This was largely the experience in the UK until adjudication was introduced to the construction industry in 1998. Adjudication is really expedited arbitration. Under the statute all construction disputes, of whatever complexity, can be referred to adjudication and are to be determined within 28 days. The referring party can unilaterally extend this by 14 days; thereafter any extension is by consent of the parties only. Most would agree adjudication has been a huge success. This is supported by the relatively few cases that go beyond the adjudication decision.
Yes it is very unfortunate that the arbitration proceedings are being run as judicial process. In India and UK the arbitration is a big business! Lust of money and fast bucks a reason? I am also undergoing a similar pain in one of arbitration proceedings and is being forced to settle the matter with a hole in the pocket.
I totally agree with Mr.Julian in adopting adjudication as an alternative to resolve disputes through arbitration. In fact I have just finished drafting a construction agreement and would consider to have an adjudication clause.
Unfortunately there is plenty of evidence that adjudication in the UK is also getting more time consuming and expensive. Orignally intended as a quick and cheap method of interim dispute resolution, to be implemented while the project was on site, adjudication has become much more legalistic and costly.
As an adjudicator I rarely get disputes referred for projects still on site. The costs mean that most disputes are saved for a battle a the end of the job, somthing adjudication set out to avoid. I sometimes get large and complex adjudications tha simply cannot be done in 28 days….or 42. I have heard of some adjudications (although none of mine!) going on for a number of months and costing several hundred thousand pounds.
Unlike arbitration, UK statutory adjudication is not final and binding in the same way. It is interim bindng and the parties may have the dispute finally determined in the courts or by arbitration, depending on what their contract states. So, adjudication MAY be cheaper, but without the same finality and generally, unlike adjudication each party has to bear its own costs, so even the winner has to bear its costs.
UK adjudication does appear to be working and few disputes get referred to the courts. However, that has not stopped it from becoming much more costly and time consuming, things that abitration has been blamed for, although perhaps not quite to that extent….yet!
I am also what is known as an Adjudicator in the Small Claims Court of Nova Scotia. The court hears tort and contract claims up to a limit of $25,000.00 Can. The court’s procedure is very flexible and could in fact be described as a form of expedited arbitration. People may and do represent themselves. There is no pre-hearing disclosure or discovery. The only real requirement is that claims be “adjudicated informally and inexpensively but in accordance with established principles of law and natural justice.” Costs are not awarded.
All of this means that the court is an avenue for both the poor and the middle class, the latter beng a class that is increasingly being denied access to the superior courts because of the cost of litigation.
Perhaps ironically it was my experience as an Adjudicator (as well as a civil litigator) that led me to arbitration. My fear is that arbitration–the purpose of which is at least in part to make justice more accessible to “ordinary” people–is ossifying. Which is too bad.
For those of you thinking of inserting an adjudication clause into your contracts, you might want to consider having a dispute board. This is one or three people appointed jointly by the parties at the outset of the contract.
The DB is provided with the contract dosuments and regular updates and carries out 3-4 site visits per year. The advantage of this process is that the DB can help the parties to avoid disputes by helping them to discuss contentious issues before the become real problems. The parties may request the DB give a non binding recommendation to help this process. Evidence suggests that just by having a DB helps the parties to resolve many issues themselves.
If all that fails then a party may refer a dispute to the DB which will adjudicate the dispute and give an interim binding decision. The deecision is usually enforecable under the contract (ultimately by arbitration), because unlike in the UK, most local courts will not enforce an adjudication decision
A distinction between domestic and international commercial arbitration has to be made. Furthermore there are countries such as England which have a large number of very small arbitrations (often only about a few hundred Pounds) und f.e. the Rravel Association scheme.
For International commercial Disputes there is no alternative to Arbitration. Cost vary widely. While some Arbitral Institutions are rather costly and may even not accept small scale arbitrations othe Institutions provide the same service and cost a fraction of the expensive ones.
Therefore in International contracts particular care should be given to the arbitration agreement which usually is an orphan not taken seriously by those who negotiate the contract.
For domestic arbitration one should look at England where the system works well and this also applies to construction disputes the majority of which are decided by two tier arbitration clauses requiring the parties to attemt a settlement by adjudication, mediation etc.
Justice Aftab Alam of Indian Supreme Court in the matter of M/s Dolphin Drilling Ltd vs Oil And Natural Gas Corporation has observed that it is unfortunate that arbitration in India has proved to be a highly expensive and time consuming means for resolution of disputes.