, made plain, and quite right too.

Well done, ISAF, on this initiative. 

Tony Bingham is a barrister and arbitrator at 3 Paper Buildings, Temple