Introduction
Adjudication is an Alternative Dispute Resolution (ADR) mechanism where an independent neutral third party makes a decision on a dispute between parties. The decision is temporarily binding. The adjudicator acts in an intermediate capacity on the spectrum between expert determination and arbitration. Adjudication is a common method of dispute resolution in the construction industry around the globe due to its benefits which include speed, flexibility, use of experts to resolve disputes, cost effectiveness and privacy. As such, it has also found a place in the construction industry in Uganda on public works however the uptake is still low in the private industry. This article will address the nature of adjudication in Uganda and offer a critique of selected judgements from CADER that seem to conflate adjudication and arbitration as the same ADR mechanism.
Forms of Adjudication
There are three forms of adjudication, namely: statutory, contractual and ad hoc. On the one hand, statutory adjudication is a form of adjudication in jurisdictions like England and Wales where there is an Act that applies to a contract between parties. The Act in this case is the Housing Grants, Construction and Regeneration Act (HGCRA) 1996 as amended by the Local Democracy, Economic Development and Construction Act (LDEDCA) 2009. When a contract falls within the description of a ‘construction contract’ in the Act, then a mandatory provision of dispute resolution by adjudication applies.
Contractual adjudication, on the other hand, is a form of adjudication where an Act does not apply, but the parties have agreed a mechanism in their contract where they resolve disputes by adjudication. Lastly, Ad hoc adjudication refers to a form of adjudication where the parties have agreed to submit their dispute, without reservation, to adjudication, thereby giving an adjudicator impromptu jurisdiction to decide their dispute in circumstances where an Act does not apply and where there is no pre-existing contractual agreement to adjudicate. In Uganda, the most common forms of adjudication are contractual and ad hoc adjudication. Uganda does not have a statutory adjudication regime in place for the construction industry.
Standard Form Contracts and Adjudication in Uganda
Contractual adjudication in Uganda is common due to the proliferation of the use of Standard Form Contracts mostly on public projects and a few private projects. The common Standard Form Contracts in Uganda include the Public Procurement and Disposal Authority (PPDA) form of Contract, FIDIC forms of contract and the East Africa Institute of Architects form of contract which is usually used on building projects in the private industry.
It is critical to note that there must be a dispute in order for the adjudication process to become operable. Courts have held in the case of AMEC Civil Engineering Ltd v Secretary of State for Transport [2004] EWHC 2339 that the word dispute should be given its normal meaning and there is no special meaning ascribed to it. A dispute crystallizes when a claim made by one party is either accepted, modified or rejected by the other party as was held in the case of Fastrack v Morrison [2000] 75 ConLR 33.
The Adjudication process in the PPDA forms of Contract which are often used on public works has come under scrutiny in a number of cases at the Centre of Arbitration and Dispute Resolution (CADER) severally. CADER was established in the Arbitration and Conciliation Act 2000 in section 68 with a role of performing administrative procedures for Alternative Dispute Resolution processes which were mainly considered to be arbitration and conciliation. It was often the institution of choice for parties in appointment of adjudicators.
Selected Cases at CADER
Reference is made to the selected cases of Board of Governors, John Paul S.S Chelekura v Kheny Technical Services Ltd, China Jiangxi Corporation for International Economic and Technical Corporation v Cotton Development Organization, Namabale Enterprises Ltd v Busitema University and Plinth Technical Works Ltd v Hoima Municipal Local Government Council where the parties wrote to CADER requesting for the appointment of an adjudicator. All these cases had a similar dispute resolution clause which was adopted from the clause in the PPDA form of contract. The clause is replicated here for ease of reference:
“24. Disputes
24.1 If the contractor believes that a decision taken by the Project Manager was either outside the authority given to the Project Manager by the Contract or that the decision was wrongly taken, the decision shall be referred to any Adjudicator appointed under the contract within 14 days of the notification of the Project Manager’s decision.“
The clause further reads that:
“25. Procedure for Disputes
25.1 Unless otherwise specified in the SCC, the procedure for disputes shall be as specified in GCC 25.2 to 25.4.
25.2 Any Adjudicator appointed under the contract shall give a decision in writing within 28 days of receipt of a notification of a dispute, providing that he is in receipt of all the information required to give a decision.
25.3 Any adjudicator appointed under the contract shall be paid by the hour at the rate specified in the SCC, together with reimbursable expenses of the types specified in the SCC, and the cost shall be divided equally between the Employer and the Contract, whatever decision is reached by the Adjudicator. Either party may refer a decision of the Adjudicator to an Arbitrator within 28 days of the Adjudicator’s written decision. If neither party refers the dispute to arbitration within the above 28 days, the Adjudicator’s decision will be final and binding.
25.4 Any arbitration shall be conducted in accordance with the arbitration law of Uganda, or such other formal mechanism specified in the SCC, and in the place shown in the SCC.“
In this case, the SCC stands for Specific Conditions of Contract. The SCC provided for the procedure for disputes to be as specified in the GCC 25.2 to 25.4 which are shown above and then provided for the Centre of Arbitration and Dispute Resolution to be the appointing authority for the Adjudicator.
It should also be noted that the Contract defined an adjudicator as:
“1.1 (b) The ‘Adjudicator’ is the person appointed jointly by the Employer and Contractor to resolve disputes in the first instance.” (Emphasis added)
In the construction of this clause, the Executive Director of CADER stated that the definition of an adjudicator is synonymous with the function of the arbitration agreement set out in s.2(1)(e) Arbitration and Conciliation Act, Cap 4 which is replicated here for ease of reference:
“arbitration agreement” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of defined legal relationship, whether contractual or not.”
The Executive Director further proceeded to state that “there is no provision in the ACA, which restricts the definition of an arbitrator.” (Emphasis added)
He then adds that “I accordingly exercise the powers vested by S.11(4) ACA to appoint an adjudicator.” (Emphasis added)
This was a consistent construction of the clauses and conclusion in decision across all of these selected cases.
A Critique of these decisions
It can be noted that there is a conflation of arbitration and adjudication which are different dispute resolution mechanisms. It is true that the parties chose CADER as an adjudicator nominating body basing on the fact that CADER was in place to administer this function, but this does not in any way call for the use of the definition of an arbitrator in the construction of the clause. CADER ‘s role in this case was to appoint an adjudicator and not an arbitrator.
It should be noted that the parties had already defined who an adjudicator was in their contract and that the adjudicator had jurisdiction on disputes in the first instance. It can also be interpreted that there are two instances that the adjudicator would be called into action and that is when one of the parties was dissatisfied with the Project Manager’s decision but also when any other dispute crystallized between the parties as guided by the procedure for disputes in the SCC which was referenced above.
The arbitrator would only be called into action when one of the parties is dissatisfied with the adjudicator’s decision. Whereas the Executive Director mentioned that there is no provision in the Arbitration and Conciliation Act that restricted the definition of an arbitrator, it is also true that an arbitrator and an adjudicator serve roles which may be different and have outcomes that have differing degrees of finality. An adjudicator’s decision is temporarily binding while the arbitrator’s award is final and binding. Therefore, it can be seen that an arbitrator and an adjudicator are not one and the same.
Reference to an arbitration agreement is also faulty since in this case the parties were requesting for the appointment of an adjudicator for which they already had a pre-existing contractual mechanism to carry out that appointment and an Adjudicator Nominating Body named to do this. This contractual adjudication provision should not have been conflated with the arbitration agreement.
In conclusion, adjudication and arbitration are two different procedures on the ADR continuum and therefore should not be conflated to mean one and the same. As such, it would not be correct to appoint an adjudicator using a section in the Arbitration and Conciliation Act in a country like Uganda with no statutory regime governing adjudication in the construction industry. This is critical in a situation where there is a provision for contractual adjudication between parties. The Arbitration and Conciliation Act 2000 governs arbitration and conciliation in Uganda and does not provide a similar legal framework as the HGCRA 1996 does in England and Wales. In any case, England and Wales have HGCRA 1996 to govern mandatory statutory adjudication and the Arbitration Act 1996 to govern arbitration.
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