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Title: CONSTRUCTION - COMMERCIAL - CONTRACT - ARBITRATION - ADJUDICATION - MEDIATION - CLAIMS


1
CONSTRUCTION - COMMERCIAL -
CONTRACT - ARBITRATION -
ADJUDICATION - MEDIATION -
CLAIMS
TOMLINSON ASSOCIATES
HOME
LOGIN
INTRODUCTION
The Quest for the Essence of Arbitration
Mr Colin Tomlinson, Professional Graduate
Engineer who has studied both the MSc in
Construction Law and LLM in Commercial Law. A
Fellow of the Institute of Commercial Management,
Member of Institutes of Electrical Engineers ,
Chartered Arbitrators , Paralegals , Cost
Engineers , who now works as a consultant to
global companies .
For a presentation at Downing College
Cambridge for the Chartered Institute of
Arbitrators Summer Seminar
Web Site
www.tomlinson-associates.com
2
CONSTRUCTION - COMMERCIAL -
CONTRACT - ARBITRATION -
ADJUDICATION - MEDIATION -
CLAIMS
TOMLINSON ASSOCIATES
HOME
LOGIN
THE ESSENCE OF ARBITRATION ?
What is Arbitration Arbitration, a form of
alternative dispute resolution (ADR), is a legal
technique for the resolution of disputes outside
the courts, where the parties to a dispute refer
it to one or more persons (the "arbitrators",
"arbiters" or "arbitral tribunal"), by whose
decision (the "award") they agree to be
bound Wikipedia
What is the purpose of Arbitration?
Arbitration is generally used when all parties
agree to the process. Most commonly, it is used
because there is an arbitration clause in a
commercial or consumer contract. Arbitration is a
formal process in which an impartial third party
with specialist background knowledge on the
nature of your dispute hears all parties and
makes a binding decision to resolve it. Law
Society

To resolve disputes
But how is it to perform that function
Breaking News
Around 440 BC, Leucippus of Miletus and his
pupil, Democritus originated the atom concept
3
CONSTRUCTION - COMMERCIAL -
CONTRACT - ARBITRATION -
ADJUDICATION - MEDIATION -
CLAIMS
TOMLINSON ASSOCIATES
HOME
LOGIN
IN THE BEGINNING
In The Law Plato gives an example of the type of
dispute that would be Arbitrated around 350BC
But if any professional person sell any such
slave (with some defect) which most men would
fail to notice, to a layperson, the buyer may
claim restitution. (The) action shall be tried
before a bench of doctors nominated and chosen by
the parties. In this case Doctors were chosen
because of their particular skill to examine a
slave but appointment was only by the agreement
of the parties.
Plato writing around 350BC describes for want of
a better word the essence of Arbitration in
the failure to fulfil a contract If a man
fails to fulfil an agreed contract an action
should be brought in the tribal courts if the
parties have not previously been able to
reconcile their differences before arbitrators
(their neighbours that is). Plato, The Laws,
Translated by Saunders, Penguin books

Aristotle explains that the law in use is the Law
of Equity, It bids us remember ... to settle a
dispute by negotiation and not by force to
prefer arbitration to litigation -- for an
arbitrator goes by the equity of a case, a judge
by the strict law, and arbitration was invented
with the express purpose of securing full power
for equity." Aristotle Rhetoric 4th century BC
4
CONSTRUCTION - COMMERCIAL -
CONTRACT - ARBITRATION -
ADJUDICATION - MEDIATION -
CLAIMS
TOMLINSON ASSOCIATES
HOME
LOGIN
EQUITY
Aristotle considered the nature of equity and its
relationship to justice in his famous passage
from his work, Ethics. He concludes that equitys
role is to prevent the law from adhering too
rigidly to its own rules and principles when
those rules and principles would produce a
miscarriage or injustice. Equity permits
Arbitrators to depart from the legal principles
to promote justice or that was the original
concept if Aristotle is to be believed
The Romans started their invasion of Britain from
around 55 BC and with it came two types of law,
the first was the Codified Law and secondly was
Arbitration, the ability of the parties to
Arbitrate disputes in proceedings agreed between
the parties.
Cicero wrote "Nore would our ancestors permit to
be a Judex even in the most trifling money
matters, not to speak of offers concerning the
dignity of a man, unless the offering parties
were agreed upon him." I.e. to appoint a person
that the parties agree upon, again it can be seen
that the system worked on a version of the Law of
Equity rather than State Law.
Breaking News
54 BC Mrs Caesars little boy Julius decided on
a three month holiday to Briton
5
CONSTRUCTION - COMMERCIAL -
CONTRACT - ARBITRATION -
ADJUDICATION - MEDIATION -
CLAIMS
TOMLINSON ASSOCIATES
HOME
LOGIN
DEVELOPMENT OF THE LAW
Through the thirteenth and fourteenth centuries
the English Courts started to developed the
Common Law and the system of assumpsit.
Pleading a case became very intricate with only
certain avenues of address were open to the
claimant.
Aggrieved persons found that legitimate
complaints were rejected for failure to comply
with the technicalities of the requirements for
the submission of the pleadings and if the
complaint was not dismissed at first instance,
relief was in most case denied based on the lack
of a controlling statute or precedent.
Breaking News
The 100 Years' War was actually a series of
conflicts between France and England that began
in 1337 and ended in 1453
6
CONSTRUCTION - COMMERCIAL -
CONTRACT - ARBITRATION -
ADJUDICATION - MEDIATION -
CLAIMS
TOMLINSON ASSOCIATES
HOME
LOGIN
DIFFERENT SYSTEMS
The aggrieved plaintiffs therefore then looked to
the king whom in turn referred requests for
relief to the Chancery Court (defined as a court
with jurisdiction in equity). The Chancery
possessed the power to settle disputes according
to their conscience with little or no regard to
the Common Law hence the basis for the Law of
Equity.
The Chancery was seen as one of the four central
courts and the number of private cases had
increased dramatically. The reason for this was
the only remedy available to the Common Law
Courts was the award of damages, but the Chancery
had the ability to make an order of specific
performance or an injunction.
The Common Law and Law of Equity represented two
opposing values in the English Legal System. The
Common Law was created independently from the
Crown, whereas the Chancery and its use of the
Law of Equity developed as part of the duties
firstly imposed by Edward I of England due to his
annoyance at the number of cases coming to him

Breaking News
The 4 different Courts were at odds with each
other, Ecclesiastical, Chancery , Common, Jus
7
CONSTRUCTION - COMMERCIAL -
CONTRACT - ARBITRATION -
ADJUDICATION - MEDIATION -
CLAIMS
TOMLINSON ASSOCIATES
HOME
LOGIN
ISSUES BEFORE THE ACT
Had the parties entered in to a valid agreement
to Arbitrate and if so agreed to be bound by the
award? WROTTING v ALGOR (1405) Coram Rege Roll
575 BLOUNDELL v AKELEY (1471) YB 10 Edw IV
One of the problems was that any party could
revoke the Arbitrators authority before the
published award
There are several reported cases where a losing
party refused to acknowledge that an arbitration
took place. ASSER v BRADMOR (1405) Coram Rege
Roll 575
An alternative to the losing party was an attempt
to upset the award. Claims that the award had not
been published, or that it was incomplete may be
found FANE v PRIOR OF TONBRIDGE (1522) CP
Apr ANON (1522 or 1523)

One way round this was the introduction of the
Arbitration Bond which meant that if the loser
did not honour the award the other party would
call for the bond, and example is SCOTT v BERACRE
(1313) YB 6 7 Edw II where an award of 15 was
not honoured. S sued on a bond of 30 which
the parties had entered into to give effect to
the award.
Breaking News
Mrs Shakespeare's little boy William wrote a few
plays (1564 - 1616)
8
CONSTRUCTION - COMMERCIAL -
CONTRACT - ARBITRATION -
ADJUDICATION - MEDIATION -
CLAIMS
TOMLINSON ASSOCIATES
HOME
LOGIN
TYPICAL 15TH CENTURY EXAMPLES
In 1484 rivalry between the two guilds erupted
into violence during the Mayor of Londons river
procession, both guilds were in the habit of
racing each other and on this day the race got
out of hand with the result of injury and death.
The parties agreed to Arbitration and the
Arbitrators decision (Robert Billesdon) resolved
the issue by deciding that the Barges should
alternate between sixth and seventh place each
year, an equitable decision and giving rise to
the saying all at sixes and sevens.
in Wrotting v Algor (1405) the sheriff was
directed to secure a jury at Westminster to
enquire whether the parties had agreed to
Arbitrate and if so had the parties agreed to be
bound by the award of the Arbitrator
In Bloundell v Akeley (1471) a similar direction
was given so the jury could enquire into the
validity of an obligation under seal to refer to
arbitration and whether an award had actually
been published

Breaking News
The Houses of York and Lancashire fight The War
of the Roses 1455 - 1485
9
CONSTRUCTION - COMMERCIAL -
CONTRACT - ARBITRATION -
ADJUDICATION - MEDIATION -
CLAIMS
TOMLINSON ASSOCIATES
HOME
LOGIN
17TH CENTURY THREE WAY OF DEALING
The first was an arbitration commenced at Common
Law without the Court's involvement. This was the
traditional method of Arbitration whereby the
parties agreed on an Arbitrator who then
proceeded to determine the issues privately
between the parties without recourse to the
Court. Whilst the procedure was a judicial
process in that, in very limited and ill defined
circumstances, the parties could invoke the aid
of the Court by way of a Bill in Equity, it was
not subject to systematic Court regulation or
assistance.
The second form of Arbitration was a reference by
the Court in a pending suit. Since medieval times
the Court had recognised that Arbitration had a
role to play in the resolution of disputes. This
procedure had the advantages of, on the one hand,
enabling the parties to select the tribunal best
qualified to decide the dispute, or part of it,
while nevertheless retaining the sanction of the
Court for a party's refusal to proceed with the
arbitration.
The third method comprised reference to
Arbitration pursuant to statute. The success of
referrals to Arbitration in a pending action
culminated in an Act of 1698 which enabled
parties to make the reference a rule of Court.
That is, the parties could effectively register
their Arbitration agreement with the Court and
their agreement thereby became subject to a
similar sanction for non-observance as obtained
in suits commenced in Court and subsequently
referred to Arbitration

The acts main objective of the act was to render
an award more effective, and this can be seen in
the Act 1698 whereas it hath been found by
experience, that reference made by rule of court
have contributed much to the ease of the subject,
in determining of Controversies, because the
parties become thereby obliged to submit to the
award of the arbitrator, under the penalty of
imprisonment for their contempt in case they
refuse Submission
Breaking News
Change is afoot with the introduction of the
Arbitration Act 1698
10
CONSTRUCTION - COMMERCIAL -
CONTRACT - ARBITRATION -
ADJUDICATION - MEDIATION -
CLAIMS
TOMLINSON ASSOCIATES
HOME
LOGIN
JUDICIAL INTERFERENCE
The second basis for judicial review of errors of
law was in the form of a special case procedure,
which empowered Arbitrators to state a case on a
point of law for the Courts opinion. While
grounded in Common Law, the special case
procedure was given limited recognition in the
1854 Act and subsequently codified in the
Arbitration Act of 1950
In 1802, English Courts claimed the right to
interfere with an Arbitration Award for error of
law on the face of the award up to that point,
the decisions of Arbitrators on questions of law
had been conclusive, barring fraud or a similar
allegation
The wide degree of judicial oversight was
unpopular with Arbitrators and led to the
practice of Arbitrators detailing their reasons
for the award, hoping to avoid judicial review
however, the reasons were stated in a separate,
confidential document which prevented them from
being shared with a court for the purpose of a
substantive appeal
Breaking News
The first real attack come in 1802
11
CONSTRUCTION - COMMERCIAL -
CONTRACT - ARBITRATION -
ADJUDICATION - MEDIATION -
CLAIMS
TOMLINSON ASSOCIATES
HOME
LOGIN
NEXT 200 YEARS
In 1854 Common Law Procedures Act incorporated
into statute a Common Law remedy that had been
available for some time. Before the 1854 Act the
Arbitrator was able to ask the Courts opinion on
a point of law as a Common Law right, the 1854
Act empowered the Arbitrator to state a case on a
point of law for the Courts opinion and held the
Arbitrator duty bound to issues a valid award.
The Arbitration Act 1950 repealed all previous
statue. An important development was the
codification of the special procedures rule at
section 21, providing that, following a partys
request, an Arbitrator could state an award (or
part thereof) in the form of a special case for
the consideration of the High Court if the
Arbitrator refused the High Court could order him
to do so the Courts upheld the right to state a
special case.
The 1889 Arbitration Act repealed all previous
legislation in Arbitration and reintroduced
additional provisions encapsulated into the 1889
Arbitration Act as all encompassing, for the
first time making provisions for the appointment
of Arbitrators by Courts, setting out the terms
and conditions to be universally implied into
every arbitration agreement

Arbitrators, unless expressly authorised, have
to apply the laws of England. When they are
persons untrained in law, and especially when as
in this case they allow persons trained in law to
address them on legal points, there is every
probability of their going wrong, and for that
reason parliament has provided in the Arbitration
Act (1950) that, not only may they ask the courts
for guidance and the solution of their legal
problems in special cases but that the court may
require them, even if unwilling, to state cases
for the opinion of the court on the application
of a party to the arbitration if the court
thinks it proper.
Breaking News
What have we done ???.
12
CONSTRUCTION - COMMERCIAL -
CONTRACT - ARBITRATION -
ADJUDICATION - MEDIATION -
CLAIMS
TOMLINSON ASSOCIATES
HOME
LOGIN
1979 1996
The Arbitration Act (1979) abolished the general
power of the Courts to review a case for an error
in law on both the face of the award and by means
of a special review. After a judicial review it
was believed that the primary purpose of
Arbitration (namely, an efficient and final award
by a chosen decision maker) was effectively
thwarted by excessive judicial intervention. As
such, the 1979 Act limited the powers of judicial
review for an error of law
The intervention of the courts in arbitration had
to be tackled if England was to regain it success
as the world leader for Arbitration.
International parties do not want or require the
intervention of the English Courts in multi
national disputes. Commercial parties to disputes
see that excessive court involvement defeats the
purpose of the partys initial decision to
arbitrate in the first place, there is a loss of
confidentiality and addition cost of the Court
It was asserted that one of the reasons for the
introduction of the 1979 Arbitration Act was to
dispel the fear that the Courts were interfering
too much, but this approach did no work and it
was held that Court interference in Arbitration
was unacceptable, hence when the first draft of
the new Arbitration Act was produced in1994 such
was the chorus of disapproval that the whole act
was redrafted.


What I was faced with was the fact that
competing nations had gone a long way towards
improving their own arbitral procedures in the
light of the UNICTRAL model law, while here (UK)
no progress was apparent despite the years that
had passed by. In these circumstance it seemed to
me that while what had to be done was obvious, it
had to be done as fast as possible.
Breaking News
In the late Autumn of 1994 Lord justice Saville
assumed Chairmanship of the DAC and stated
13
CONSTRUCTION - COMMERCIAL -
CONTRACT - ARBITRATION -
ADJUDICATION - MEDIATION -
CLAIMS
TOMLINSON ASSOCIATES
HOME
LOGIN
THE LAW OF ARBITRATION
We are here to provide a service that meets the
requirements of our own times. Commercial men
require not only speed, economy, and
consideration in the procedures that we adopt
they also require, and expect to have the benefit
of fair judgment, based on common sense and
commercial reality. In a word, they expect that
we shall apply natural justice in the
dispensing of our judgment, in the same way that
we apply natural justice in our procedures.
Lord Justice Singleton said The duty of an
arbitrator is to decide the questions submitted
to him according to the legal rights of the
parties and not according to what he may consider
fair and reasonable under the circumstances

Mr. Justice Denning (as he then was) asserted,
There is not one law for arbitrators and another
for the Courts. There is one law for all, and
arbitrators are bound by it just as much as the
Courts.
14
CONSTRUCTION - COMMERCIAL -
CONTRACT - ARBITRATION -
ADJUDICATION - MEDIATION -
CLAIMS
TOMLINSON ASSOCIATES
HOME
LOGIN
HGCRA 1996
  • During the late 60s, 70s, and 80s we saw
    Arbitration fail on a number of points
  • Legalised
  • Expensive
  • Stopped being quick
  • Damage and reputation destroyed

Assertion of Blame Nobody played fair Pay
when Paid clauses in contracts Industry
practises in 80s
Statutory Adjudication was introduced on the 1st
May 1998 and incorporated into the Housing Grants
Construction and Regeneration Act 1996
(HGCRA). WHY???

Breaking News
What is to stop us ruining the process again
15
CONSTRUCTION - COMMERCIAL -
CONTRACT - ARBITRATION -
ADJUDICATION - MEDIATION -
CLAIMS
TOMLINSON ASSOCIATES
HOME
LOGIN
INITIAL DESCRIPTION
Adjudicate
  • There was initial opposition to Adjudication
  • Adjudication is not suitable for all types of
    cases
  • Protracted and costly
  • Uncertain outcome
  • Adjudicators fees have increased
    disproportionately
  • Interim not final
  • Problems with enforcement
  • An expensive way to flip a coin

Adjudication

100 DAY Arbitration
This presentation was one of many in the late
90s that went on to insist that Adjudication
would be costly . Adjudicator unlikely to have
legal/ procedural training???
16
CONSTRUCTION - COMMERCIAL -
CONTRACT - ARBITRATION -
ADJUDICATION - MEDIATION -
CLAIMS
TOMLINSON ASSOCIATES
HOME
LOGIN
THE LAST 12 YEARS
Costs to contractor estimated at approx.
40k Tecsa 1750/Day CEDR On
appointment AICA Dependant JCT/RISC
100 / Hr
  • Reasons for challenges in court
  • Lack of jurisdiction
  • No dispute
  • Contract not in writing
  • Breach of Natural Justice
  • Bias
  • Service of notice

The last 14 years have seen a multitude of cases
have been put before the courts, and most areas
have been challenged. But some of the issues are
the same. Costs Challenges Reasoned awards

Rupert Jackson, when in charge of the Technology
and Construction Court has raised questions as to
the suitability of adjudication for large complex
final account claims and professional negligence
claims. The increasing view is that to attempt to
squeeze a complex quart of a case into a pint
pot of the adjudication procedure gives a result
that is unfair and therefore unenforceable
17
CONSTRUCTION - COMMERCIAL -
CONTRACT - ARBITRATION -
ADJUDICATION - MEDIATION -
CLAIMS
TOMLINSON ASSOCIATES
HOME
LOGIN
SUMMARY
Should we look at adopting the UNCITRAL model of
arbitration ? Is the 100 day Arbitration model
of any advantage compared to Adjudication?
Arbitration started life as an equitable solution
to a dispute, we have seen that through judicial
interference this process has changed and with
the direct interference during 19th and 20th
century the demise of the English Arbitration
system with the estimated loses in the 1960s of
500 million.
What is the correct law for Arbitration or
Adjudication ? By using Judges Law are we in
breach of the laws of natural justice? Why do we
allow judicial interference? Is the skill base
correct for Adjudication?
John Riches recently talk was entitled We lost
Arbitration are we losing Adjudication
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