The state of arbitration since the passing of the AA is provided by reviewing the comments by practitioners and academics published in articles together with research publications. Published articles, not involving research, express the
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36 opinions of the people writing the article and where there has been peer review, the concurrence of the reviewer/s. With respect to research, this is usually the considerations formed by analysing the answers of many people on particular matters investigated. Whilst therefore the opinions of individuals is of importance in determining the overall state of construction arbitration, in this thesis, it is the extent of research and what it has revealed so far about construction arbitration that is of primary importance. As referred to in section 1.7, this thesis is in respect of construction arbitration in England and Wales, however some references are from research into international arbitration. It is not that there is a major difference in arbitral processes, but with international surveys, respondents come from all corners of the globe where cultural attitudes to the same issue may vary between respondents. In addition, respondents may come from different legal backgrounds.
For example in a survey on international arbitration conducted by Friedland and Brekoulakis120, 48% of respondents were from a civil law background, 44%
common law background and 8% other legal backgrounds. This does not mean that all respondents were lawyers, but that there are different legal systems in different areas of the globe where respondents reside and respondents are likely to be influenced by the legal system they are familiar with.
3.2.1 Comments about arbitration contained in articles
Comments referred to generally follow a chronological order, as opposed to taking a particular feature and listing the various comments appertaining to that feature.
These comments are then assembled into distinct features for further consideration. Shilston121, before the AA was underway, said that the AA gave considerable encouragement to arbitrators, but that the traditional adversarial way had to be abandoned and replaced with trust and respect. Goode122 opined that aggression had to change to conciliation and co-operation. He considered that better case management was needed, involvement of party executives and reducing the volume of evidence. Some four years after the AA came into force,
120 Friedland, P. and Brekoulakis, S. (2012) 2012 International Arbitration Survey: Current and Preferred Practices in the Arbitral Process. Queen Mary University London.
www.arbitration.qmul.ac.uk/docs/164483.pdf Acessed21/05/2015
121 Shilston, A. (1997) The consequences of a sea change in English arbitration procedural practices.
Arbitration Vol.63(1)
122 Goode, R. (1998) Dispute Resolution in the 21st Century. Arbitration Vol.64(1). pp 12-14
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37 Uff refers to arbitration following court procedures and engaging in arbitration remaining costly123. A year later he speaks about the potential value of the AA, but contends that there are provisions within the AA that require development and that this would bring benefit to construction arbitration124. Parratt125 suggested that lawyers, particularly those not fully conversant with arbitration, felt out of their depth other than with standard court proceedings and resist methods that may achieve rapid progress through innovative means. Parratt also refers to a culture of conflict with winning being more important than a fair resolution of the dispute.
Whilst in an article relating to international arbitration, Hunter126 when referring to common law lawyers, suggested that they are taught to focus on rights and not interests of their clients, with victory being the overriding factor. It is the inability of arbitrators to control the time element and that this can result in the cost of the arbitration being more than the value of the claim, which according to Clinton and Jogi127 is putting people off of using arbitration. These early comments indicate that arbitration was conducted on adversarial lines with the aggression of common law litigation, that better case management was required to control cost, but that the AA provides potential for innovation by arbitrators and the parties to deal with these matters.
The continuing years from these early comments, the literature indicates there is little to suggest that arbitration in construction disputes has changed. Henderson and Dees128 considered that as the AA and the HGCRA came into effect in close proximity to one another, arbitration was not given the chance to show its strengths, due to the popularity of statutory adjudication129. In 2004, the Society of Construction Arbitrators devised a scheme for arbitration that gives a decision within 100 days. The time period does not start until the statement of the defence, or defence to the counterclaim, should there be one, has been submitted to the
123 Uff, J. (2001) Dispute Resolution in the 21st. Century: Barrier or Bridges. Arbitration Vol 67 No. 1 p.11
124 Uff, J. (2002) Arbitration With The Benefit Of The Construction Act. www.scl.org.uk
125 Parratt, D.G. (2001) Is construction arbitration failing Construction Law Journal. Vol 17 No.3 pp209- 215
126 Hunter, M. (2000) International Commercial Dispute Resolution: The Challenge of the 21st Century.
Nottingham Law Journal. Vol 9 Issue 1 p.60
127 Clinton, M and Jogi, Sonal (2001) Arbitration. www.nce.uk/arbitration/814123.article
128 Henderson, N. and Dees, D. (2004) Adjudication and the Emperor’s new clothes. Construction Law.
Vol. 15 Issue 8.
129 Allen, M. (2011) Construction disputes on the rise. Construction Law Vol22 Issue 8
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38 arbitrator. There is therefore some time consumed to get to the stage from which the 100 day period runs, however, this is according to Uff130, a mechanism to bring the parties onto an even footing. That is, both the claimant and respondent (this is the term in arbitration that is equivalent to defendant in litigation), have their cases before the arbitrator before time starts running. Uff also refers to statutory adjudication being the dominant procedure for resolving construction disputes and that other forms of dispute resolution must match themselves against statutory adjudication. Gaitskell131 considered that arbitration had been subject to the impact of statutory adjudication and mediation. Hughes and Freeman132 acknowledged that arbitration had become unpopular, but suggested that the 100 day arbitration was worth considering as it had most of the benefits and few drawbacks. It is the erosion of speed, cost, confidentiality and the problem of joinder of several parties into one proceeding that according to Bell133 has resulted in the construction industry moving away from arbitration. Bell also refers to domestic arbitration adopting traditional litigation procedures. Whilst referring to international arbitration, it is the opinion of Onyema134 that the quality of arbitral proceedings is largely dependent on the quality and skill of the arbitrator.
Newman commented on the decline of arbitration in the construction industry135. The comment referred to the JCT 2005 suite of contracts which are standard forms of contracts for use by the construction industry. In this version of their standard contracts, where the parties had failed to specify how their disputes would be resolved, there was a presumption in favour of litigation rather than arbitration. This has continued in the JCT 2011 suite, for example in the Design and Build contract it requires that if it is intended to use arbitration, it must be specifically stated. Newman suggested that this reflected a semi-official
130 Uff, J. (2005) 100-day arbitration: is the construction industry ready for it. Construction Law Journal Vol.21 Issue 1 pp 3-10
131 Gaitskell, R. (2007) International statutory adjudication: its development and impact. Construction Management and Economics. Vol.25 Issue7 pp. 777-784.
132 Hughes, J. and Freeman, K (2005) Around the world in 100 days. Construction Law. Vol.16 Issue 3
133 Bell, G.(2006) Construction arbitration- past and present. Construction Law. Vol. 17 Issue 6 pp 17-19
134 Onyema, E. (2005) Selection of arbitrators in international commercial arbitration. International Arbitration Law Review Vol. 8 Issue 2 pp 45-54
135 Newman, P. (2008) A fillip for arbitration. Construction Law. Vol.29, Issue 1. P26
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39 recognition that arbitration was in decline in the construction industry. Newman136 also suggested that, particularly where counsel is involved, arbitrators’ directions tended to replicate those of litigation. Ennis137 considered that the rise in adjudication mirrored the decline in arbitration. Ennis also went onto say that the arbitral process had moved towards a litigation style process due to its familiarity with lawyers. Cidoli del Ceno138 in an article about mediation, referred to arbitration being increasingly confrontational and similar to litigation with its associated costs.
It was thought by Harris et al when they wrote the 3rd. edition of their book in 2003 that arbitrators were responding to the philosophy of the AA, however by the time of their 4th. Edition in 2007, they considered there had not been any further progress in that regard. They commented that “There are no great recent signs in the adoption of imaginative time and cost saving procedures that might have been hoped for.” In an article from Pinsent Masons (a firm of solicitors)139, they commented that construction arbitration is not what it set out to be, it often adopts a litigation approach, with detailed pleadings, wholesale disclosure, long and detailed witness statements and lengthy expert reports. They questioned whether construction arbitrations will survive if they continue in this mode.
In an effort to reduce cost and duration, Limbury140 refers to a hybrid solution using mediation with arbitration using the same third party neutral for both parts of the process. He says that starting with mediation, if this fails to produce a resolution to the dispute, it can pass onto arbitration and the arbitrator will be “up to speed” due to information gleaned from the mediation part of the process. If the dispute is settled during the mediation, a contractual facility can be entered into to enforce the agreement. If the settlement is by arbitration, then it will be dealt with by way of an award. There is some concern, that from an international aspect, it may be
136 Newman, P (2009) Commercial arbitration Construction Newsletter 2009 Jan/Feb 4-5
137 Ennis, C. (2012) Arbitration of disputes in UK construction projects: what is left after adjudication?
Construction Law Journal Vol. 28 Issue 8 pp585-589
138 Cidoi del Ceno, J. (2013) A Process Account of Construction Mediation. International Review of Law.
Vol 2013, Issue 1 p 22
139 Pinsent Masons (2006) Construction Arbitration – Past and Present.
http://www.pinsentmasons.com/media/13167961.htm. accessed 16/02/11
140 Limbury, A. (2012) Med/Arb getting the best of both worlds. Law Society Journal Vol.48 Issue 8 pp 62- 65
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40 difficult to enforce a mediation agreement, Wolski141 however suggests arbitration followed by mediation and back to arbitration. With this the arbitration is commenced, giving parties the opportunity of agreeing a consent award, or going the full arbitration process. If it moves on to mediation, but fails to reach an agreement, it can go back to arbitration, or if an agreement is reached in the mediation, that agreement can go into a consent award, having the benefit that goes with enforcing arbitral awards. Mau142 investigated arbitration –mediation – arbitration using a convenience sample of arbitrators, mediators, advisers to disputants and parties involved in disputes. The survey used questionnaires with a five point Likert scale being used and receiving 180 responses. As Mau considered that there was a possible lacuna in the acceptability of this process in ADR, he conducted a small pilot study, which revealed that the majority of the respondents would not recommend the arbitration-mediation-arbitration procedure.
.
There are therefore many comments outlining apparent failings with arbitration that remain after the passing of the AA. There are many more references that could be included in the above, however they would only bulk out what has already been identified, rather than highlight additional problems of major consequence with arbitration. In addition, there are several PhD theses, which at first glance appear to be relevant, however they are not sufficiently connected to the subject matter of this study to provide any useful insight of a meaningful nature143.
141 Wolski, B. (2013) Arb-Med-Arb (and MSA’s) A whole Which is Less than, Not Greater than, the Sum of its Parts. Contemporary Asia Arbitration Journal Vol. 6 Issue2 pp 249-274
142 Mau, S.D. (2015) Arbitration to mediation to arbitration with the same parties in the same international commercial dispute before the same neutral: innovative evolution or recipe for disaster. Construction Law Journal Vol. 31 Issue 8 pp-429-463
143 Seriki,H.O. (2002) Judicial involvement & intervention in arbitration proceedings after the Arbitration Act 1996. PhD Thesis. Cardiff University; Pontin, N. M.-P. (1998) A comparative study of the context of arbitration and the powers and duties of arbitrators in the light of English, French, Scottish law and the ICC Rules. Ph.D. Thesis, University of Edinburgh; Brekoulakis, S.L. (2008) Arbitration And Third Parties PhD Thesis. Queen Mary University London.; Ren, Z. (2002) A Multi-Agent Systems Approach To Construction Claims Negotiation. PhD Thesis, Loughborough University; Sinclair, S. (2016) Designing+(dis)assembling disputes: an ethnography of disputes& lawyers in the construction industry.
PhD Thesis University of Westminster; Younis, G.E. (2010) Minimising Construction Disputes. PhD Thesis, University of Salford
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41 3.2.3 Continuing problems likely to affect the use of arbitration
Despite the intention of the AA to resolve the problems with arbitration referred to in section 2.3, problems still remain as previously described. Furthermore, there is real evidence of other methods of dispute resolution competing with arbitration in respect of resolving construction disputes. The general indications from these comments are:-
1. arbitration remains unpopular and in decline.
2. that duration and cost of arbitration remains a problem.
3. arbitral procedures continue to follow those of litigation.
4. arbitration has strong competition from other dispute resolution processes.
There are two concerns prior to the AA that do not, generally, reflect in the concerns raised by academics and practitioners post the passing of the AA. Prior to the AA, firstly there was concern about court intervention and secondly there was the concern regarding the complexity of the law governing arbitration. These two prior concerns do not now appear to be major concerns affecting the use of construction arbitration. These two issues aside, it appears that items two to four are the main drivers of the unpopularity of arbitration and its possible decline. As items one to four are derived from academic and practitioners comments, the next step is to determine what research has been undertaken in respect of these items.