MARKET COMMENTARY 45
LESSONS FOR HONG KONG So what can Hong Kong learn fromother jurisdictions’ successful and less successful experiences when structuring its own legislation? The panellists differed on themerits of the statutory adjudication process but agreed that there are plenty of hurdles to get over and that, whilst improving bad payment practices and the cash flow of contractors, the introduction of differing statutory adjudication schemes has been far froma perfect fit for all jurisdictions. Reflecting on the jurisdictions discussed, Ian Cocking, Partner in Clyde&Co’s Hong Kong office, noted that there will be a number of questions that will need to be addressed in Hong Kong, includingwhat safeguards will to be in place to avoid overuse or abuse of the adjudication process, such as has become common in the U.K. Varying approaches in Singapore and Australia raise questions as to whether adjudication in Hong Kong should be limited to payment disputes only, similar to the Australianmodel, or applywidely to all construction activities carried out (with some exclusions), as is the case in Singapore and has been proposed under the draft legislation. What party should act as the nominating authority for appointing adjudicators? How shouldwe be dealing with the potential bias that may arise? The salient Australian lessons appear to be that above all a consistency of approach is amust and that the risk of the potential for even perceived biasmeans that party-appointed adjudicators are to be preferred to the nominating authority model used in the East Coast. Beth Cubitt noted that a negative result of statutory adjudication schemes generally, and particularlywheremandatory, is that froma practical and commercial perspective, parties who lose adjudications are sometimes discouraged frompursuing the dispute through arbitration or litigation. In-house counsels have little impetus to pursue a dispute through costly arbitration or litigation processes when a positive outcome was not achieved disputing the same issues in adjudication. This has the undesirable consequence that adjudication, often intended to be for interim issues, acts in effect as a final forum for disputes. As can be seen from the canvassed jurisdictions, statutory adjudication has undoubtedly had a cooling effect on the use of arbitration and litigation to resolve construction disputes. Nevertheless, if it is to be introduced, it is clear that the adoption and success of the adjudication process in Hong Kong will require the cooperation and support of the courts to build user trust in the enforceability of the process. The judiciarywill need to demonstrate awillingness to support the framework with the same robustness that it has adoptedwhen other alternative dispute resolutionsmethods including arbitration andmediationwere introduced.
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