Adjudication Framework

Parties can generally agree between themselves who they want to adjudicate their dispute.

Under the Construction Contracts Act 2002, adjudicators must have prescribed qualifications, expertise, and experience. The Construction Contracts Act 2002 provides for regulations to be made, but these have not been enacted. The lack of prescription in the Construction Contracts Act 2002 does not appear to have resulted in poor quality adjudicators.

Similar legislation in Australia sets out requirements for adjudicator’s qualifications, expertise, and experience. For example, states in Australia may require a degree in specific fields, five years of experience, and/or a course completion. The Northern Territory and South Australia require additional registrations and memberships with professional regulatory organisations. Queensland requires an "adjudication qualification" and implements a grading system to reflect an adjudicator’s level of experience. A registrar or commissioner is often responsible for accreditation.

A fundamental question is whether there is a government role to authorise adjudicators that can offer statutory adjudication. This may depend on how much we need to build and maintain confidence in the new scheme. Adjudicator authorisation would also support adjudicators to verify their competence when promoting their offerings. Options for an authorisation scheme could include:

• Individual certification: A public agency (or an authorised private agency) could issue individual certifications to adjudicators and maintain a public register of adjudicators.
• The Minister could authorise one or more private entities to provide adjudicators. These entities could be required to develop and maintain standards for their adjudicators and could also be authorised to select an adjudicator if parties cannot agree. This latter model is included in the Construction Contracts Act 2002.

Individual certification would provide greater government oversight of the qualifications of each individual adjudicator, increase transparency, and provide greater public access to a registry of available adjudicators. However, it would also require significant government resources, which would add cost to the overall process.

Authorising private entities is the approach taken in the Construction Contracts Act 2002. There have been six authorised nominating authorities (ANAs) approved. In practice, while the legislation only specifies that an ANA's role is to select an adjudicator when parties cannot agree, ANAs have used the authorisation as a way to verify their eligibility to provide services, advertise their own offering and develop industry standards. Some have introduced fixed-fee schemes for low value claims, accessible websites, and wider digital resources for dispute resolution. The government can still maintain oversight by setting criteria for the selection and monitoring of ANAs.

Adjudicators will likely require statutory powers to facilitate the adjudication process. This includes deciding whether hearings are necessary, managing the exchange of evidence and inspecting anything related to the dispute. While adjudication is designed to be a streamlined process, adjudicators may also need powers to exercise discretion in allowing additional time or evidence when justified, and to set conditions on compliance with the determination.

Other similar legislation generally provides discretion for the decision-maker to run the process in a way that works for the parties and suits the particular dispute. The Construction Contracts Act 2002 gives the adjudicator considerable flexibility to run the process in the way they see fit. Under the Arbitration Act 1996, the parties can agree on the process that will be followed. Many other laws governing dispute resolution in different sectors have similar flexibility inbuilt.

Setting clear obligations will ensure the adjudicator’s responsibilities are understood by both the adjudicator and the parties. These provide a framework for accountability and protection for parties against unethical behaviour, for example where an adjudicator seeks unreasonable costs or where they have a vested interest in the outcome. It also provides criteria for the regulator to assess adjudicator performance. Consideration would need to be given to how this could be monitored and enforced.

The Construction Contracts Act 2002 sets out that an adjudicator must:

• act independently, impartially, and in a timely manner
• avoid incurring unnecessary expense
• comply with the principles of natural justice
• disclose any conflict of interest to the parties
• if there is a conflict of interest, resign unless those parties agree otherwise
• ensure the process is non-discriminatory and accessible.

Although an adjudication framework would set out a clear process and general approach to adjudication, the legislation could also enable flexibility in adjudication methods. This flexibility is consistent with other generic dispute resolution legislation such as the Arbitration Act 1996.

There are many examples of different approaches to adjudication, for example, parties could have the ability to select adjudicators based on their experience of Tikanga Māori. Tikanga-based dispute resolution is underpinned by whakapapa and may incorporate te ao concepts, such as whanaungatanga, utu, kaitiakitanga, and tapu. Parties could select an adjudicator who uses methods that support the needs of disabled people in their disputes. The framework might enable the use of online dispute resolution methods or artificial intelligence.