What is Adjudication
Adjudication is a speedy and effective means to resolve contractual or commercial disputes (especially on construction or building related disputes) by means of a neutral, independent and impartial adjudicator.
The adjudicator is a legal practitioner or construction professional with knowledge and experience in adjudication and the subject matter of the disputes. In comparison to open litigation and arbitration, adjudication as an alternative dispute resolution (ADR) method is generally speedy, more flexible and cost-effective.
Statutory Adjudication and Contractual Adjudication
The HKSAR Government and Courts are promoting the use of adjudication to resolve disputes. There are two types of adjudication, namely statutory adjudication and contractual adjudication.
For statutory adjudication, the adjudicator’s decision is binding to the parties on the disputed issues in the applicable law and the contract. However, the adjudicator’s decision is subject to parties’ appeal to Court or can be amended by an Arbitration Tribunal later. For contractual adjudication, it is based upon the principle of party autonomy in which the parties agreed that disputes in the contract will be decided by an independent adjudicator based upon the contract and applicable law. Adjudicator’s decision is binding to the parties subject to their rights to appeal to Court or further amendment by an Arbitration Tribunal.
Proposed Security of Payment Legislation in Hong Kong
The Hong Kong SAR Government (HKSARG) and the Construction Industry Council (CIC) have conducted comprehensive and industry-wide surveys on payment practices in the local construction industry since 2011. The surveys revealed significant payment problems experienced by main contractors, sub-contractors, suppliers, consultants and sub-consultants etc.
Hence, the HKSARG had proposed to adopt the experiences of overseas jurisdictions and introduce Security of Payment Legislation (SOPL) to resolve some of the existing payment problems for Hong Kong, especially on late or default payment, pay-when-paid clauses. The proposed SOPL will, as from a future date, apply to all contracts entered into by the Government (and a list of public bodies), and all relevant private sector contracts for new buildings with contract value exceeding $5,000,000 (or $500,000 in the case of professional services and supply only contracts). The HKSARG proposal listed 31 specified statutory and/or public bodies and corporations that will be covered under the SOPL.
The results of the consultation carried out in 2015 by the HKSARG were published in April 2016. The Hong Kong Institute of Arbitrators (HKIArb), as one of the leading professional bodies in arbitration, mediation and ADR methods had participated and responded in the consultation. The HKIArb had offered two comprehensive and professional training programmes in 2016 and 2017 for qualified professionals and construction industry practitioners to learn about the SOPL, use of adjudication in resolving disputes under the legislation, and to assist qualifying individuals to address the future demand for accredited adjudicators under the scope of the proposed SOPL. Successful candidates who meet the criteria of the HKIArb Council had been admitted into the HKIArb List of Adjudicators.
Pilot Scheme on Private Adjudication of Financial Disputes in Matrimonial and Family Proceeding
Practice Direction on the above Pilot Scheme – S.L. 9 issued by the Courts had commenced in 2015. Parties can agree to submit their financial disputes in matrimonial and family proceedings to adjudication. The Adjudicator’s decision is binding to the parties and subject to their rights to appeal to Court.
HKIArb List of Adjudicators
The HKIArb Council had set up a List of Adjudicators for statutory and contractual adjudication. The adjudicators in the List shall demonstrate sufficient knowledge or experience in adjudication. Legal practitioners or construction professionals who had completed the training and met assessment criteria in HKIArb Adjudication Training and Assessment Programme are eligible to apply to be included in the List.
• Website – HKIArb List of Adjudicators to be provided by Secretariat.
• Website – Selected HKIArb Adjudicators will have CV attached in web-link similar to existing practices.
HKIArb Adjudication Rules and Adjudication Clause
Appointment of Adjudicators by HKIArb
HKIArb provides the services of adjudicators appointment and administration for both statutory adjudication and commercial adjudication.
Code of Ethics
Adjudicators are obliged to take necessary CPD training according to the requirements set up by the Council of HKIArb. Adjudicator shall conduct the adjudication process in accordance with the applicable laws, rules for adjudication and Code of Ethics set up by the Council of HKIArb. Adjudicator shall also explain clearly the process of adjudication to the parties.
Brief CV of Chair of Adjudication Committee
To be provided separately to Hon. Secretary.