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Sample Argumentative Essay on Enforcement of Adjudication Awards

Adjudication in the UAE: Enforcement of adjudication awards

Introduction

Alternate dispute resolution strategies form an essential aspect of business conflict resolution procedures. The different types of ADR strategies in use today include negotiation, adjudication, arbitration and mediation. According to Tamimi, arbitration is the most frequently used method for conflict resolution outside the judicial system and with utmost confidentiality[1]. However, most construction contracts provide a clause allowing adjudication in potential disagreements. Adjudication is mostly applied in cases where a party to a contract agreement fails to make due payments. Adjudication may also be applicable when payments are made for services not delivered to the expected quality[2].

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In the UAE, adjudication as a dispute resolution strategy is not clearly outlined in the statutory regulations. The expansion of the construction industry in the UAE has led to an increase in the number of cases requiring adjudication in recent times. In most cases, agreements drafted in foreign countries are more likely to include adjudication clauses as compared to locally drafted agreements. The enforcement, therefore, is often carried out under regulations set by the countries in which the agreements are made. The enforcement of adjudication awards is often times carried out subject to the International Federation of Engineers (FIDIC) contract agreement terms in Arab countries. The adjudication procedure should be in accordance with the construction Act requirements. On the other hand, most local contracts prefer arbitration as a dispute resolution strategy. Adjudication is included in FIDIC Contract forms as a second stage in the dispute resolution process, whereby the first stage is the Engineer’s trial to settle any dispute regarding claims[3]

This paper is aimed at discussing various concepts of the adjudication process, with specific focus on the enforceability of adjudication awards. Of particular importance to this paper is the nature of adjudication awards, their enforcement and the challenges involved in the enforcement of adjudication wards in the UAE. In accomplishing the purpose of this paper, the provisions of the adjudication process will be based on common international adjudication regulations as the adjudication process in the UAE is often carried out under foreign statutes.

Adjudication Awards

In various countries, amendments to the construction acts are made to make construction contracts clearer and to encourage the use of adjudication as a dispute resolution strategy. It has in fact been ascertained that adjudication is the most favorable method of handling construction disputes. Another purpose of the amendments in construction law is to build fair payment regimes in the construction sector. It therefore follows that adjudication has the potential of ensuring that payments are made fairly and in a timely manner following the presence of clear construction contracts. In order for adjudication awards to be effective and enforceable, two major conditions must exist. First, the adjudication awards must be lawful and within the adjudicator’s jurisdiction. The process of adjudication is driven by the key theme of payment first and arguments later[4].

In order for the successful operation of adjudication, it is necessary that an effective statutory framework should exist that guides it. The courts must also give freedom to the enforcement of adjudication awards with minimum interference. Although no such framework exists in the UAE, adjudication cases are handled by the Dispute Adjudication Boards, which prove to be just as efficient[5].

Enforcement of Adjudication Awards

The enforcement of adjudication awards is often carried out through an experienced court or through the use of an independent dispute adjudication board. The International Federation of Engineers (FIDIC) contracts outline terms for the use of adjudication for procedural dispute management. In some of the Emirates in the UAE such as Dubai, the dispute adjudication board takes the central position in the application of adjudication[6]. The roles of the DAB with respect to dispute resolution revolve around ensuring that payments are made fairly in order to prevent disputes and to resolve disputes in case they arise[7]. In enforcing the adjudication awards, some factors have to be considered. First, the contract entered into must have been legal, the contract agreement must have laid down conditions for adjudication and the adjudication process must have been led by a qualified adjudicator.

The total time taken for adjudication proceedings to take place from initiation to enforcement is approximately 8 to 12 months. According to the FIDIC contract terms, provisions for adjudication cannot be made where the proposed adjudication procedure is not in compliance with the construction act of the country of enforcement, and/ or there is no written contract or the contract does not give provisions for adjudication. In each of these scenarios, adjudication cannot be applied in the dispute resolution[8].

In construction contracts, it is required that provisions for adjudication be made in writing. FIDIC also allows construction contracts to be in writing, or partially oral. However, without a written provision for adjudication, the adjudication process cannot proceed and there can be no enforcement of adjudication awards where the process leading to the award is controversial[9]. Adjudication should take place in an environment where there is a demanding timetable for the adjudication process. This helps to save time and costs in the adjudication process, a factor which can be borrowed for the improvement of the arbitration process. Adjudication is however the best dispute resolution method. Apart from having a written contract outlining the agreement to adjudicate in case of dispute and the conditions under which adjudication can occur, other conditions also exist for the enforceability of adjudication awards[10].

The second condition is the compliance of the adjudication procedure with construction laws and FIDIC contract terms. The adjudication process should take place within the jurisdiction of the adjudicator. It should also be within the confines of the agreement to adjudicate in terms of costs and time frame. Construction Acts in the UAE state that the costs of dispute resolution procedures such as adjudication should be shared between disputing parties[11]. Without the sharing of these costs, it is probable that the adjudication procedure can fail.

According to Hembling, a clear language should be used in the adjudication agreement to make it possible for courts to rule on adjudication without compromise[12]. In the enforcement of adjudication awards, it is recognized that the adjudicator’s decision is binding, final and enforceable in a court of law. Before an adjudication award is enforced, it is necessary that an application for the enforcement be made by the party to whom the enforcement is due (claimant). The application needs to be formal and it seeks monetary enforcement. This is because most adjudication processes rise around issues of payment in the construction business.

Apart from the application by the claimant for the enforcement to commence, another business that is carried out in the enforcement of adjudication awards is the application for declarative statutory relief from the obligations associated with the award enforcement by the defendant[13]. This however takes place after two major activities i.e. the payment must have been made and/ there has been a challenge to the adjudication award.

During the enforcement of an adjudication award, different stances are taken as to which particular section of the construction act to apply. The factors that determine the applicability of different sections of the construction act include whether the enforcement requires a monetary judgment or the issues at hand do not raise significant dispute. To determine if the case requires monetary judgment, several conditions must be established[14]. First, it must be ascertained that a contract existed between the disputing parties and the terms of the contract, especially where the contract was on oral terms. Secondly, the facts of the case and the contract must show that there was a duty of care entailed within the contract agreement. It must also be confirmed that relevant documents such as the contract agreement and the agreement on adjudication are present with the award. After confirmation of these conditions, monetary judgment can be considered. The adjudicator must however decide whether the engineer has tried to resolve the dispute before hand and the results of such an attempt[15].

In the standard enforcement procedure, the defending party is served with claim forms and other claim particulars within four months of claim issuance. Specific rules guide the delivery of witness statements, documents and reports from experts[16]. After the reception and analysis of various materials required for the case adjudication process, the procedure follows a pre-trial, trial and finally the judgment session. The case can however result in summary enforcement of awards where the defense does not provide a timely defense, if there is a requirement for judgment on a preliminary issue and when either party makes an application for summary judgment. In the first case, enforcement is issued against the defense at default. In the second case, the whole dispute may be resolved and the parties assisted to make settlement discussions while in the third case, a modified procedure may be applied[17].

On the other hand, if the enforcement does not comply with any of these conditions, the award cannot be enforced with monetary judgment. In case the case has been confirmed to involve an invalid contract or the terms of the contract are disputable, the enforcement requires a full trial instead of adjudication. The role of the adjudication process is always to reduce the time spent in extensive court proceedings that culminate into a judgment[18]. The cases of contract invalidity are therefore intensive and thus require similarly intensive processes. Other cases that can be subjected to alternative procedures include those in which there is a dispute about the organization of the contract documents, the adjudicator’s nominating body, where there is a nonexistent factual dispute, and where there is a dispute as to whether a duty of care existed prior to the contract breach. In each of these cases however, once the adjudication enforcement proceedings have begun, the decision cannot be made to use alternative dispute resolution strategies. The enforcement proceedings must therefore be tailored to match the provisions of the case at hand. On the other hand, in case the enforcement proceedings have not begun, alternative procedures are often advised depending on the case. The most commonly used alternative in the UAE is arbitration[19].

Sometimes adjudication awards are found to be unenforceable by courts due to the features of the awards or the nature of adjudication proceedings. For an award to be unenforceable, it must possess at least one of two characteristics. First, the adjudication proceedings may have been carried out by an adjudicator outside his/ her jurisdiction. Secondly, the awards may have been accorded based on a breach of natural justice. For cases adjudicated without the adjudicator’s jurisdiction, the decisions reached by the adjudicator are invalid. This can occur when the adjudicator acts where there is no construction contract, where the appointment of the adjudicator was un-procedural or where there is purported case. In either of these situations, the decisions reached by the adjudicator are invalid and cannot be enforced[20].

On the other hand, the breach of laws of natural justice occurs where the rights of individual parties to fair hearing that is carried out by an impartial tribunal are abused. In this case, the decisions made by the adjudicator are unenforceable[21]. The cases that fall within the breach of law of natural justice include where there is purported or actual bias in the case, procedural irregularity or failure to act impartially in deciding the case. This can occur when the adjudicator makes decisions on his own volition and without giving consideration to the claims of either parties or where the adjudicator decides the case devoid of prejudice correspondence.

According to Burns, the decision of the adjudicator is legally binding unless a subsequent arbitration or court proceedings decide otherwise or the parties involved in the case agree that the decision is no longer binding[22]. In this case, the adjudicator’s decision is enforceable regardless of whether the adjudicator made an error in reaching it. However, when it has been as ascertained that the adjudicator made an error in reaching the decision; it is allowed for the adjudicator to make changes relating to where there are obvious and clear errors in the cased decision and where the errors are corrected within a limited time span post publication of the decision.

Challenges in Enforcing Adjudication Awards

In the UAE, the major challenge that is faced in the enforcement of adjudication awards is the lack of statutory framework that can guide the adjudication process. The enforcement of adjudication awards in other countries is subject to the particular countries’ regulations and statutes[23]. With lack of such statutory frameworks, it becomes significantly difficult for parties carrying out constructions in the UAE to consider adjudication as a dispute resolution procedure. The implication of this in the UAE construction industry has been the persistent and increasing use of arbitration as a dispute resolution method even in the light of increasing advocacy for adjudication by the International Federation for Engineers. In order to address this challenge, the law of the UAE allows for the inclusion of adjudication clauses in construction contract agreements. It also prevents the Emirates’ courts from gaining the necessary experience with respect to the enforcement of adjudication awards despite the fact that Dubai hosts one of the largest arbitration centers in the world[24].

The second challenge to the enforcement of adjudication awards in the UAE is the lack of court experience in dealing with adjudication cases[25]. This is due to the limited use of adjudication as a method of resolving disputes in the UAE. This implies that as much as the courts may be willing to engage in the enforcement of adjudication awards, it may be difficult for them to decide complex cases that may need referral from previous cases. For instance, in the UK, it is easy to make decisions on the enforcement of adjudication awards by drawing from past case decisions and the law[26], while in the UAE, such past decisions are limited and there is no statutory provision for the enforcement of those awards.

A final challenge that is faced in dealing with adjudication awards is based on the ethical considerations of the case[27]. For instance, based on the contract terms and agreements, it may be unethical to coerce a party to the agreement to pay first and argue later as FIDIC contract agreements describe the conditions of contract. In addition to this, there is no method that can be used to determine whether the decision has not been made without a conflict of interest since there are no regulations.

Conclusion

The use of adjudication as a dispute resolution strategy in the UAE has not found wide application yet. However, the construction laws of the UAE allow the inclusion of adjudication in construction contracts. The major challenges to the enforcement of adjudication awards however, include: the lack of statutory frameworks that guide its operation, the courts do not have relevant experience in dealing with adjudication cases and there are also ethical issues that surround the enforcement procedure.

 

Words: 2870

Bibliography

Books

Redmond, John, Adjudication in Construction Contracts, (John Wiley and Sons 2001) Retrieved from  http://books.google.ca/books?id=DurFSKCZRP8C&printsec=frontcover#v=onepage&q&f=false

Klee, Lucas, International Construction Contract Law (Wiley Blackwell 2015) Retrieved from  http://eu.wiley.com/WileyCDA/WileyTitle/productCd-1118717902,descCd-google_preview.html

Tamimi, Al Essam, Practical Guide to Litigation and Arbitration in the United Arab Emirates (Arab and Islamic Law Series) (Amazon 2003).

Articles

Bunni, Nael, ‘Dispute Boards in the Middle East’ (2013) Paris: DRBF Conference Paper

Burns, Robert, ‘A study of the Impact of the Housing Grants, Construction and Regeneration Act 1996 and the Local Democracy, Economic Development and Construction Act 2009 on Resolving Disputes within an Industry which appears to embrace Conflict in the UK and a Comparative Global Study on ADR and Dispute Resolution Techniques and Applications’ (2009) Dissertation: Robert Gordon University.

Dennis-Smith, John, ‘Adjudication in the Construction Industry’ (1999) Society of Construction Law

Frame, Shona, ‘Challenges in Adjudication’ (2011) Construction Law.

Hembling, Barry, ‘Recent Developments in Adjudication’(2009) Fenwick Elliot.

Hickey, Alexander, ‘Weather Warning: Adjudication Hot-house Meets Depression. Precipitation Expected’ (2009) TECBAR Annual Conferen

[1] Tamimi, Al Essam, Practical Guide to Litigation and Arbitration in the United Arab Emirates (Arab and Islamic Law Series) (Amazon 2003) 180.

[2] Bunni, Nael, ‘Dispute Boards in the Middle East’ (2013) Paris: DRBF Conference Paper

[3] Klee, Lucas, International Construction Contract Law (Wiley Blackwell 2015) Retrieved from  http://eu.wiley.com/WileyCDA/WileyTitle/productCd-1118717902,descCd-google_preview.html

[4] Frame, Shona, ‘Challenges in Adjudication’ (2011) Construction Law.

[5] Klee, Lucas, International Construction Contract Law (Wiley Blackwell 2015) Retrieved from  http://eu.wiley.com/WileyCDA/WileyTitle/productCd-1118717902,descCd-google_preview.html

[6] Bunni, Nael, ‘Dispute Boards in the Middle East’ (2013) Paris: DRBF Conference Paper

[7] Hembling, Barry, ‘Recent Developments in Adjudication’(2009) Fenwick Elliot.

[8] Hembling, Barry, ‘Recent Developments in Adjudication’(2009) Fenwick Elliot.

[9] Dennis-Smith, John, ‘Adjudication in the Construction Industry’ (1999) Society of Construction Law

[10] Dennis-Smith, John, ‘Adjudication in the Construction Industry’ (1999) Society of Construction Law

[11] Hembling, Barry, ‘Recent Developments in Adjudication’(2009) Fenwick Elliot.

[12] Hembling, Barry, ‘Recent Developments in Adjudication’(2009) Fenwick Elliot.

[13] Dennis-Smith, John, ‘Adjudication in the Construction Industry’ (1999) Society of Construction Law

[14] Klee, Lucas, International Construction Contract Law (Wiley Blackwell 2015) Retrieved from  http://eu.wiley.com/WileyCDA/WileyTitle/productCd-1118717902,descCd-google_preview.html

 

[15] Redmond, John, Adjudication in Construction Contracts, (John Wiley and Sons 2001) Retrieved from  http://books.google.ca/books?id=DurFSKCZRP8C&printsec=frontcover#v=onepage&q&f=false

[16] Redmond, John, Adjudication in Construction Contracts, (John Wiley and Sons 2001) Retrieved from  http://books.google.ca/books?id=DurFSKCZRP8C&printsec=frontcover#v=onepage&q&f=false

[17] Frame, Shona, ‘Challenges in Adjudication’ (2011) Construction Law.

[18] Hickey, Alexander, ‘Weather Warning: Adjudication Hot-house Meets Depression. Precipitation Expected’ (2009) TECBAR Annual Conference Paper

[19] Frame, Shona, ‘Challenges in Adjudication’ (2011) Construction Law.

[20] Frame, Shona, ‘Challenges in Adjudication’ (2011) Construction Law.

[21] Frame, Shona, ‘Challenges in Adjudication’ (2011) Construction Law.

[22] Burns, Robert, ‘A study of the Impact of the Housing Grants, Construction and Regeneration Act 1996 and the Local Democracy, Economic Development and Construction Act 2009 on Resolving Disputes within an Industry which appears to embrace Conflict in the UK and a Comparative Global Study on ADR and Dispute Resolution Techniques and Applications’ (2009) Dissertation: Robert Gordon University.

[23] Frame, Shona, ‘Challenges in Adjudication’ (2011) Construction Law.

[24] Tamimi, Al Essam, Practical Guide to Litigation and Arbitration in the United Arab Emirates (Arab and Islamic Law Series) (Amazon 2003) 100.

[25] Hickey, Alexander, ‘Weather Warning: Adjudication Hot-house Meets Depression. Precipitation Expected’ (2009) TECBAR Annual Conference Paper

[26] Hickey, Alexander, ‘Weather Warning: Adjudication Hot-house Meets Depression. Precipitation Expected’ (2009) TECBAR Annual Conference Paper

[27] Frame, Shona, ‘Challenges in Adjudication’ (2011) Construction Law.

 

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