INTERNATIONAL ARBITRATION 1/3LY
MARKET COMMENTARY 41
REPORT ON CLYDE & CO CHINA CLUB PANEL DI SCUSS ION : REGIONAL PERSPECT I VES IN INT ERNAT IONAL CONSTRUCT ION ARBI TRAT ION
Arbitration and construction law practitioners recently congregated at Hong Kong’s China Club as part of Hong Kong Arbitration Week. Attendees enjoyed the club’s famous xiao long bao whilst listening to discussion between Clyde & Co partners on the different approaches to statutory adjudication and the impact on arbitration and other forms of dispute resolution in various jurisdictions. The event reflected in particular on the imminent Security of Payment (“SOP”) legislation currently under review in Hong Kong and expected to come into effect as early as 2016. The proposed legislation introduces a statutory adjudication scheme which is widely expected to be modelled on the UK’s framework. The scheme will be applied broadly to contracts across the whole construction industry in Hong Kong. It is likely to apply not only to payment disputes, but also to larger, more complex disputes involving claims for extension of time, delays and disruption costs. As a result, it is anticipated that the introduction of SOP legislation will have widespread consequences for the local construction industry and looks set to replace arbitration and litigation as the primary mechanism for resolving construction disputes. In the interests of discussing the implications of the proposed scheme for Hong Kong, Clyde & Co partners from the UK, Australia, Dubai, Singapore and Hong Kong shared the unique experiences and lessons of their own jurisdictions in dealing with adjudication. JohnMorris, Partner in Clyde&Co’s London office, gave an introduction to the stalwart statutory adjudication regime in the UK. The adoption of the adjudication scheme there, whichwas introduced as part of the Construction Act 1998, was driven by the desire to abolish bad payment practices and improve the cash flow of contractors. It was also intended to deal withworks being suspended for long periods whilst lengthy disputes were being resolved. With the introduction of adjudication, it became possible to obtain a decision in just 28 days – a process that previously required lengthy application to the court. This development significantly improved the window in which payment disputes could be resolved. Furthermore, every party to a construction contract nowhad the statutory right to adjudicate and there were only two circumstances inwhich enforcement could be challenged: (i) where the adjudicator did not have jurisdiction tomake the decision, and (ii) where there has been a serious breach of the rules of natural justice. By robustly enforcing adjudication decisions in the UK, the courts have allowed adjudication to develop amomentumof its own and a sizeable adjudication industry has nowbeen established in the UK. THE STALWART UNITED KINGDOM REGIME Introduction of the legislation and implementation
BY JAMES MCKENZIE, REGISTERED FOREIGN L AWYER AT CLYDE & CO
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