28.5.1 Contractors may try to include disputes between the Authority and the Contractor under the Contract in the list of Relief Events on the basis that they cannot continue work until the dispute is resolved. This issue arises during the construction phase in particular. This should not be allowed. The Contractor (and the Sub-Contractors) should not be permitted to "down tools" just because a dispute has arisen. If no other course of action can be taken (usually towards the end of the construction phase, but also at critical stages), then the issues involved can give rise to relief.
28.5.2 The Contractor must be under an obligation to carry on with the Service in accordance with the Authority's wishes while any dispute is being carried on, even if this involves building or covering over construction works which may need rebuilding or opening up if the dispute is resolved in the Contractor's favour. The Contractor must rely on the expert or arbitrator awarding adequate compensation if the dispute is resolved in the Contractor's favour.
28.5.3 The Authority should recognise that if the dispute is resolved in the Contractor's favour, the Authority will typically be liable for the Contractor's costs. These could include any extra costs incurred in rebuilding (such as staff costs and materials costs) and any resulting costs incurred by the Contractor if a delay to Service Commencement results. Delays caused by the Authority failing to comply with the relevant dispute resolution procedure should be taken into account in the arbitrator's determination.
Required drafting is as follows:
28 Dispute Resolution
(a) Any dispute arising in relation to any aspect of the Contract shall be resolved in accordance with this Clause.
(b) If a dispute arises in relation to any aspect of this Contract, the Contractor and the Authority shall consult in good faith in an attempt to come to an agreement in relation to the disputed matter.522
(c) Without prejudice to paragraph (b) above, either party may give the other notice of intention to refer the dispute to adjudication and the adjudicator shall be selected in accordance with paragraph (d) below.523
(d) The Adjudicator nominated to consider a dispute referred to him shall be selected on a strictly rotational basis from the relevant panel of experts appointed in accordance with the following:
(i) there shall be two panels of experts, one in respect of construction matters (the "Construction Panel") and one in respect of operational and maintenance matters (the "Operational Panel").524 All the experts on each panel shall be wholly independent of the Contractor, the Authority, the relevant Sub-Contractor and any of the major competitors of the Contractor or relevant Sub-Contractor;
(ii) the Construction Panel shall be comprised of [3] experts who shall be appointed jointly by the Contractor and the Authority. Such appointments shall take place within [28] days of the date of this Contract;525
(iii) the Operational Panel shall be comprised of [3] experts who shall be appointed jointly by the Contractor and the Authority. Such appointments shall take place on or before the Service Commencement Date;526
(iv) if any member of a panel resigns during the term of the Contract, a replacement expert shall be appointed by the Contractor and the Authority as soon as practicable;
(v) if the Authority and the Contractor are unable to agree on the identity of the experts to be appointed to the panel(s), the President for the time being of the Chartered Institute of Arbitrators shall appoint such expert(s) within 30 days of any application for such appointment by either party.
(e) Within 7 days of appointment in relation to a particular dispute, the Adjudicator shall require the parties to submit in writing their respective arguments. The Adjudicator shall, in his absolute discretion, consider whether a hearing is necessary in order to resolve the dispute.
(f) In any event, the Adjudicator shall provide to both parties his written decision on the dispute, within 28 days of appointment (or such other period as the parties may agree after the reference, or 42 days from the date of reference if the party which referred the dispute agrees). Unless the parties otherwise agree, the Adjudicator shall give reasons for his decision.527 Unless and until revised, cancelled or varied by the Arbitrator, the Adjudicator's decision shall be binding on both parties who shall forthwith give effect to the decision.528
(g) The Adjudicator's costs of any reference shall be borne as the Adjudicator shall specify or, in default, equally by the parties. Each party shall bear its own costs arising out of the reference, including legal costs and the costs and expenses of any witnesses.
(h) The Adjudicator shall be deemed not to be an arbitrator but shall render his decision as an expert and the provisions of the Arbitration Act 1996 and the law relating to arbitration shall not apply to the Adjudicator or his determination or the procedure by which he reached his determination.
(i) The Adjudicator shall act impartially and may take the initiative in ascertaining the facts and the law. The Adjudicator shall have the power to open up, review and revise any opinion, certificate, instruction, determination or decision of whatever nature given or made under this Contract.529
(j) All information, data or documentation disclosed or delivered by a party to the Adjudicator in consequence of or in connection with his appointment as Adjudicator shall be treated as confidential. The Adjudicator shall not, save as permitted by Clause 26.9 (Confidentiality), disclose to any person or company any such information, data or documentation and all such information, data or documentation shall remain the property of the party disclosing or delivering the same and all copies shall be returned to such party on completion of the Adjudicator's work.
(k) The Adjudicator is not liable for anything done or omitted in the discharge or purported discharge of his functions as Adjudicator unless the act or omission is in bad faith. Any employee or agent of the Adjudicator is similarly protected from liability.
(l) If:
(i) there is any dispute in respect of matters referred to in [Section 13 (Change in Service)], [Clause 14 (Change in Law)], [Clause 15 (Price Variations)], Clause 21.1.3 (Compensation on Authority Default), [Section 21.2.5 (Compensation on Termination for Contractor Default)], Clause 21.3.4 (Compensation on Termination for Force Majeure), [Clause 21.4.4 (Compensation on Termination for Corrupt Gifts and Fraud)] Clause 21.5.2 (Compensation on Voluntary Termination) [or, Clause 21.5.5 (Compensation on Termination on an Authority Break Point Date)]; or
(ii) either party is dissatisfied with or otherwise wishes to challenge the Adjudicator's decision made in accordance with Clause [ ]; or
(iii) both parties agree, then either party may (within [28] days of receipt of the Adjudicator's decision, where appropriate), notify the other party of its intention to refer the dispute to arbitration.530 Such notification shall invite the other party to concur in the appointment of a sole arbitrator who shall be a solicitor, barrister or arbitrator recognised by the Chartered Institute of Arbitrators of not less than 10 years' standing (the Arbitrator). If the parties are unable within 14 days to agree the identity of the Arbitrator either party may request the President of the Law Society of Northern Ireland to make the appointment.
(m) The Arbitrator shall have the power to open up, review and revise any opinion, certificate, instruction, determination or decision of whatever nature given or made under this Contract, to vary or cancel the decision of the Adjudicator and, where appropriate, to order financial compensation to be paid by one party to the other. The arbitration shall take place in Belfast.
(n) The Arbitrator shall in his absolute discretion, make such procedural directions as he considers necessary such as ordering the parties to provide written submissions within such time period as he considers appropriate and/or to attend such hearings as he deems necessary.
(o) The Arbitrator shall deliver his decision on any matter referred to him within 28 days of concluding any hearings which may have been held in connection with the matter and in any event within 3 months (or such other period as the parties may agree) of his appointment. The Arbitrator's decision shall be in writing and shall state his reasons for his decision. The decision of the Arbitrator shall be final and binding on both parties. The costs of the arbitration will be in the discretion of the Arbitrator.
(p) The parties shall continue to comply with, observe and perform all their obligations hereunder regardless of the nature of the dispute and notwithstanding the referral of the dispute for resolution under this Clause and shall give effect forthwith to every decision of the Adjudicator and the Arbitrator delivered under this Clause.
(q) If any dispute arising under this Contract raises issues which relate to:
(i) any dispute between the Contractor and the Construction Sub- Contractor arising under the Construction Sub-Contract or otherwise affects the relationship or rights of the Contractor and/or the Construction Sub-Contractor under the Construction Sub-Contract (the "Construction Sub-Contract Dispute"); or
(ii) any dispute between the Contractor and the Operating Sub-Contractor arising under the Operating Sub-Contract or otherwise affects the relationship or rights of the Contractor and/or the Operating Sub-Contractor under the Operating Sub-Contract (the "Operating Sub-Contract Dispute"),
then the Contractor may include as part of its submissions made to the Adjudicator or to the Arbitrator, where the dispute is referred to arbitration, submissions made by the Construction Sub-Contractor or by the Operating Sub-Contractor as appropriate.
(r) The Adjudicator or the Arbitrator, as appropriate, shall not have jurisdiction to determine the Construction Sub-Contract Dispute or the Operating Sub-Contract Dispute but the decision of the Adjudicator or the Arbitrator shall, subject to Clause 28(1), be binding on the Contractor and the Construction Sub-Contractor insofar as it determines the issues relating to the Construction Sub-Contract Dispute and on the Contractor and the Operating Sub-Contractor insofar as it determines the issues relating to the Operating Sub-Contract Dispute.
(s) Any submissions made by the Construction Sub-Contractor or the Operating Sub-Contractor shall:
(i) be made within the time limits applicable to the delivery of submissions by the Contractor; and
(ii) concern only those matters which relate to the dispute between the Authority and the Contractor under this Contract.
(t) Where the Construction Sub-Contractor or the Operating Sub-Contractor makes submissions in any reference before:
(i) the Adjudicator, the Adjudicator's costs of such reference shall be borne as the Adjudicator shall specify, or in default, one-third by the Authority and two-thirds by the Contractor; and
(ii) the Arbitrator, the costs of the arbitration shall be in the discretion of the Arbitrator.
(u) The Authority shall have no liability to the Construction Sub-Contractor or the Operating Sub-Contractor arising out of or in connection with any decision of the Adjudicator or Arbitrator or in respect of the costs of the Construction Sub-Contractor or the Operating Sub-Contractor in participating in the resolution of any dispute under this Contract.
(v) The Contractor shall not allow the Construction Sub-Contractor or the Operating Sub-Contractor access to any document relevant to the issues in dispute between the Authority and the Contractor save where:
(i) the document is relevant also to the issues relating to the Construction Sub-Contract Dispute or the Operating Sub-Contract Dispute as the case may be; and
(ii) the Contractor has first delivered to the Authority a written undertaking from the Construction Sub-Contractor and/or the Operating Sub-Contractor (as appropriate) addressed to the Authority that they shall not use any such document otherwise than for the purpose of the dispute resolution proceedings under this Contract and that they shall not disclose such documents or any information contained therein to any third party other than the Adjudicator or Arbitrator or any professional adviser engaged by the Construction Sub-Contractor or the Operating Sub-Contractor (as appropriate) to advise in connection with the dispute.
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522 The parties may wish to incorporate some form of Alternative Dispute Resolution - if this is the case, government policy should be followed and SIB should be consulted. Developments in the market on Alternative Dispute Resolution will be kept under review. Any such procedure however should not result in the overall timetable ceasing to be compliant with the Construction Contracts Order. See footnote 527.
523 See footnote 517 above.
524 The parties shall consider how they wish to deal with disputes of a financial (rather than construction or operational) nature and ensure the Contract contains appropriate provisions. The parties may want to appoint a panel of financial experts in the way set out in Clause 28(d) or may prefer to appoint a financial expert by mutual agreement at the time of the dispute. As currently drafted, financial disputes could be referred straight to arbitration (see Clause 28(I)(i)) so parties may prefer to include an intermediate level of dispute resolution. The parties should also consider the likelihood of overlapping disputes arising of both a construction and operational nature. If such disputes are likely, a procedure will need to be developed for deciding which of the Construction Panel or Operational Panel should preside over the dispute's resolution.
525 It is essential that such appointments are made as soon as possible after Contract signature so that the panel is in place in time to deal with any construction disputes arising.
526 If operational disputes are capable of arising prior to the Services Commencement Date, an earlier date should be specified for such appointments.
527 The reverse can be specified. It is up to the parties to choose whether or not they wish reasons to be given. The parties should ensure that the relevant insurers and insurance policies will recognise the Adjudicator's decision and process claims accordingly if this is the case, as this could have important implications for both parties.
528 The timing of this process matches the fast track procedure set out in The Construction Contracts (Northern Ireland) Order 1997. The fast track nature favours the claimant as the defendant will be under time pressure to prepare its case-see Clause 28(e). The parties should consider if the timing is appropriate for all types of dispute envisaged and adjust the standard drafting if required.
529 This should be the case unless the parties agree that any relevant opinion, certificate etc. should be binding and conclusive on the parties.
530 The parties may incorporate provisions to go to court at this stage instead of arbitration if appropriate. In addition, the parties may wish to address expressly the right to apply to the courts for interlocutory relief at any stage in support of the adjudication or arbitration (assuming the arbitrator does not have such powers). If so, the need to appoint agents for service of process on overseas parties will arise.