ADR, Arbitration

Huberman appointed to construction dispute adjudication board

By AdvocateDaily.com Staff

Ontario’s new mandatory adjudication system for construction disputes could transform the industry in the province, says Toronto lawyer and arbitrator Marvin Huberman.

The interim dispute resolution process is a key plank of the “prompt payment” regime brought to the province by Bill 142, the Construction Lien Amendment Act, which finally came into full force this October, almost two years after its passage by the legislature at Queen’s Park.

“I’m very excited about how this will all shake out,” says Huberman, the editor of A Practitioner’s Guide to Commercial Arbitration. “If you can get the right people doing the right things at the right time, it holds great promise in terms of improving the efficiency of the entire construction industry.”

He explains that construction disputes are notoriously complex. Covering a wide range of issues across the spectrum of a project, including problems with the bidding process, incomplete or faulty designs, ambiguous contract clauses, disagreements over scope and cost overruns, the possibility of time-consuming and expensive litigation has always weighed heavily on the minds of industry participants, he tells AdvocateDaily.com.

However, the Bill 142 amendments — widely hailed as the most significant advance in construction legislation in decades — aimed to tackle the issue with a series of reforms, including the mandatory adjudication procedure, which kicks in when one party raises a contractual issue related to the value of services or materials, payment, set-off and release of holdback, among others.

Huberman was recently named as one of just 13 adjudicators certified by the Ontario Dispute Adjudication for Construction Contracts (ODACC).

Written decisions are expected to be delivered within 30 days following the receipt of documents from the party initiating the hearing, while adjudicators’ decisions are temporarily binding and enforceable by court order. Appeals may be launched in court, but only with leave from Ontario’s Divisional Court.

“It’s a statutory regime that is brand new to Canada, geared to having a construction dispute referred quickly to an independent third party for a decision, and it seems like a fantastic idea,” Huberman says, noting that the template for Ontario’s prompt payment regime was set by similar systems in the U.K. and other European jurisdictions.

The process has a number of the hallmarks of traditional arbitration, says Huberman, who notes that hearings are conducted in private, with details only entering the public domain if one side elects to proceed with an appeal in court. Parties are also able to choose their own decision-maker from the ODACC registry, with a process in place for the appointment of an adjudicator if they are unable to agree.

On the flip side, Huberman acknowledges that particularly large and complicated or document-heavy disputes may not be as well-suited to the new process.

“There is a concern that the emphasis on speed may have a negative effect on the submissions and evidence presented by the parties, as well as the quality of decision-making,” he says.

The interim nature of the decisions issued by ODACC adjudicators could also cause some parties to regard the whole process as pointless, but Huberman says the experience of other jurisdictions, including the U.K., suggests that stakeholders have embraced the “rough and ready” nature of the regime.

“With the passage of time, they could go at the end of the project to litigation or arbitration for a final decision, but it doesn’t tend to happen,” he says. “They seem to be placing a high value on continuity of the project: keep the show on the road and the cash flow going.

“Few cases involve huge amounts of money, and they’re happy to let interim decisions hold while the project carries on,” Huberman adds.

Still, he says there is a possibility that parties may use the new process to ambush or frustrate construction project partners they have fallen out with.

“In my view, most of these challenges can be addressed by capable adjudicators with good case management and people skills that they can apply appropriately to the case in front of them.”

The adjudication provisions came into force on Oct. 1, and Huberman and his ODACC peers are now waiting for their first appointments to settle disputes over contracts signed after that date.

“It’s just a matter of time before the first batch arrives, and we can see how it plays out over a period of time,” he says.

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