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06/11/19

Ontario Adjudication (Part 2) – Well-Rehearsed Disputes

Ontario Adjudication (Part 2) – Well-Rehearsed Disputes

Ontario Adjudication – Well-Rehearsed Disputes

Much has been discussed in Ontario within the past year or so regarding adjudication procedures, adjudicators appointment, and jurisdictional challenges, etc. However, little has been said about what the parties can do to maximise the benefit from this alternative dispute resolution mechanism.

Mandatory adjudication has a history of more than 20 years. Although still subject to some criticism, it has proven to be a time and cost-efficient alternative dispute resolution mechanism, to the extent that these days disputes in the UK are rarely referred to private arbitration or litigation after the adjudicator has issued their decision. One reason that adjudication has positioned itself in the UK market not only as, what initially intended to be – a ‘quick and dirty’ interim solution to the project cash flow, but also as a method in which the parties primarily decide to live with its outcome and move on, is that the parties have learnt that over time adjudication is designed for “well-rehearsed” disputes. 

It is more likely for the parties to accept the adjudicator’s determination as the final verdict if they feel they have been able to clearly set out and defend their positions in adjudication. This becomes particularly significant when a complex matter has been referred to adjudication. It is recommended that the claimant  clearly presents their position with substantiation in the first place. I have seen many instances in the past where the parties negotiated, sometimes for several months, before having seen a clear and detailed presentation of each other’s (and sometimes their own) claims.

A well-rehearsed dispute means that, prior to referring the matter to adjudication, the parties have had the opportunity to utilise appropriate levels of expertise to assess and present their positions in respect of the disputed matter, and exhaust their efforts to amicably settle the matter by negotiation. Albeit, the time spent on presenting and negotiating one’s position must be proportionate to the complexity of the disputed matter; for a straightforward issue, it may take a few days to ensure that all efforts for an amicable settlement have been exhausted.

The advantages of a well-rehearsed dispute include:

  1. Full presentation of arguments by the parties provides an opportunity to understand their own strengths and weaknesses, and have a better understanding of their, and the other party’s, entitlement;
  2. The likelihood of an amicable settlement rises significantly (time and cost efficiency);
  3. Even if the dispute is not fully settled by negotiation, the dispute could be narrowed down and/or at least crystallised;

Certain risks would be involved if the claimant refers the matter to adjudication without having first properly assessed its claims and communicated it to the other party. The risks may include the following:

  1. Lack of a proper understanding of the parties’ positions, may result in the lack of a real (crystallised) dispute, potentially raising jurisdictional challenges. There are a number of case laws in the UK that draw the line as to when a dispute exists; in Canada there is no clear definition (yet), which would require the parties to act with caution.
  2. By not properly presenting its case to the other party, and therefore not having a clear understanding of the other party’s position and counter arguments, the claimant may end up with unrealistic expectations from its own claim.
  3. By not utilising an appropriate level of expertise to assess their positions in first place, the parties may end up changing their positions during the adjudication process, e.g. an expert witness may point out an issue which was not raised before.In AWG Construction Services Ltd v Rockingham Motor Speedway Ltd (5 April 2004) the Court refused to enforce the Adjudicator’s Decision because an expert’s report changed the Referring Party’s contentions mid-way through an adjudication.

In 2018, Party-to-Party negotiation ranked the most common alternative dispute resolution method, taking over the top position from adjudication the year before, according to ARCADIS’s Global Construction Disputes Report 2019.

Most Common Alternative Dispute Resolution Methods

Source: Global Construction Disputes Report 2019 by ARCADIS 

Adjudication serves its intended purpose best when it is used for well-rehearsed disputes. If you intend to use it otherwise, do it at your peril.

Ali Fard - Driver Trett Canada

Driver Trett has more than 20 years’ experience in successfully helping its clients with adjudication.

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