Adjudication under the Construction Contracts Act 2002
Adjudication is a fast-track dispute resolution process for construction contracts under the Construction Contracts Act 2002 (the CCA). The stated purpose of the CCA is to facilitate regular and timely payments, to provide for speedy and cost-effective dispute resolution, and to provide remedies for recovery of payments.
An adjudicator’s determination is normally available within 6-8 weeks, is binding on the parties, and may be enforced in the courts.
Adjudication provides only temporary finality, as the dispute may be later be referred to other dispute processes such as “a court or tribunal, or to mediation” (CCA s 26(1)). However anecdotal evidence suggests that adjudication is, more often than not, the final step in a dispute.
Key steps in the adjudication process are as follows
| Step |
Action |
Time Limit |
Responsibility |
| Notice of Adjudication [s 28] |
One party (claimant) serves notice of adjudication on another party (respondent) |
|
Claimant (may be payee or payer) |
Request adjudicator to act
[s 33] |
Request an agreed adjudicator to act.
If no agreed adjudicator, request an agreed nominating body to select person and request to act as adjudicator
If no agreed adjudicator or nominating body, request authorised nominating authority to select person and request to act as adjudicator
|
As soon as practicable; or
5 working days after service of notice of adjudication; or
5 working days
|
Claimant |
Confirm adjudicator appointment
[s 35] |
Selected adjudicator indicates availability; and
Confirms acceptance of appointment
|
2 working days after request to act
As soon as practicable
|
Adjudicator |
Adjudication claim
[s 36] |
Submit adjudication claim |
5 working days after acceptance of appointment |
Claimant |
Adjudication response
[s 37] |
Submit adjudication response
Adjudication continues if response late
|
5 working days after service of adjudication claim; limited entitlement to extend |
Respondent |
Adjudication proceedings
[ss 38-44] |
Adjudicator may call conference, conduct investigations, request details, etc as required |
|
Adjudicator. Parties must cooperate |
Issue written determination
[ss 45-49] |
Issue written determination with reasons |
Up to 20 working days after due date for response; adjudicator may extend to 30 days, or by agreement |
Adjudicator |
Adapted from Managing Contractors Cashflow – Making the Construction Contracts Act work for you. Rawlinsons 2003 (with permission).
- You may obtain information on the adjudication process through your legal advisor or an authorised nominating authority approved by the Minister under section 65 of the Construction Contracts Act 2002:
- Building Disputes Tribunal NZ Limited www.buildingdisputestribunal.co.nz offers a private dispute resolution service with full case-management service. No application fee applies.
- Arbitrators’ & Mediators’ Institute of New Zealand Inc. www.aminz.org.nz offers a nomination service. An application fee of $500.00 applies.
Arbitration under the Arbitration Act 1996
The parties to a dispute appoint an agreed arbitrator, who issues an award that is final and binding, with limited appeal rights.
Arbitration is governed by the Arbitration Act 1996 and conducted in accordance with the AMINZ Arbitration Protocol. The parties must have agreed to refer their dispute to arbitration.
Enquire about an arbitration appointment
Mediation
Mediation is a voluntary process where the parties engage an agreed mediator to facilitate a settlement between them, through a process set out in a mediation agreement.
As mediator I work with all parties neutrally and impartially, sometimes in separate meetings, to systematically identify the issues in dispute. Using joint problem-solving techniques we develop and explore options for resolution to meet the parties’ interests and needs, the goal being a settlement acceptable to all parties. How mediation is conducted depends on the parties and the nature of the dispute. Two-party mediation sessions are usually concluded within one day, although sometimes it is late at night before a mediated agreement is concluded.
As mediator I seek to facilitate agreement, not to give advice. I will not seek to impose an outcome, or make decisions for the parties, nor can I provide any assurance that the parties will reach a settlement at all.
Once the parties have agreed to my appointment a short preliminary meeting or teleconference will be called to sort out procedural matters including venue and timing, terms of engagement, and the agreement to mediate. Alternatively these matters may be sorted out by email.
I will ask the parties to provide a brief case summary, along with a bundle of agreed relevant documents, a few days ahead of the mediation. This allows me to become familiar with the background to the dispute, and to have an understanding of the issues between the parties. Summarising the situation also helps parties to focus their minds on the matters in dispute, and to ensure that they have all necessary documentation and relevant witnesses available for the mediation.
Enquire about a mediation appointment
Expert determination
Parties may agree to submit their dispute to an “expert” who will consider the parties’ submissions and issue a binding written decision on agreed terms.
The Expert may be nominated in the contract (as in NZS 3915:2003) or may be appointed by party agreement for a particular dispute when it arises.
Enquire about an expert determination appointment
Dispute Resolution Board (DRB)
Dispute Resolution Boards have been adopted on many major projects overseas particularly in USA and Europe, particularly under FIDIC contracts, and are only rarely adopted on projects in New Zealand. The DRB is best suited to major projects, comprising a panel of three respected independent neutrals, usually selected for their technical and dispute resolution skills; for example, legal, engineering and quantity surveying.
The DRB may be engaged under a tri-partite agreement, and attends scheduled meetings on site throughout the project in order to be familiar with all aspects of the project. As the primary role of the DRB is dispute prevention, the DRB takes an interest in risk management, and in the early identification of potential disputes. The conditions of the construction contract may provide for disputes to be settled by fast-track negotiation between senior management, only to be referred to the DRB for a decision if not settled quickly. Please refer to www.drb.org for more information on the DRB concept.
Given the small number of DRB appointments in New Zealand there are few experienced DRB practitioners. I am a member of Dispute Resolution Board Australasia Inc, and attended a DRB training course in Sydney in March 2008.
Enquire about a DRB appointment