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Jon Gilbert
White & Case, London

In November 2024, the United Nations Commission on International Trade Law (UNCITRAL) published a series of specialised express dispute resolution model clauses covering adjudication, highly expedited arbitration, technical advisers and confidentiality. This article looks at some of the notable features of UNCITRAL’s model adjudication clause^[1] and considers whether any of the clause’s concepts could be deployed in relation to dispute board proceedings on construction projects.

UNCITRAL’s adjudication clause

In summary, UNCITRAL’s adjudication clause sets out a contractual adjudication regime under which:

• a dispute is decided within 30 days by a sole adjudicator: in the model clause, this period is in square brackets, suggesting that the parties are invited to consider this timeframe and amend as necessary when drafting their dispute resolution provisions;

• the adjudicator is appointed on an ad hoc basis, that is, only once a dispute arises and solely to decide that dispute;

• the decision is interim binding, that is:

– the parties must immediately comply with the decision; and

– if a party is unhappy with the decision, it can refer the dispute to arbitration, but it still must comply with the adjudicator’s decision in the meantime; and

• adjudication is optional, that is, a party can go straight to arbitration and bypass the adjudication process if it wishes.

The clause is intended for use across various industries. However, much of it will be familiar to those involved in construction projects, as being generally consistent with the mechanisms for adjudication (either statutory adjudication where this applies or contractual adjudication) or binding dispute board proceedings.

Notwithstanding the above, there are some notable features of UNCITRAL’s adjudication clause that may be of interest to those in the construction industry. In this article, I look at three key features and consider whether they could be used to improve dispute board proceedings on construction projects (specifically those that result in a binding decision, sometimes referred to as dispute adjudication board proceedings).

A point to note is that, where a construction contract is subject to local legislation that provides a mandatory right to adjudication, the scope to incorporate features from the UNCITRAL clause may well be restricted.

Enforcement

The enforcement mechanism is arguably the most interesting feature of UNCITRAL’s model clause.

According to comprehensive data on global dispute board proceedings published by King’s College London in December 2024, when asked how often parties voluntarily complied with binding decisions of dispute boards, the responses were as follows:^[2]

• always: 32 per cent;

• most of the time: 38 per cent;

• sometimes: 13 per cent;

• rarely: ten per cent; and

• never: eight per cent.

The above figures indicate that, even if a dispute board decision is binding, whether or not it is actually complied with is a different matter. In fact, compliance with binding decisions was not significantly better than compliance with non-binding recommendations.^[3]

While some jurisdictions (eg, England and Wales) have developed efficient and effective regimes to enforce statutory adjudication decisions in their national courts, the enforcement of dispute board decisions remains a problem. On international construction projects, a barrier to enforcement is the time and cost it can take to obtain an arbitral award to enforce the terms of the dispute board decision.

Sophisticated contracts, such as FIDIC contracts, contain a specific mechanism to refer a failure to comply with a dispute board decision to arbitration.^[4] Even though such arbitration should only consider the unsuccessful party’s failure to comply with the decision, rather than the underlying merits of the dispute, it can still be a costly and slow process. While recent years have seen the introduction of expedited arbitration regimes in several institutional rules, these often apply only to low value disputes and/or require consent, so are unlikely to be available for enforcing most dispute board decisions.

The UNCITRAL model adjudication clause seeks to address the above concerns by providing for ‘compliance arbitration’ as a mechanism to enforce the decision. As is the case in FIDIC contracts, for example, the proceedings are limited to the question of whether a party has breached its contractual undertaking to comply with the interim decision, without taking into account the underlying merits of the dispute (although enforcement can be refused where there has been a breach of natural justice). However, the key difference is that the clause provides for arbitration to be conducted under the UNCITRAL Expedited Arbitration Rules that are then modified to make the process even quicker. For example:

• the parties have seven days to reach agreement on the appointment of a sole arbitrator (this is 15 days in the unmodified Expedited Arbitration Rules);

• the award must be made within 30 days (six months in the unmodified Expedited Arbitration Rules); and

• if extended, the total period for making the award cannot exceed 60 days (nine months in the unmodified Expedited Arbitration Rules).

The above process would enable a party to obtain an arbitral award within a very short timeframe. The costs of doing so should also be lower under this process. Obtaining the award then opens the gateway to international enforcement under the New York Convention.

Introducing a similar process into construction contracts, by which parties agree to the enforcement of dispute board decisions by way of highly expedited arbitration proceedings, could go some way to speed up the process for the enforcement of such decisions. In turn, this may even increase the voluntary compliance rate if the parties know an arbitral award can be obtained relatively quickly. Indeed, at the FIDIC International Contract Users’ Conference in December 2024 there was a high degree of interest in the compliance arbitration mechanism contained in UNCITRAL’s model clause.

Ability to limit the scope of the adjudication clause

The parties can select from two options when drafting the clause:

1. any dispute may be referred to adjudication; or

2. only certain types of disputes may be referred to adjudication (a footnote to the text of the clause suggests that adjudication could be limited to ‘claims solely for monetary relief’).

Dispute is widely defined as ‘[a]ny dispute, controversy or claim arising out of or relating to this contract, or breach termination or invalidity thereof’ (Article 1).

Dispute board proceedings play an important role in reducing the number of disputes that are ultimately referred to arbitration. In the aforementioned global disputes boards survey by King’s College London, 67 per cent of individuals said that subsequent proceedings, such as litigation or arbitration, were only commenced between zero per cent and ten per cent of the time.^[5] This suggests that, in many cases, the parties decide to accept the dispute board’s decision and avoid further escalation.

However, dispute board proceedings may not always be the best solution for every type of dispute and, in some cases, might be regarded as leading to wasted time and costs. The approach taken by UNCITRAL of providing the ability to limit the scope of the clause could encourage parties to turn their mind to this issue, and the role they wish dispute board proceedings to play, at the contracting stage.

What to include (or not include) depends on the nature of the project and the wishes of the parties. By way of example, in security of payment legislation, the scope of adjudication clauses is often limited to payment disputes. For example:

• in Victoria, Australia, the Building and Construction Industry Security of Payment Act 2002 provides for adjudication in relation to ‘payment claims’ (a similar approach is taken in other Australian states and territories); and

• in Hong Kong, the recently enacted Construction Industry Security of Payment Ordinance provides that adjudication proceedings may be initiated in relation to ‘payment disputes’.

By contrast, in the United Kingdom, parties have the right to refer any dispute arising under a construction contract to adjudication pursuant to the Housing Grants, Construction and Regeneration Act 1996, not just those relating to payment.

The adjudicator can decline jurisdiction

Article 1(g) sets out a short but potentially very significant provision: ‘The adjudicator may determine that the dispute is, in whole or in part, not suitable to adjudication’.

The Explanatory Notes provide some non-exhaustive examples as to when an adjudicator might determine that the dispute is not suitable to adjudication (paragraph 20):

1. the dispute is too complex to make a determination in the limited amount of time;

2. the adjudicator has expertise on technical matters and the dispute focuses predominantly on legal issues not suitable for that adjudicator’s determination; or

3. the relief sought is irreversible once performed or enforced and cannot be compensated by monetary payments.

Regarding suggested ground (1), complexity, this has been rejected by English courts as a basis on which the enforcement of an adjudicator’s decision can be resisted in the context of statutory adjudication.^[6] However, some may agree that, as a matter of practice, some disputes are arguably too complex for adjudication or dispute board proceedings given the limited time available. Including a mechanism in a construction contract by which a dispute board can decline to act where it considers the dispute to be too complex to determine in the time available could provide comfort to parties who are wary of seeing all disputes submitted to dispute board proceedings.

Suggested ground (2) appears to relate to the question of whether the specific adjudicator is suited to determine the dispute rather than whether the dispute is suitable for adjudication more generally. This may not be an issue in practice; a key benefit of having an ad hoc adjudicator or dispute board should be that the parties can select an adjudicator/board who is suited to determining the dispute at hand.

One fundamental risk of an adjudicator or dispute board having an express right to decline jurisdiction is the risk of satellite arguments during the proceedings around whether they should do so. Such arguments could also cause delays and/or problems during the enforcement stage, for example, an unsuccessful party may argue that jurisdiction should have been declined. Accordingly, if the parties are considering conferring such a power on the dispute board, it may be worth considering some safeguards, for example:

• an express statement that the dispute board’s determination as to whether the dispute is suited to dispute board proceedings is final and cannot be challenged; and/or

• a list of clear and defined circumstances as to when the dispute will not be suitable for dispute board proceedings.

Conclusion

The publication of UNCITRAL’s model adjudication clause is a welcome development. While much of it may seem familiar to construction lawyers, it contains some interesting features that could be usefully deployed in relation to dispute board proceedings on construction projects, subject to some safeguards. In particular, the use of highly expedited compliance arbitration as a way to enforce dispute board decisions could serve as an efficient and effective enforcement mechanism.

Any views expressed in this publication are strictly those of the author and should not be attributed in any way to White & Case.

Jon Gilbert is a Professional Support Lawyer in the Construction Team at White & Case in London. He can be contacted at jon.gilbert@whitecase.com.