LEGAL TALK with Hahn & Hahn Attorneys: Adjudication - Why it is faster and cheaper

It's time again for a legal talk with the Hon and Hon attorneys here on their EU radio and last Friday the poll are linked and asked the question, "If a construction payment dispute hit your project tomorrow, what would you reach for first?" The majority said, "It was 57%, my lawyer, 0% said arbitration and 43% said adjudication." So we joined by Yaku Aman from Hon and Hon attorneys today to actually find out what is adjudication. Yaku, welcome back. Hi, Yon, thank you very much, much appreciated. So just before we get to that, Yon, if we can deal with a poll and then there's responses. So normally I would agree with 57% of your listeners that said that what would you reach for first, which their response was my lawyer. So normally I would fully agree that is the very first thing that you do, except in adjudication. So hopefully when a client has adjudication prior to they being a construction payment dispute, their lawyer had educated them enough, so that the first thing that they reach for is already adjudication without having to call their lawyer. And that is the basis of adjudication. So keeping that now in mind. So adjudication is what we call a contractual dispute resolution process, which of course is now very big words, but all it means is that in your contract, the parties provide for they choose adjudication as a first point of the purchase. So you've now got a payment dispute, a contractual dispute, and then ideally before you run to lawyer, you first follow the adjudication process. Now either party can refer it to an adjudicator. Now this adjudicator is normally an independent and a suitably qualified professional, which the parties agreed upon in the contract. Now unlike litigation going to court or arbitration, your adjudication isn't designed to deliver a final, unappealable answer. It is designed specifically to give the parties a quick and binding decision so the project can keep moving. The adjudicator's decision will be binding and it has to be complied with immediately, even if one party later wants to challenge its suit arbitration or litigation. Okay. Well, Yaku, it sounds a feeling on paper, but practically, why does it end up fast and cheaper? Okay. So a few reasons. The first one is your timelines are very strict and a lot shorter. So most of your contracts require a decision within 28 days of referral and sometimes even less. Now compare that to litigation going to court or which can be years before you even get to trial. The second is the process is far less formal. We don't get your normal pleadings exchange and there's no lengthy discovery process and typically also no oral hearing unless of course you're adjudicated, besides one is needed. But often it's dealt with on paper. Your submissions, your supporting documents and that sort of thing is all on paper. And then thirdly because the decision maker is usually a construction professional rather than a generalist, generalist judge. So you're not spending time and money educating the judge there on the bench. It's normally you'll have it as an engineer or quantity surveyor or an architect, that's sort of thing. So they already understand the process. Now and the negative thing there is that I dispute that might cost hundreds of thousands and rents of rent and take two to three years in court can often be resolved in adjudication within a month or so and then of course at a fraction of the cost. Okay. And Jakku win is adjudication that right to and win isn't it? So it's best suited for disputes that needs to be resolved while the project is still running. Payment disputes. Let me give you an example. You are the contractor, the client in other words the employer, they're not paying an invoice. And in terms of the contract, they must pay the end of the month. Now the project isn't finalized yet and you want that employer to pay you so long so that the project can proceed then you go to adjudication. You say to the adjudicator, I've done X, Y and Z, the employer doesn't want to pay me. You put your paper, you say yeah, I've submitted my payment certificate for argument and say it shows that I've built up to the fourth level of bricks of the house and no reason has been given for me not paying. And then the client, the employer has to give reasons why he's not paying. And the reasons can't then be something that is only at the end that sort of thing because that's not the purpose of adjudication. The purpose of adjudication is to while the project is still running, thought out those payment disputes or extension of time claim. You can then later go on and fight the bigger fight and that is when normally your arbitration will come in. And that's why it's less suited for your highly complex disputes that's got large and multi-layered claims. It's also worth remembering that adjudication is only available if it is provided for in your contract. So if you don't have a clause in your contract that says that matters must first be referred to adjudication, then you don't have that right to remember because adjudication is a voluntary process between the parties. The parties need to agree to go to adjudication. So if the parties in their contract, in their JDCC contract which we spoke about in the past or the other type of construction contract agrees to adjudication, then you can go to adjudication. Okay. And any final advice for someone dealing with a lie of dispute right now? Don't set on it. The strength of adjudication is speed and that only works if you act quickly once a dispute crystallizes. Gather your documents, understand your notice periods that's in your contract and get the necessary advice early if you haven't done so already. A well-run adjudication can resolve a dispute in weeks rather than years. Remember the principle on adjudication is as it is normally set out in your construction contract is a scholar. Let me say, me as the contractor, I take you as the employer to an adjudication tribune right now. Formalize my statement of claim for adjudication. If I win, you have to pay me. Then you can still take me on arbitration but that doesn't suspend your payment obligation. Now if using payment 100,000 yen because adjudication is right then you must pay me. If the arbitration later finds that Yaku was wrong, then I ask to repaint. But the whole process for adjudication is so that the project doesn't stand still. Plus, these are the next things. People often, as the defense, just try to push people around and cause delays, that sort of thing. But if you've now already had to pay the 100,000 yen for argument sake, then you're going to think twice, on whether you want to go to arbitration or not, and hence why it is so effective. Interesting. Yaku, thank you so much for joining us today and for sharing that with us. Thank you, Ian. Always nice talking to you. Likewise, that was Yaku Aman from On and On attorneys. For this week's Ligo Talk. Are you all your business in trouble and struggling to find a solution? Call Han and Han attorneys as we assist clients in finding solutions. We specialize in consumer and food law, commercial and construction law, forensic investigations and administrative law, visit Hanlaw.co.z. That's H-A-H-N, we assist clients nationwide, Han and Han attorneys, because we care. Don't miss Ligo Talk with Han and Han attorneys, when's their morning's at 10 on E-Radio.