Competitive bidding is the tool of choice for procurement of goods, works and services. Changes in business ethics driven by international treaties and other pressures have produced a procurement environment of unbalanced competition that is fraught with the potential for disputes.

Globalisation, the WTO and FTAA, in recent times, continue to open many hitherto unknown doors to our territories and has broadened competition within our region without necessarily presenting reciprocal opportunities in foreign countries.

The local entity giving out the contract, might itself be constrained in the price that it can pay to a local supplier because of the availability of cheaper, similar imported products or services now available on the local market.

Unforeseeable situations are now commonplace in the dynamic cauldron that is today's world. A businessperson tries to anchor to what s/he believes is immutable, such as the US dollar. But even this can change.

What about continuing effects of 9/11? What if the world were to change one-half of its reserves to euros? What if China starts trading with Europe in euros. What if OPEC were to sell oil for euros? How does one price for these eventualities and win a contract? And let us not forget that corruption and politics (separate issues) also influence the state of affairs.

The entire arrangement of bidding in order to be awarded a contract is a knife-edged balancing act, fuses are short, survival is at stake, many are desperate and so the stage is set for disputes. A method for dealing with conflicts head-on and real time is an important pre-emptive strategy for minimising price uplifts.

Enlightened entrepreneurs look behind the wording of a contract in order to find some competitive advantage in the agreement. They tend to subscribe to the modern culture of narrow interpretation of the bid document and borderline pricing. The contractor now uses claims to secure compensation.

The ultimate procedure for dispute resolution under a contract is litigation. This is often the most expensive process because of the direct costs and the time involved. Litigation is usually preferred by the party who recognises the likelihood that s/he is the party in breach and who therefore requires expert legal services to buttress a weak case, find a legal position and delay settlement.

Such persons are not searching for justice and recognise that the aggrieved party will often suffer when payment is severely delayed because the courts do not award realistic opportunity costs.

Litigation time is extended because it is a staged process dependent on the number of appeal procedures allowed in different jurisdictions. In Jamaica, as the court roster stands today, a court could easily take three years to arrive at a first instance civil judgment. If one accepts the aphorism "justice delayed is justice denied" then it is axiomatic that the courts do not dispense civil justice.

Mediation is perhaps the most benign approach to dispute resolution and should be a process available to the parties throughout any commercial arrangement. Mediation is essentially a negotiated mutually agreed settlement managed by a skilled third party (the mediator) who facilitates the discussions but it is the parties themselves that arrive at a solution.

This can be a disadvantage in that some entities that spend public or shareholders money may prefer to be instructed what to pay because they could come under harsh criticism for volunteering a payment.

Arbitration is a similar process to litigation but may have the advantage of being a swifter method. Sometimes the arbitrator, unlike a magistrate, is an expert in the technology surrounding the dispute.

The process of arbitration is governed by the local Arbitration Act. Arbitration may not be final because the court - always the dispute settler of last resort- can usually be approached about the procedures surrounding the arbitration, if not the result itself.

Adjudication, similar to mediation and arbitration, is confidential. It is a formal process of alternative dispute resolution and has come to the fore only in recent times.

Adjudication is simply explained by a quotation from Morris Stoppi - regionally well-known quantity surveyor, author, arbitrator and adjudicator - "If two fishmongers have a dispute who better to solve it than a third fishmonger?" In general, an adjudicator is an impartial expert in the area of dispute (manufacturing, distribution, shipping, construction etc) who operates at large in examining an issue and making recommendations quickly and at short notice.

An adjudicator is inquisitorial and can carry out his/her own investigations, request information and apply experience in arriving at a decision. (In litigation or arbitration the judge or arbitrator is generally constrained to find on evidence presented.) An adjudicator's decision must be followed. It can be appealed through arbitration or court but only after compliance with the adjudicator's decision.

In the construction industry the decision must be handed down no later than 56 days after the filing. The major lending agencies are in favour of this new initiative and the success of adjudication in engineering contracts is proof that disputes are most palatably resolved by experts in the area of dispute. Indeed, in litigation, experts are often called upon to advise the court.

Adjudication bypasses the judge and puts the matter before that same person who would qualify as an expert witness in court.
The ideal modality to obtain virtually instant remedies under commercial agreements of all kinds is through the acceptance of an adjudication clause in the trade instrument.

If the parties cannot agree on an individual then each party can nominate an adjudicator. If the two adjudicators agree, then there is no difficulty but, if they dissent, the contract can stipulate that they (not an entourage from each party) present to a third adjudicator (an umpire).

This umpire could be the International Chamber of Commerce (ICC, Paris) or the American Arbitration Association (AAA New York) for a minimum of travel expenses and, of course, only if the adjudicators disagree.

There is every reason to believe that adjudication will continue to gain ground as the preferred means of dispute resolution worldwide.

(Robert Evans, an Engineer, practices Adjudication in the Construction Industry)

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