RC113 JulyAugust 2024 - Magazine - Page 19
Parallel Proceedings: In Ontario and jurisdictions with similar legislation (Saskatchewan, Manitoba, New Brunswick, Nova Scotia and
under Federal legislation), parallel proceedings are permitted. Adjudication is available even if a court or arbitral proceeding is already
underway unless the court or arbitral proceeding has already 昀椀nally
determined the issues.
In these jurisdictions, an adjudication decision is “binding until” a
court or arbitral process is concluded—o昀昀ering quick, interim relief
pending the determination of the issues in the more complex and
rigorous court or arbitral process.
Court-Priority: In Alberta, if a court action is already underway,
adjudication is not available. The court action takes priority. In fact,
even if a court action and adjudication are commenced on the same
date, the adjudication must be discontinued
to allow the court action to proceed.
Interestingly, in Alberta, priority is only
speci昀椀ed for court actions. Arbitration is not
mentioned, without explanation and despite
the prevalence of arbitration as a dispute resolution mechanism for construction disputes.
However, in Alberta the adjudicator’s decision is binding on the parties “except where…
the parties have entered into a written agreement
to appoint an arbitrator under the Arbitration
Act.“ This provision has not yet received
judicial attention.
However, several questions arise, including:
Is the presence of an arbitration clause in a contract enough to
foreclose the binding nature of an adjudication, or do the parties
have to agree on a speci昀椀c arbitrator after the dispute has arisen?
Does this provision relate only to domestic arbitrations
commenced under the Arbitration Act, or does it also apply to
international arbitrations commenced under the International
Commercial Arbitration Act?
These questions have not yet been answered in Alberta.
Commencing a Court or Arbitral Process After Adjudication In all
Canadian prompt payment jurisdictions, the adjudication process
is an interim process. As such, even if an adjudication decision has
already been issued, there will likely be no impediment to a party
commencing a fresh court or arbitral process, provided such process
is not barred by the passage of time.
Binding Decision Unless Stayed or Overturned An adjudicator’s
decision may be overturned in two ways. First, in limited circumstances, judicial review may be available if there were problems
with the adjudication process. For example, a decision may be set
aside if the adjudicator was biased, the adjudication procedure was
improper, or the decision relates to a matter that was outside of the
adjudicator’s jurisdiction.
The wave of prompt payment legislation sweeping across Canada
offers construction stakeholders adjudication, a new dispute resolution
that comes with its own advantages and disadvantages.
GWTTY IMAGES
Racing to the courthouse
Given the complexities, stakeholders may wonder whether they
should race to initiate court or arbitral proceedings before an adjudication is commenced. In most jurisdictions, the answer is no.
In the Ontario Model Jurisdictions, since parallel proceedings are
allowed, a mad dash to the courthouse will not halt the adjudication, and the outcome of the adjudication will be binding until the
dispute can be more fully resolved in court or in arbitration.
However, it is di昀昀erent in Alberta, where initiating a court action
before or on the same day as an adjudication can stop the adjudication in its tracks. So, if avoiding adjudication is the goal, a speedy
trip to the courthouse might just be the ticket, which may also cause
a surge in litigation to avoid adjudications.
However, in Alberta, the treatment of arbitration is again less
clear, and it does not appear that the mere commencement of an arbitration will stop an adjudication. Nonetheless, if parties have made
an agreement to appoint an arbitrator under the Arbitration Act, the
adjudicator’s decision won’t be binding.
After adjudication
Once an adjudication decision has been issued, stakeholders contemplating related court or arbitral proceedings encounter a fresh
set of considerations.
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Second, an adjudicator’s decision may be overturned by a subsequent court or arbitral decision relating to the subject matters adjudicated. In these circumstances, the adjudicator’s decision serves as an
interim decision, pending the issuance of the court or arbitral decision.
However, if a subsequent process is commenced, the adjudicator’s
decision will not be automatically stayed. If a monetary award is issued, the award must be paid, or a stay must be obtained to pause the
adjudicator’s decision, while the subsequent dispute resolution process
continues. Obtaining a stay can be di昀케cult, and will likely require that
it be shown, among other things, that irreparable harm will be su昀昀ered
if the stay is not granted. Additionally, a court may require that the
disputed award amount be paid into court to obtain the stay.
Of course, one can simply ignore an adjudicator’s decision without obtaining a stay. However, doing so carries risk. The adjudicator’s award is likely immediately enforceable against the losing
party’s assets. Moreover, the Ontario court recently dismissed a judicial review because the applicant failed to pay the award or obtain a
stay. Thus, by ignoring the adjudicator’s order, the applicant lost its
opportunity to have the order set aside.
The effect of the adjudicator’s decision in a subsequent court or
arbitral proceeding
once an adjudication decision is issued, what is its impact on subsequent court or arbitral processes? Ontario and New Brunswick
prompt payment legislation explicitly allows adjudication decisions
to be admitted as evidence in court.
The admission of an adjudication decision in subsequent related
proceedings presents further risk. Adjudication o昀昀ers “rough justice,”
fraught with perils that may impact the decision ultimately issued—a
decision that may be prejudicial if reviewed in a subsequent process.
While adjudication o昀昀ers swift resolution of disputes, it lacks many
of the rigours of court and arbitral processes. Stakeholders with
complicated issues or signi昀椀cant sums in dispute may face signi昀椀cant di昀케culty in the con昀椀nes of the adjudication process, where the
JULY/AUGUST 2024 – RENEW CANADA 19
