John reading book

What solutions do
third-party mediation
and adjudication offer?

A dispute resolution may require one or more regulated processes, where the parties to a dispute come to an agreed forum in an attempt to resolve their differences without adversarial court proceedings. These processes can constitute solutions in themselves, as they usually lead to an outcome which is positive for all parties.

Adjudication is a statutory dispute resolution process signed into law in Ireland on 25 December 2013, embodied in the Construction Contracts Act, 2013. In general, adjudication involves an independent third party who considers the claims of both sides and makes a decision. The adjudicator is usually an expert in the subject matter in dispute, and adjudicators are not bound by the rules of litigation or arbitration.

Adjudication offers immediate, binding and affordable relief, win or lose, with the opportunity of later revisiting contested issues in arbitration.

The Act came into full operation on 25 July 2016, following the ministerial order issued on 13 April. From that date, parties to a construction contract will be precluded from contracting out of the statutory adjudication process.

Under the terms of the Act, where payment disputes arise between parties to a construction contract, either may refer the payment dispute for adjudication, which will be concluded within a set period. Where the parties cannot agree on an adjudicator, the chairperson of the Ministerial Panel of Adjudicators will appoint an adjudicator from that panel to decide the dispute.

The Irish Act is, however, subtly different to the UK equivalent in so far as it is confined to a ‘payment dispute’ rather than ‘any dispute’ arising under a construction contract. However, the term ‘payment dispute’ has not yet been explicitly defined.

John advises: ‘The adjudication process is not for the faint-hearted. A claimant must have his ducks in a row before pulling the trigger. It is a fast and rough process where the adjudicator’s award is immediately enforceable and binding, and can only be overturned in a subsequent arbitrator’s award or by Court order.

“All the same, it is a welcome addition to the existing methods of settling disputes outside of court action — mediation, conciliation and arbitration. It will be quick, which saves in terms of costs. But anyone entering into adjudication must be ready to argue their entire case promptly, as the process is intended to be speedy and won’t be allowed to drag out.”

The party that commences the adjudication process must refer the dispute to the adjudicator within seven days of the appointment. The adjudicator must decide within 28 days from the referral date unless the parties or the appointing party agree to extend this period.

Photo by Roger Kenny.

For many years now, arbitration has been a leading form of dispute resolution for all kinds of commercial disputes. Like litigation itself, arbitration results in a binding decision that is enforceable in law. Unlike litigation, however, arbitration is private and can be adapted to suit specific disputes.

Under the 2010 Act, arbitration is a very serious business as there is virtually no chance of appealing a final award from the presiding Arbitrator. Parties should, therefore, have the very best advisors on board throughout this process. John Farage O’Brien provides this vital link between the technical facts of a dispute and the legal arguments pleaded before the Arbitrator.

Conciliation is, under most Irish standard forms of construction contracts, a mandatory step to be attempted before a dispute is referred to as binding Arbitration. It offers the parties a real opportunity to resolve their disputes with the benefit of a third party who will, both privately and openly, critically assess the strengths and weaknesses of their argument, and who will inject a reality check before entering the arena of arbitration.

Conciliation is usually quantitative, where the parties voluntarily engage an experienced, competent and independent third party who hears the arguments of both sides and suggests a solution. Conciliation is an extremely successful form of alternative dispute resolution and most construction disputes are resolved in this forum.

While court cases are open to the public and proceedings may be published, all dispute resolution proceedings take place in private, behind closed doors, and parties are generally bound by non-disclosure clauses in any settlement.

Depending on the conciliation rules adopted, if the parties fail to agree a settlement at the hearing, the Conciliator proceeds to make a written recommendation which is not immediately binding on the parties and can be rejected by either side. However, if the Conciliator’s recommendation is not rejected within an agreed time, it becomes binding.

The entire process is private, confidential and without prejudice, which means that no part of the evidence adduced during the conciliation can be used in a subsequent arbitration, and any findings or recommendations by the Conciliator are not under any circumstances disclosed to the Arbitrator.

Conciliation under the PWC forms of contract is, however, temporarily binding on the parties until overturned in arbitration. This means that the recommendation made by the Conciliator is temporarily enforceable and monies are paid out to the successful claimant — normally on the production of a suitable bond by the claimant.

Conciliation under this form of contract is more akin to the adjudication process explained previously.

John Farage O’Brien is highly experienced in representing parties at conciliation, having successfully settled and concluded many disputes between many parties. John is available to accept appointments by agreement of the parties, or appointments as a ‘standing conciliator’ in public works contracts.

Mediation is a process in which an impartial and independent third party facilitates communication and negotiation and promotes voluntary decision-making by the disputing parties to assist them in reaching a mutually acceptable solution.

Mediation is looked on very favourably by Irish courts. A party refusing an offer to mediate may suffer consequences in recovering its costs if the matter proceeds to court — even if that party succeeds. The mediator is a facilitator who encourages the parties to find a solution to their dispute without imposing his or her suggestions.

John FFF O’Brien has been appointed as mediator in several disputes by agreement of the parties — and with his assistance, the parties have successfully reached agreement themselves in these cases.