Role of the Modern Disputes Resolver
You can use an eraser on the drafting table
or a sledgehammer on the construction site.
Frank Lloyd Wright
Introduction
It may seem strange to consider the role of a disputes resolver, whether a mediator, adjudicator or arbitrator, in the context of project success; but the very nature of construction contracting, whether in commercial or residential building, infrastructure or technology development, is that there is considerable uncertainty which needs to be managed; particularly at award.
At that point in the project cycle, the owner’s requirements are often ill-defined (particularly in ICT, process and electrical & mechanical engineering); the design less than definitive; project risks inadequately investigated; owner expectations unrealistic, particularly where price is concerned; blind adherence to inappropriate procurement methodologies and standard forms; and incomplete assessment of physical, environmental and economic conditions prior to award.[1] Understandably, what owners seek is price certainty, assured quality and timely delivery within investing in procuring those certainties. Instead, competitive tenders are sought based on incomplete information. It can all look like a lottery.
In that context, it is very important to (1) identify and deal with multitude uncertainties, (2) establish working relationships, and (3) agree realistic dispute management.
Contract terms cover more than rules for carrying out the works and payment; they provide frameworks to deal with uncertainty and project development following award. As design is developed; the regulatory environment changes; site conditions become more challenging; markets and supply chains are disrupted; and weather or another events disrupt work, then the contractor will usually be allowed additional time and/or cost. Or not.
How that time and cost is dealt with is where problems arise.
Any consideration of contract dispute, alleged failure by a party or change in economic environment must be considered against the alternative of contract termination or project failure. A win in court will be cold comfort when a project has failed and the unsuccessful party in liquidation.[2] Pacta sunt servanda only goes so far!
Seeds of Disagreement
Disagreement over the cause, responsibility and impact of such events is almost inevitable, particularly if a tender or other competitive procurement process has been adopted. Most owners have fixed budgets, and contractors wish to be assured that their costs will be paid and their margins preserved. Following award, this introduces tension.
Project success can usefully be defined as the owner receiving a completed project of the quality anticipated, on time and within budget expectations; and the contractor making a reasonable profit. When quality is ill-defined, the programme based on owner’s needs, the design less than required for pricing and budget wildly optimistic, the contractor will be blamed for delays and cost overruns – the media reports on any recent Government procurement contract is illustrative of this point.
Yet the number of insolvencies in the construction industry, and project cost overruns and delays, would suggest that project success is eluding the industry – most specifically where public procurement is concerned.[3] If further confirmation is required, as has been widely reported, at 5.8% of GDP, New Zealand is in the top 10% of OECD spending on infrastructure, and in the bottom 10% in terms of delivery.[4] We are simply not procuring infrastructure effectively.
In any procurement process, appropriate allocations of risk and effective dispute avoidance is critical.
The Modern Disputes Resolver
Under most standard form construction contracts, there is a tiered approach to dispute resolution, starting with an interim binding decision, for example:
- NZS3910:2013 – Engineer’s determination (clause 13.2), followed by mediation (clause 13.3) and/or arbitration (clause 13.4) – note, all disputes must first be referred to the Engineer, and mediation is optional;
- NZS3910:2023 – review of Contract Administrator’s instruction by the Independent Certifier (clause 6.4), negotiation or mediation (clause 13.1 & 13.2), and arbitration (clause 13.3), which is un-preconditioned;
- FIDIC Red Book – determination by the Engineer (clause 3.5), Disputes Adjudication Board decision (clause 20.4), amicable settlement (clause 20.5) and arbitration (clause 20.6); and
- NEC4 – disputes referred to the tribunal, either arbitration or court selected by the parties (Contract Data).
In each case, adjudication under the Construction Contracts Act 2002 is available at any time (section 25), independently of any contractual disputes procedure (section 26), where a dispute arises (section 25(2)) under a construction contract (sections 5 & 6).
For the purposes of the AMINZ Construction Day, the questions posed below relate only to the roles of the mediator, adjudicator and arbitrator. As these roles are defined by the relevant contracts, and legislation in the cases of adjudication and arbitration, that consideration is relatively narrow.
This paper also considers the wider, at times extra-contractual roles, of the following:
- the Engineer under NZS3910:2013 and the FIDIC Red Book, and Independent Certifier in the case of NZS3910:2023;
- Disputes Boards under the FIDIC Rainbow Series of contracts;
- the probity auditor/peer reviewer; and
- CEDR’s Project Mediator.[5]
In each case, the approach is to provide a prompt and durable determination of a dispute on an interim basis which allows the work to proceed. This may involve a reconsideration of the commercial terms; that is less of a consideration for this paper.[6] In practise, arbitration as the final forum for binding determination is best handled after project completion, or earlier termination.[7]
Three questions were raised for the AMINZ Construction Day for discussion:
1. Are adjudication, mediation and arbitration fit for purpose?
The question rather begs a definition of fit for purpose; it also overlooks the extent to which project feasibility, procurement strategy and allocation of risk contribute to dispute, which is a question for another day.
Taking project success as a measure, the fitness for purpose of dispute procedures can be assessed against project efficiency – price certainty, quality assurance, timely delivery and contractor profitability. In the context where pre-contract investigation is seen as wasted expense and competitive tendering the norm, disagreement is inevitable; that disagreement morphing into formal dispute and warfare onsite, increasingly common.
The alternative is for (1) disagreement to be resolved without adverse project impact; and (2) when dispute arises, that its determination is timely, proportionate and durable.
Adjudication
As mentioned above, the adjudication of a dispute[8] under the Construction Contracts Act can be initiated by any party to a construction contract[9], being a contract for construction work[10] (each as defined), at any time. Once initiated, the respondent has no option but to engage in the process, unless it is prepared to have a default determination entered against it.
Determinations are binding, in that they can be entered as a judgment in court (see section 73 et seq); however unlike an arbitrator’s award, they are not final. The entire pay-now-argue-later ethos of the Construction Contracts Act is that the cashflow of the industry is to be preserved, with payment claims approved or disputed by payment schedules; and scheduled amounts paid, and adjudicators’ determinations complied with, without demurral.[11]
Any final determination of a disagreement is heard either in court or in arbitration de novo – as a new hearing with all relevant evidence presented and submissions made. The prior adjudicator’s determination is no more than advisory.
In practical terms, the opportunity to game this process has been too much for clients and their legal advisors to resist. While adjudication is intended as an interim measure, the norm has been that, after the expense and uncertainty of the adjudication process, determinations have become final; incurring even greater delay and expense in referring the dispute to arbitration for final consideration is just too much.
This is exacerbated by the following:
- time constraints – the timing of the process is entirely within the control of the claimant.
Construction disputes tend to be complex and documentation heavy. The average claim will include legal submissions (with authorities), witness statements, expert reports and volumes of documents. Most claimants have those documents well prepared, if not finalised, prior to issuing a notice of adjudication.
The respondent has no ability to raise a counterclaim, leaving the jurisdiction to be defined by the claimant.
The respondent then has 5 working days from the appointment of the adjudicator to respond, although that time limit can be extended by the adjudicator if it is considered necessary (see section 37).
Once the process of claim and response has been completed, the adjudicator then has 20 working days (which may be extended by a further 10 working days at the adjudicator’s option). The provision of reply and rejoinder under section 37A has no impact on this timing.
The provision for prompt determination is commendable, but for complex disputes, the respondent is often at a disadvantage, particularly where the claim has been prepared in advance – in that case, a claimant may serve a notice of adjudication (section 28), 5 working days later seek the appointment of an adjudicator by an authorised nominating authority (section 33(2)(b)) and then serve the claim and all supporting documentation on the respondent once the adjudicator has accepted appointment (section 37).
In all, 5 working days from receipt of the notice of adjudication.
- adjudicator appointment – 5 working days after serving the notice of adjudication, the claimant may seek the appointment of an adjudicator by an authorised nominating authority (section 33).
There is no obligation on the claimant to seek the agreement of the respondent to a suitable adjudicator; the norm is to apply to an authorised nominating authority for appointment; and there is no provision in the Act for the claimant to have a say in the final appointment, though preferences are commonly provided for.
The appointment is then made by the nominating authority.
Nominating authorities are appointed by the Minister under section 65. The Ministry of Business Innovation and Employment provides some guidance for applicants. There is currently no auditing function to ensure that such authorities are complying with the assurances given prior their appointment, nor any review of their continued suitability. There has been no post-appointment review of authorised nominating authorities discharging their statutory obligations.
We currently have a proliferation of authorised nominating authorities,[12] with adjudicators of varying expertise. The sole nominating authority with an accredited training programme, continuing professional development requirements to maintain accreditation and complaints procedure is AMINZ.
More choice does not necessarily make for better outcomes, and without any auditing function, the entire process lacks any assurance of quality (promises of peer reviewing notwithstanding).
For most disputes, the selection of the disputes resolver is one of the most important decisions the parties have to make. For any dispute, having a competent adjudicator selected by agreement between counsel has ot be preferable.
- time for determination – an adjudicator may extend the time for issuing a determination to 30 working days from the last day for lodging a response (section 46), and beyond that with the agreement of the parties.
This time period takes no account of the claimant’s reply and the respondent’s rejoinder (section 37A) or site visits, conferences or responses to any requests for further information by the adjudicator (section 42).
A claim for a variation (a common dispute) will invariably involve consideration of whether or not the variation is justified under the contract, entitlement to extensions of time, additional cost and time related costs, each with significant evidence and conflicting expert reports.
Determination of disputes over extensions of time have required more than consideration of the factual background. The accepted baseline for considering delay is outlined in the UK’s Society of Construction Law Delay and Disruption Protocol, now in its second edition. That protocol then needs to be applied to both contemporaneous records of what has happened on site and an analysis of the applicable construction programme under the terms and conditions of the contract.
That assessment invariably requires expert reports, which need to be understood by the adjudicator on the basis of onus of proof. It is the claimant-contractor typically seeking the extension of time, and the owner’s expert response need go no further than establishing that the claim has failed.
This is a rigorous assessment requiring an understanding of the Protocol and consideration of whether the claimant’s expert report establishes an entitlement, or if the respondent’s expert has properly challenged that claim. In such cases, it is not for the rebutting expert to establish what actually happened, but to answer the question of whether or not the claim has been substantiated.
- enforcement – once a determination is issued, it can be enforced without regard for any counterclaims, set-off or cross-demands (section 79).
In practical terms, the underlying dispute is unlikely to get fully considered in the adjudication, and the cost of re-litigating the dispute in arbitration unattractive.
It may seem that adjudication has resulted in an uneven playing field, with pretty unattractive results.
The reality is that adjudication has been very effective, but great caution is required to avoid the default provisions of the Act. Owners must be vigilant in responding to payment claims with valid payment schedules within the time limit provided for in their contracts; all contract documentation (contract, Engineer instructions, email communications and minutes of meetings) must be carefully saved and organised; and documentation to respond to any adjudication claim prepared in advance.
Immediately on receipt of an adjudication claim, the recipient will need to move quickly to prepare the response documentation.
The Act has been very effective in easing contract cashflows and adjudication has assisted with the prompt determining of some disputes. However, the process has made adjudication expensive, and the results variable, with gaining procedural advantage common. In practical terms, adjudication has displaced arbitration as being in reality the final determination of most disputes; from expense, delay and party exhaustion if nothing else.
Where adjudication has been effective is where the parties have limited and defined the issues in dispute, agreed on the most appropriate adjudicator, and tailored the procedure accordingly. This has worked well in complex infrastructure disputes where there has been reasonable disagreement, and a desire to get the dispute resolved so the project can proceed without further disruption.
Mediation
Mediation has become a one day litigation settlement negotiation, typically at a point where proceedings have been issued and discovery concluded. At least, that is frequently the advice given when mediation is proposed.
Certainly one day mediation has its place, but it falls short of what could be achieved, and what the construction industry requires.
For ongoing construction projects, the aim of mediation has to be to find an early and prompt solution to disagreement which the parties can live with. Disagreement over how work is to be paid for, variations triggered extensions of time due or the unexpected managed, and settlement of that disagreement will set behaviour for the rest of the project.
In those cases, one-day litigation settlement is not ideal. A number of factors will increase the potential for durable agreement:
- early identification of disagreement – it is rare in the construction industry for either owners or contractors to acknowledge at project inception that disagreement is likely, and to engage productively on how such disagreement is to be managed. Disagreement tends to morph into distrust and disruptive dispute.
Most disagreement in construction projects arises not as a result of a singular event, but out of an ongoing difference of interpretation or opinion. Any negotiated agreement is going to have consequences which flow through the balance of the project.
Whether by a relationship charter, Engineer encouragement or independent neutral, parties need to engage in a mediated process early.
- pre-appointment of a neutral evaluator/mediator – the approach taught in most mediator accreditation is facilitative, with the mediator expressing no views on the relative merits of the parties’ positions, preferring to promote agreement.
In the construction industry, a different set of skills is required. While the parties may be encouraged to leave their rights at the door to the mediation room, and to negotiate based on their interests, the parties are typically seeking guidance on the strengths of their respective positions from the mediator. This is not unreasonable.
In most cases, project staff believe they are capable of achieving a negotiated agreement. What they seek is support for the validity of their positions so that they can progress the project on a sound basis, in accordance with the contract.
How an early disagreement is resolved will have an ongoing impact on the project. This lends itself less to a facilitative approach to mediation; more to a neutral party with an understanding of the points of contention, and the authority to express an opinion as a basis for agreement on future behaviour.
Agreeing to a mediator before a dispute arises encourages the parties to consider and discuss the skills of the mediator in isolation of the subject matter of any dispute. This also avoids the temptation to use the appointment process to gain advantage.
- preparation – the party best prepared will achieve more from the mediation process than the party “winging it” on the day.
Preparation is less about preparing a case than it is about prompt and reliable access to relevant documentation when needed, a clear understanding of the bounds of settlement and the alternatives to a negotiated agreement. Part of that preparation also includes considering the opposing party’s position, and what might be acceptable to them, and considering what the alternatives may. be to a negotiated agreement.
Mediators have a valuable role in pre-mediation discussion and preparation for the day, even if it is to explore options for settlement, client expectations and explaining the procedure on the day.
- maximising the mediation session – mediators are, by definition, focused on achieving a durable agreement between the parties. That may not of necessity mean a formal agreement, provided the parties leave the mediation better informed about their respective positions and they have a basis for future negotiation.
What is important is to make the most of the mediation process.
Prior to the mediation, the parties should make time with the mediator to understand the mediation process and what can be achieved, and to explore options for settlement. This does not mean a documentation dump, or presenting statements of claim; what is helpful is to refine each party’s position, and for them to explore potential settlement options in advance; and to ensure that the parties with the relevant knowledge and authority to settle are in the room at the relevant times.
In the mediation itself, while the pro forma process of mediator introduction; opening statements; whiteboard joint discussion; caucusing with the mediator reality testing; further joint session; rinse and repeat til agreement, has its strengths, it is not mandatory.
Mediators need the flexibility to tailor the process to the skills of the parties and the complexity of the dispute – lengthy opening statements may simply cover common ground, achieving little more than hardening positions and inflaming emotions; caucusing may be seen as wasted time, when direct negotiation is more productive; and the use of AI generated settlement models may also provide a more balanced perspective.
Where mediation can help is to clarify the parties’ respective positions, to provide perspective to the issues in dispute, to preserve project relationships and potentially increase trust, and to promote interest in best of project outcomes, while recognising each of the parties’ rights. Mediation provides a non-binding opportunity to test those positions, with input from the mediation more constructive than asking open questions, reframing position statements and making neutral contributions.
The alternative can too easily be a negotiated settlement made out of exhaustion, regardless of the parties’ rights and best for project outcomes.
Arbitration
The keystone of arbitration is party autonomy, with confidentiality running a close second.
The Arbitration Act 1996 provides for considerable flexibility in the selection of the arbitral tribunal, applicable law (in both procedural and substantive terms), the seat of the arbitration, the extent of institutional oversight and the procedure to be followed. The structure of the Act is that Schedule 1 contains the articles of the UNCITRAL Model Law and Schedule 2 contains clauses specific to New Zealand.
For domestic arbitrations, Schedule 1 applies and the clauses of Schedule 2 apply, unless the parties agree otherwise.[13] On that basis, the parties may opt out of any or all of the provisions of Schedule 2. Where the parties have their places of business in separate States,[14] then the arbitration is an international arbitration and those provisions of Schedule 2 apply only to the extent the parties agree.[15]
A surprising number of construction arbitrations are properly international, and yet counsel do not appear to have turned their minds to which, if any, of the clauses in Schedule 2 apply.
It is important to note that, while many if not most arbitrations in New Zealand are conducted on the same basis as High Court litigation, the High Court Rules do not apply. Similarly, the Evidence Act 2006 does not apply to arbitrations;[16] the provisions in the High Court Rules in relation to expert witnesses and awarding costs similarly don’t apply.[17]
Much of the provisions of Schedule 1 are subject to agreement of the parties to the contrary, leaving only questions of the arbitrability of disputes under section 10,[18] the equal opportunity to be heard under the equal treatment provisions of article 18 of Schedule 1, or setting aside or refusing enforcement for either public policy or breach of natural justice under either article 34 or 36 of Schedule 1.
This leaves to parties the freedom to agree on the following:
- the seat of the arbitration
- the applicable law
- the composition of the arbitral tribunal
- the language of the arbitration
- whether or not the arbitration is to be private
- whether a hearing is to be held or if the dispute is to be dealt with on the papers
- how documentary disclosure is to be handled
- managing the presentation of expert reports
- the timing of submissions (and their length)
- the timing of the arbitral award, and whether or not reasons are to be given
- how costs are to be allocated
For various good reasons, the parties may decide that a business as usual approach is to be applied, adopting High Court procedures. However, adopting these by default and not considering the flexibility which the Act provides is a missed opportunity. This is not helped by NZS3910 simply providing for arbitration in New Zealand under the Act before a single arbitrator.
For most disputes processes, the most important decision to be made is the appointment of the decision maker.
In almost all cases, there is much to be gained by counsel agreeing on the most appropriate arbitrator; not by the usual submission of 3 names, but by picking up the phone and discussing who might be available and acceptable to the parties.
If a number of alternatives are agreed, then it is entirely appropriate for counsel to interview the prospective tribunal members. Clearly, care must be taken not to stray into the subject matter of the dispute during such an interview process. The Chartered Institute of Arbitrators has published a guideline on the interviewing of prospective arbitrators.
In default of agreement, the appointment is made by AMINZ under article 11 of Schedule 1.
2. Is the construction industry genuinely moving from reactive to proactive resolution – and if not, why not?
The short answer is no, but for a number of reasons.
As mentioned above, the seeds for disagreement are sown at award. Too many projects go to competitive tender based on incomplete designs and perfunctory site and market investigation; the conditions of contract are frequently inappropriate, containing aggressive and opportunistic transfers of risk; projects are poorly resourced, both on contractor and client side; and the award decision is based on lowest tender, rather than best for project bases.
Following award, there is insufficient importance placed on early risk identification and dispute management.
In all projects, there is a reluctance to recognise that disagreement is inevitable, with the levels of uncertainty at the time of award. The standard form construction contracts fall back on “reasonable foreseeability” rather than identifying what those uncertainties are and either reducing them or providing more detailed procedures for managing them.[19]
The disputes provisions in our standard conditions of contract are predicated on a dispute having arisen, rather than proactively identifying disagreements and dealing with them before they crystallise into a formal dispute.
3. What skills are required across the project lifecycle, not just at the point of dispute?
It follows from the above that a number of practical changes are required in the industry.
First is the use of one or more independent neutrals to peer review documentation before it is issued to prospective contractors; second, to audit the procurement process to ensure that probity is maintained, and; third to identify disagreement and to promote the early resolution of disagreement to reduce the potential for formal dispute and project disruption.
Such a person needs to have an understanding of the construction industry (without necessarily being a technical expert in the project itself). Part of this process may also involve pre-contractual discussion, short of ECI, preceding the formal procurement process, under which contractors may be invited to comment on the project, providing an opportunity for innovation, the process and the commercial terms.
This process can also be undertaken following award, during a stage 1 period, whereby designs are settled, consents obtained, construction methodology and programming agreed and the final price, whether lump sum, rates, remeasure, cost-plus or a combination of them are agreed.
Following award, the potential for disagreement must be identified early. Due the extensive involvement as owner’s agent, project manager and often designer, the Engineer is generally not an appropriate person for this role. The potential for conflict of interest is too great, and in the event that the engineer is directly challenged, the protection of professional indemnity insurance also becomes an issue.[20]
Once a dispute has been formalised, NZS3910 assumes that the Engineer will make a formal, interim decision notwithstanding that most disputes will turn on the Engineer’s own management of the project or provision of designs. While mediation is provided for, it follows the Engineer’s decision, at which point the parties in practice prefer to either go to adjudication or arbitration; that decision largely based on the complexity of the dispute and cost.
What is missing from almost all construction projects in New Zealand is an acceptance that disagreement, potentially leading to dispute, will arise and it will be beyond the capability of the owner and contractor project teams to resolve by themselves. What is needed is a robust and durable interim determination process.
The Alternatives
The existing procedures in most standard forms can be used effectively to avoid or resolve disputes on a best for project basis. Generally, they are not.
Mediation, if used early in the dispute lifecycle, rather than as litigation settlement as a precondition to arbitration. Mediation can be a very powerful process, promoting not just durable agreement but also project cooperation going forward.
Similarly, adjudication of defined disagreements before an appropriate adjudicator, with the procedure adapted to the dispute, can provide decisions which will govern the way in which the project is carried out through to completion without further dispute.
Conversely, arbitration is a final forum for dispute determination with no rights of appeal, save on questions of law under clause 5 of Schedule 2 (if retained). Arbitration is resource heavy, requiring the collating of substantial quantities of documentation, witness statements, expert reports, legal research and submissions, and hearings. While arbitration will typically result in a binding decision more quickly than court litigation, it is rarely cheaper.
Arbitration really shines when conducted after the works have been completed (or the contract terminated, at which point costs will yet to be determined) under rules and procedures adapted to the nature of the dispute and the priorities of the parties, rather than under the High Court Rules.
What is missing under the current versions of NZS3910 is a process for dealing with disputes on an interim basis which provides a workable solution for the parties to continue to work on the project.
FIDIC deals with this issue in two ways – (1) by retaining the decision of the Engineer under clause 3.5, and (2) by providing for Disputes Boards under clause 20. The first has problems of conflict of interest discussed above, and the second is cost.
Disputes boards have been used in NZ on a few occasions, but most owners are reluctant to countenance the potential for dispute, let alone cover the cost of retaining a sitting board of experts to deal with disputes which may arise.
An alternative is the appointment of an independent disputes expert, whether mediator or otherwise, to fulfil the disputes role of the Engineer/Independent Certifier under NZS3910. This person can largely carry out the roles of peer reviewer, probity auditor and project mediator/decision maker, or any combination of them.
As an independent neutral, such a person would establish a working relationship of trust with both owner and contractor project management teams, and being informed of the day to day progress of the project, could either mediate or provide prompt decisions on matters of disagreement which would have a high probability of acceptance as a way for maintaining progress on the project.
Conclusion
The contract and statutory procedures of mediation, adjudication and arbitration can be effective, if used on a best for project basis with the flexibility each allows.
Due to its pay-now-argue-later ethos, adjudication under the Construction Contracts Act has become very expensive, and prone to gaming to one party’s advantage. This has meant that, while it provides for an interim determination, due to cost and resources involved, most parties treat it as final. There is also a perception that, having gone through the adjudication process, an arbitrator may not come to a differing conclusion. This simply encourages further procedural abuse.
Mediation as practised tends to be litigation settlement, rather than providing for early resolution of disagreement. Conducted early, it has the potential to provide for quick and effective avoidance of dispute. That is rarely the case in practice, as it requires an acknowledgement of dispute.
Arbitration is very heavy on resources and expensive, best left to once the project has been completed, if possible. Arbitration during the course of a project, in all but every case, goes hand in hand with termination of the contractor’s engagement. There is also a tendency to adopt High Court rules and procedures, without having regard to the procedural flexibility which the Arbitration Act provides.
If the parties to construction contracts are prepared to:
(1) acknowledge that disagreement is almost inevitable at some point, and they are genuinely committed to a successful project outcome;
(2) carry out site investigations and progress designs to a point where they can be accurately priced;
(3) adopt an appropriate procurement process with a sensible allocation of risk;
(4) provide for a truly independent person to identify the potential for dispute early, and to mediate or determine the dispute if possible; and
(5) then appoint an appropriate person to either adjudicate or arbitrate the dispute under a tailored procedure,
then the probability of a successful project outcome is considerably enhanced.
The skills required of the putative mediator, adjudicator and arbitrator are variously to understand pressure points in any project referred to them; prioritise the early identification of potential dispute; use the procedures available to them to find a durable solution to the dispute, in each case causing the least disruption to the project on site; and to finally determine the dispute in accordance with the law, having followed all relevant procedures and having ascertained the critical facts.
The alternative of a business as usual approach is not sufficient.
John Walton
Bankside Chambers
15 July 2026
[1] Studies in the UK (the 1994 Latham Report), Australia (the Blake Waldron Survey in 2015) and more recently in NZ have supported this view.
[2] The Willis Trust litigation is illustrative; after success in numerous adjudications and court procedings, the claimant received no payments at all.
[3] For the year to 31 March 2026, there were 769 construction company liquidations, an 8.1% increase over the previous year - https://www.centrix.co.nz/wp-content/uploads/2026/04/Centrix-Credit-Indicator-Report_March-2026_web.pdf
[4] The latest OECD report on NZ is available here - https://www.oecd.org/en/publications/oecd-economic-surveys-new-zealand-2026_3ec5de98-en/full-report.html
[5] For discussion of the Project Mediator Protocol, adapted for the New Zealand construction environment, see https://johnwalton.co.nz/musings/project-mediation-probity-auditing-peer-reviewing. A copy of my project mediation protocol, adapted for the NZ environment, is available on request.
[6] Recent international construction experience has been that, with the impact of the Middle East conflict on oil and commodity prices, owners are looking beyond contract terms to accommodate unanticipated and unmanageable cost increases.
[7] This was the approach adopted for the Hong Kong Government’s new airport development at Chek Lap Kok in the 1990s.
[8] Defined in section 25(2) of the Construction Contracts Act 2002.
[9] See section 5 of the Construction Contracts Act.
[10] See section 6 of the Construction Contracts Act.
[12] At the time of writing, the MBIE website lists seven ANA’s – AMINZ, Building Disputes tribunal NZ Ltd, Adjudicator’s Association of NZ, RICS, JC Consultants Ltd, Fairway Resolution Ltd and Construction DRB. That list may not be up to date.
[13] See section 6(1)
[14] See article 1(3) of Schedule 1
[15] See section 6(2)
[16] The Act is limited in its application under section 5 to “proceedings” in court.
[17] Note that costs in arbitration are covered by clause 6 of Schedule 2. AMINZ has issued a Guide to Awarding Costs In Arbitration.
[19] For example, see the predominant use of geotechnical baseline reports (GBR) in tunneling projects internationally, and more recently in NZ.
[20] See Custom House Hotel Limited v Plus Construction Limited [2018] NZCA 36 where the engineer failed to issue a suspeension notice following default by the owner under NZS3910.