Adjudication Framework

A fundamental element of an adjudication framework will be the strict timeframes set for the adjudication process. These may be varied by agreement between the parties.

In practice, adjudication in the construction industry takes 28.7 days on average for a determination of low value claims, and 44.7 days for general claims.

Maximum times for key stages could be:

Information shared during adjudication is usually kept confidential. It can only be shared if everyone agrees, if it is already public, if it is needed to carry out or enforce the decision, or if it is shared in a way that does not reveal who it is about.

Statutory adjudication will be designed to be a quick process. A framework could set out whether and when the parties are able to be represented in an adjudication. It could also set out whether representatives have to be legally qualified.

Australian state security of payment legislation, with the exception of the Northern Territory and Western Australia, says that if a conference of the parties is called, it must be conducted informally without legal representation.

However, in New Zealand, the Construction Contracts Act 2002 allows representation, whether legally qualified or not, if the adjudicator considers the proceedings will remain efficient. In practice, 80% of claimants and 78% of respondents are legally represented in adjudications performed by the privately operated Building Disputes Tribunal.

We note that if the adjudication framework is limited to businesses with commercial disputes, the eligibility criteria for legal aid is unlikely to be met.

There are more than 60 statutes and regulations that prescribe a range of dispute resolution procedures for particular sectors. Existing legislation has been developed with the issues facing specific sectors in mind, and there may be unintended consequences of trying to bring these into line with a framework designed to apply generically.

Legislation should be clear which scheme takes precedence. If another regime is mandated, regulated parties could be required to adhere to those requirements before being able to use a statutory adjudication framework. Voluntary participation in an adjudication could be permitted if existing dispute resolution processes have not succeeded.

Proposed adjudication legislation will also need to clarify how it interacts with other laws governing businesses. It will also need to be clear as to how limitation periods and limitation defences in the Limitation Act 2010 apply.

We could introduce a requirement for adjudicators or any authorised entities to report aggregated data to support monitoring of a statutory adjudication framework. For example, we could measure what types of claims are being adjudicated, the average time to resolution, what it costs, and whether disputes are being subsequently litigated, or determinations are accepted by the parties. We could also collect demographic data on the nature of the businesses using adjudication and by region.

This information should be subject to privacy safeguards. For example, that it could not be disclosed unless with the consent of any identifiable person, where the information is already public, or it is in a statistical or summary form that will not be published in a way that could reasonably be expected to identify any person.

We need to ensure that any future changes can be safely integrated, for example, changes in artificial intelligence and automation technology, online dispute resolution platforms and integration of legal systems.

We also need a mechanism to add new types of disputes (other than business disputes) in the future if the framework proves successful and it is appropriate to do so.

What have we missed? Are there any elements that have not been included in this consultation document that you think we should consider?