October 2012 Can Adjudication assist Abu Dhabi in achieving its Sustainability (Estidama) goals for the construction industry? Presentation by: Paul Straker FCInstCES, FRICS, FICE, MCIArb October 2012 1 October 2012 1
October 2012 (1) Can Adjudication assist Abu Dhabi in achieving its Sustainability (Estidama) Adjudication! goals for the construction industry? Presentation by: Paul Straker FCInstCES, FRICS, FICE, MCIArb October 2012 1 2 October 2012 October 2012 (2) (3) Estidama! The ICES survey on Dispute Resolution 2012! 3 4 October 2012 October 2012 How do these 3 relate? My Hypothesis! 5 6 October 2012 October 2012 1
October 2012 “I assert that Adjudication can significantly assist Abu Dhabi in The results of the ICES dispute achieving its Estidama resolution survey for Abu Dhabi (sustainability) goals for the 2012, support my assertion ! construction industry” How? 7 8 October 2012 October 2012 What is Adjudication? First some background • “A process whereby the [neutral third party] information. adjudicator who may not be a lawyer has to An Overview of Adjudication, reach a decision on matters referred to him Estidama & key findings from the [by] the complaining party”. (1.1) dispute resolution survey. 9 10 October 2012 October 2012 Who is the Adjudicator? What is an Adjudicator’s Decision? • After a dispute (rejection of a clearly defined • Either a single suitably qualified and claim) has been referred to the adjudicator for his experienced person / adjudicator. decision thereon. • Or a dispute adjudication board (DAB), • The adjudicator, acting fairly and impartially, shall comprising of 3 suitably qualified adjudicators. adopt suitable procedures, to make his reasoned decision within a limited time (usually 3 months). • Appointed as a standing adjudicator/DAB at • The adjudicator’s decision will be contractually commencement of the project; or on an ad- binding; unless and until revised in an amicable hoc basis; by the parties to the contract. settlement or an arbitral award. 11 12 October 2012 October 2012 2
October 2012 What are the alternatives? Dispute Resolution Options • In Abu Dhabi Arbitration is the preferred • The following are the more commonly used method of dispute resolution! Alternative Dispute Resolution (ADR) • However, methods. the Abu Dhabi Commercial, Conciliation and Arbitration Center (ADCCAC) • Discussed in order, from simple inexpensive also offer Conciliation prior to Arbitration. (3.0) methods, to the more complex, legalistic and • Other increasingly expensive methods. potential options: Negotiation ; Mediation ; Early Neutral Evaluation ; Expert Determination ; Litigation . 13 14 October 2012 October 2012 Negotiation Mediation • Theoretically gives the parties most control • The least adversarial dispute resolution over the dispute resolution process. method! • Without the intervention of a third party: “… • “… the facilitation, by a third party, of a typically consists of a sequence of proposals … negotiated agreement … in which the and counter proposals … that continue until mediator does not decide the dispute, but agreement is reached or negotiations break facilitates communication and problem- down …” . (1.2) solving by the parties” . (1.3) • Negotiations often break down ! • The optimum solution? But would it work? 15 16 October 2012 October 2012 Conciliation Early Neutral Evaluation • Provided by an independent third party: “… an • Utilizes similar techniques to Mediation, except: early, frank and thoughtful evaluation of the • Its more formalized. relative positions of the parties …”; (1.4) • Results in a settlement proposal , made by the • “… to enhance the prospects of a successful conciliator. negotiation …”; (1.4) • Its a means of amicable settlement. • “… by offering a realistic view of what might • Non-binding on the parties; therefore open to transpire if a case is fully prepared and tried”. (1.4) further dispute! 17 18 October 2012 October 2012 3
October 2012 Expert Determination Adjudication • Discussed earlier: internationally proven ; used • Used where the parties have appointed a third by the Multilateral Development Banks (incl. the party expert and: “… submit an issue for the World Bank) ; on projects worldwide. determination of a third party …” . (1.5) – FIDIC MDB Harmonised Construction Contract 2010 ; • Its “used primarily in disputes of a technical Clause 20.4, Obtaining Dispute Boards Decision; and throughout the FIDIC 1999 contracts; NEC3; JCT; etc. nature which require … an opinion on a specific issue or issues” . (1.6) • Limited cost , similar to conciliation. • Reaches an impartial and contractually binding • The parties may agree in advance, to be decision ; usually within 3 months. contractually bound by the determination. 19 20 October 2012 October 2012 Adjudication cont’d Arbitration • An independent, impartial and finally binding, • “The DB procedure amounts to serial adjudication private dispute resolution process; proven … over 90% of disputes referred to a DB will not worldwide. go beyond that procedure into arbitration or litigation …”.(Dr. Robert Gaitskell QC CEng) . (4.1) • Typically the default method, after the client’s • Speedy resolution ; thereby facilitating the works, own dispute procedure in the UAE; and the enhancing cash-flowand project delivery . final method under FIDIC contracts. • Disposes of the argument, before tensions build; • Award is enforceable in many countries thereby preserving business relationships . (pursuant to the New York Convention) ; therefore may be attractive to foreign parties. 21 22 October 2012 October 2012 Arbitration cont’d Litigation • Takes many months or 1 – 2 years to reach a • Settlement of the dispute through the courts. resolution. • A judicial process that is finally binding; • Formal, adversarial, typically with only one subject to appeal. Arbitrator in UAE. • May not be enforceable outside the UAE • Heard in private; but may still damage jurisdiction; therefore may not be attractive to business relationships. foreign parties. • Similar cost to litigation. 24 23 October 2012 October 2012 4
October 2012 Litigation cont’d • May take many months or years conclude. • Public hearing that may damage reputations. Estidama! • Can result in a breakdown of business relationships . 25 26 October 2012 October 2012 What is Estidama? Integration at its core! • Estidama is Arabic for Sustainability! • Estidama integrates the 4 pillars. • But with a difference. • What are its expectations of the construction industry? • It is comprised of 4 fundamental pillars • “To achieve significant environmental, social, – Environment. economic and cultural benefits, while ensuring – Economic. that the costs of the development are – Cultural. minimized.” (2.1) – Social. 27 28 October 2012 October 2012 Pearl Rating System for Estidama Comprises • A green building rating system. • Mandatory and optional sustainability requirements, to achieve: • Launched by ABU Dhabi UPC in 2010. – Minimum One Pearl Rating for all developments. • Mandatory for all construction projects. – Minimum Two Pearl Rating for government developments. – The maximum is Five Pearls. 29 30 October 2012 October 2012 5
October 2012 How? Pearl Rating Categories (2.4) • Integrated Development Process • “An essential part of the strategy for achieving Estidama is to fundamentally change the way • Natural Systems we approach design, construction and real • Livable Buildings estate development”. (2.2) • Precious Water • To achieve Pearl Credit Points, under the Pearl • Resourceful Energy Rating Categories. • Stewarding Materials • Innovating Practice. 31 32 October 2012 October 2012 Integration Innovation • Has • Has the further potential to benefit from the potential to benefit from Adjudication. Adjudication. • Integrated Development Process: • Innovating Practice: • “Encouraging cross-disciplinary teamwork to • “encouraging innovation in building design deliver environmental and quality and construction to facilitate market and management throughout the life of the industry transformation ” . (2.6) project” . (2.5) 33 34 October 2012 October 2012 Estidama Implementation • I propose to you; that Adjudication would be • Currently the focus of the Pearl rating system the most effective dispute resolution appears to be on design and construction. procedure; for Abu Dhabi, as it: • The benefits of adopting the most efficient – Integrates the team dispute resolution process are not usually – Results in a contractually binding decision considered. – Gives a quick solution at moderate cost. • The UPC could help to facilitate the adoption • Adjudication achieves Integration and would of adjudication; by awarding significant credit be regarded as Innovative at present times. points for its demonstrable and beneficial use. 35 36 October 2012 October 2012 6
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