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Standing adjudication and replacement of members

1 March 2017

The GCC 2010 Adjudication Board Rules (the Rules) define standing adjudication as a flexible procedure available to the parties, from the outset of the contract, for its full duration.  The intention is to have the adjudication board members (the members) on hand for the duration of the contract, to assist the parties in reducing conflict.

The parties are required, at the outset of the contract to jointly select one or three persons from the SAICE panel of standing adjudication members.  Failing selection by the parties, the president of SAICE, on application of either of the parties, will nominate the required person/s.

These persons are required to provide disclosure statements to the parties.  Once both parties are satisfied with these disclosure statements, the member/s are appointed by entering into the Adjudication Board Agreement (the Agreement) with the parties.

If a three-member adjudication board is required, the parties will jointly pick the chairman.  Failing agreement by the parties, the members will select their chairman, amongst themselves.

Clause 4 of the Agreement permits the parties to jointly terminate it.  This must be done individually with respect to each member.

But what happens if only one of the parties lose confidence in a member or members?  This is not specifically catered for in either the Rules or the Agreement.

The only guidance provided by the Rules is that in Rule 3.7, which states:
“If an Adjudication Board Member for any reason cannot or ought not to continue as Adjudication Board Member, the new Adjudication Board Member shall be appointed in the same manner as the Adjudication Board Member who is being replaced.” [Emphasis added]

While this explains the procedure to be followed in appointing new members, it does not establish the criteria for when a member “ought not to continue” as such.

The answer to this may be found, it is suggested, in Rule 6.3, which requires the adjudication board to conduct its proceedings in accordance with:
  1. The contract and the Rules;
  2. The principles of fairness and impartiality;
  3. Consideration for the wishes of the parties; and
  4. The rules of natural justice.

Rule 6.4.11 of the Rules authorised the members to settle any dispute regarding the Agreement and decide on their own jurisdiction.

While a loss of confidence in one or more of the members, should in and of itself lead such members to seriously consider whether they “ought” to continue acting or not, this could be countered by the knowledge that such allegations may be used by intractable parties to delay proceedings.  Should a party, however, be able to make a sufficiently strong case for the members’ failure to comply with the requirements of Rule 6.3, this may be more likely to sway the members in question.

Should they, despite being furnished with such argument, refuse to recuse themselves, it will support an objecting party’s case for damages for any future infractions, on the basis that the members were acting in bad faith, as per Rule 10.1.

Author: Michelle Kerr, Senior Associate