Joint Committee on Jobs, Enterprise and Innovation díospóireacht -
Tuesday, 26 May 2015

Construction Contracts Act 2013: Chairman Designate of Panel of Adjudicators

Chairman

I remind members, visitors and those seated in the gallery to ensure their mobile phones are switched off for the duration of this meeting as they interfere with the broadcasting equipment even when on silent mode.

The next item on the agenda is No. 6, which is an engagement with Professor Nael G. Bunni, chairman designate of the panel of adjudicators required under the Construction Contracts Act 2013. I welcome him to the meeting.

Before we commence, in accordance with procedure, I am required to read the following. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.

I invite Professor Bunni to make his opening remarks.

Professor Nael Bunni

I thank Deputy Corcoran Kennedy, as Chairman, and the members of the committee for inviting me to appear before them today. I am both honoured and very pleased to have been asked by the Minister of State at the Department of Jobs, Enterprise and Innovation, Deputy Gerald Nash, who has responsibility for business and employment, to chair the panel of adjudicators pursuant to the Construction Contracts Act 2013. It is very significant legislation which will, I believe, bring about a number of important reforms and transform the dispute resolution landscape in the construction sector.

I understand that on such occasions as this it is customary to give some personal background information. I was born in Iraq. Following my initial studies at Baghdad University, I graduated with first class honours and was awarded a scholarship to study for an MSc and PhD in England. I completed my MSc at Manchester University in 1962 and my PhD in London in 1964. It was a requirement of my scholarship that I return to work for the government for four years. When I returned to Iraq in 1964 I was appointed as a lecturer at Baghdad College of Technology. Alongside my work at the university, I was selected by Iraq Reinsurance Company, which was reinsured by the Munich Reinsurance Company, to manage and develop a new construction insurance pool. It was then that I was introduced to conditions of contract, insurance and construction disputes.

I left Iraq and came to Dublin in September 1969, following which I applied for and was granted Irish citizenship. In 1969, I joined T. J. O’Connor and Associates, consulting engineers in Dublin, during which time I also acted as special adviser to the Munich Reinsurance company, dealing with major construction claims in the Arab world, through which I was appointed to my first arbitration in 1972, which related to the collapse of a dam in Libya.

Later in the 1970s, I was asked by the Association of Consulting Engineers of Ireland, ACEI, to help draft the third edition of the Irish conditions of contract and, in particular, to use my knowledge in relation to insurance and contracts, which I did. Having incorporated many new ideas into these general conditions, I was commissioned by the ACEI to write a book explaining what I did and why, which was published in 1984. In 1986, I extended that publication to construction insurance for international contracts, which is now in its second edition, last published in 2003. I have a copy of these books with me if anybody wishes to look at them. They are too expensive to buy but are available in Trinity College library.

In 1979, I passed the fellowship examination of the Chartered Institute of Arbitrators, CIArb, and was later part of the founding committee for its Irish branch. In 1986, I was elected chairman of that branch. In 1987, I was elected president of the ACEI and having chaired a number of committees for the International Federation of Consulting Engineers, FIDIC, I was requested to help in drafting its international conditions of contract. The 1987 FIDIC conditions of contract for civil engineering work introduced, for the first time, alternative dispute resolution to the construction industry. My work on those conditions resulted in the publication of my book on the FIDIC form in 1992, a copy of which is available if members wish to browse through it.

Alternative dispute resolution methods started then. The book explains the principles of the conditions of FIDIC and practical aspects of their application. The book is now in its third edition. As alternative dispute resolution methods became a necessary part of virtually all conditions of contract, Engineers Ireland asked me to head a committee to draft a form of a conciliation procedure for the industry in Ireland, which was produced in 1995, following which I was asked to chair the dispute resolution panel of Engineers Ireland between then and 2009. That committee trained conciliators and lay dispute adjudication boards. A one year diploma course was then devised by Trinity College, Dublin and I was asked to become a visiting professor. The course has since developed to include various forms of dispute resolution methods, including adjudication.

I left T.J. O’Connor and Associates in 1994 to form Bunni & Associates Limited, in order to concentrate on dispute resolution and dispute avoidance, a subject I refer to as "disputology”. In 1999, I was elected Fellow of the Irish Academy of Engineering, and in March 2000 I was elected a member of the International Council for Commercial Arbitration, which is a gathering of 45 members of the foremost leaders worldwide in the field of dispute resolution. In 2000, I was elected president of the Chartered Institute of Arbitrators, CIArb, worldwide, and in 2005, I was appointed chairman of the executive committee of the Dubai International Arbitration Centre in the United Arab Emirates, a position I retained until 2012.

In summary, I have acted as arbitrator in more than 150 arbitrations, both domestically and internationally, as conciliator, mediator, member of dispute board or adjudication board involving parties from more than 50 jurisdictions.

I have received a number of awards for my work in innovation and structural design and in 1995 and again in 2004, I was awarded the premier institution prize by Engineers Ireland for a "contribution of outstanding merit ... to the benefit of the members [of the institution]."

I greatly relish the prospect of bringing my experience to bear on the new construction contracts adjudication service to the benefit of the industry in Ireland. Senator Feargal Quinn introduced this insightful legislation some years ago. It strives, inter alia, to provide a quick, fair and low cost remedy to disputants and follows the example set in certain other jurisdictions around the world. My commitment to the Minister of State, Deputy Nash, this committee and the construction industry stakeholders is that, in so far as my responsibilities and authority envisaged under this legislation permit, I will endeavour to ensure that a robust, responsive, high-quality and fit-for-purpose adjudication service will be delivered for Ireland, standing the test of time and in the interests of the parties in dispute. I thank members for their attention.

Chairman

I thank Professor Bunni for his presentation. No doubt his academic and practical experience will stand him in good stead in his new role. I invite the input of members.

Deputy Dara Calleary

I thank Professor Bunni for his presentation. He brings immense experience to this role. I was the Minister of State who accepted Senator Quinn's Bill on 8 March 2011. I commend Senator Quinn and also Seán Gallagher, who were instrumental in getting the Bill to this stage. Professor Bunni's role in disputology might be handier in this institution at times and I hope we will not need his skills in this committee. I wish him every success. He will shape the job for many years to come.

Professor Nael Bunni

I thank the Deputy for his comments. That is a term I coined and a number of people have picked it up and used it.

Senator Feargal Quinn

Professor Bunni is very welcome to the committee. We are close neighbours and live in the same part of Howth but I have not met him previously. I am a great admirer of what he has achieved and what I have read in the presentation. One of the questions we had in developing the Construction Contracts Bill, which became the Construction Contracts Act, was how we would handle dispute resolution and whether it should be by way of mediation, arbitration or adjudication. Will Professor Bunni give us his experienced view of the difference between the various alternative dispute resolutions and why he accepts that adjudication is the one for which we have aimed in this case, with a very short timespan in each dispute?

Professor Nael Bunni

This is a very important question and a full answer to it would take a whole day, but I will try my best to answer it in the short and crisp way the Senator would want. Adjudication is supposed to be a fast and fair method. In Ireland it would have specific meaning because of the Irish Constitution. We would have to apply not only the normal fairness that we would understand from other methods of dispute resolution but also what is termed to be constitutional fairness or constitutional justice, which is quite different from the other definition.

If we move on from adjudication to other dispute resolution methods, they take longer. In my experience, conciliation or mediation take at least three months in construction disputes. I am not talking about other disputes but about construction disputes. If one enters arbitration in construction disputes, which is a much more thorough process, it would take between two and four years, although the longest my role in such a dispute has lasted was ten years, after which one of my co-arbitrators, a lord justice of appeal in England for the English industry, retired and we managed to get the last segment of fees after that long period of time.

In terms of speed, there is a difference between adjudication, conciliation, mediation and, finally, arbitration, which is the longest. If one takes justice as a second option for comparison, then, of course, adjudication could lead to rough justice because of the short period of time we are talking about. We are talking about 28 days, and hopefully the courts will not take another 28 days to enforce their decision. In international work, the 28 days is really 84 days. Still, we are really talking here about fairness and justice that could be sped up through the method of looking at the problem. Of course, one ends up in mediation or conciliation, and that is a totally different process because one is now trying to bang the two heads together to get them to agree. If they do not agree, then it might take three months. One produces a recommendation, and if that recommendation is rejected, one ends up in arbitration, which is really the best way of reaching a fair and proper decision, but it takes four years.

There is another aspect to adjudication which is significant - namely, that in this country, as part of the common law system, we look at all these processes domestically in a way that requires the adversarial system. That means the judge, the arbitrator or whatever it is sits there between two parties that are fighting each other. In adjudication the situation is different because one is required to seek the truth one's self. It is more than the adversarial system one gets in Ireland or in the Commonwealth system. One then moves into the field of international arbitration. There, the arbitrator is asked to investigate the truth himself. That is quite a different role. Adjudication is quite different in those areas. Explaining what the Senator asked is a three-month project for Trinity College. It is really the most important question.

Senator Feargal Quinn

Professor Bunni did very well in three minutes.

Chairman

Is Senator Quinn satisfied?

Senator Feargal Quinn

Yes.

Deputy Peadar Tóibín

Professor Bunni is very welcome. His CV looks very impressive. I wish him the best of luck in his new role. It is obviously a role we have been awaiting in the Oireachtas for many years given the length of time it has taken to go through the Houses of the Oireachtas and then for the appointment to be made. I am not sure Professor Bunni can help me, but I would be interested to find out whether advertisements have been made for the panel of adjudicators and when those positions are expected to be filled. Along with the code of practice, these are the last pieces of the jigsaw before we can have a functioning service in this regard.

Professor Nael Bunni

The Deputy is quite right. Unfortunately, some of the questions he has asked are beyond my control. The only way I could answer that would be to say we are now on the first step towards doing all these things very quickly. It has taken some time, I agree, but it had to be done right. This is the first step. Many more steps need to be taken and I hope they can be taken in no longer than three to four months. Certainly, the wheels are in motion. One of them is exactly what the Deputy has said, namely, the panel itself. Before the panel can be selected or appointed, there would have to be a process of seeking the right people for the job. As Deputy Tóibín noticed from my reply to Senator Quinn, specific qualifications are required for adjudicators.

For example, an arbitrator practising in a domestic scene would not automatically be good enough to act as an adjudicator, nor, indeed, would a conciliator, because the decision of an adjudicator has to have reasons, and those reasons, while they are similar to those made by an arbitrator, are not similar to those of a conciliator.

Certain elements in respect of qualifications have to be decided on and a code of conduct under section 9 of the act is required. This has not, as far as I know, been completed, although many drafts seem to have been done, and I have seen at least one produced by Engineers Ireland some time ago. There are a number of steps to be taken. For example, the publication of various forms is necessary, as these have to be ready so that applications can be sought from people who think they are good enough to apply. This has to be done very shortly but, unfortunately, I am not privy to the timeframe. Somebody else will have to answer that question.

Deputy Seán Kyne

I join colleagues in wishing Professor Bunni well in his role. Looking at his CV, it is clear he has a lot of experience in a range of areas. Are there any issues in the legislation which he feels could be looked at in the future with a view to strengthening it?

Professor Nael Bunni

Yes, I have some views on that. The technical press has been full of comments in the past two or three years about certain issues which have to be ironed out, but all of these can, I believe, be easily and successfully ironed out by the courts. There is one aspect on which I have been commenting for many years - in fact, from the time the legislation was first thought about. This is that there ought to be a court system or a particular judge designated for adjudication. Various matters which have been questioned in the technical press, or by myself, could easily be ironed out by such a judge. In Ireland we are blessed with a very high calibre of judge, and any of the judges working at the moment could handle this particular aspect of the legislation. The first real-life case to go to enforcement will bring in at least one of these issues and, depending on how it is resolved, it has the capacity to make this piece of legislation a very successful one.

Deputy Michael Conaghan

I welcome Professor Bunni and thank him for his views, which he has put very succinctly and clearly. In his own experience, how do these matters in Ireland compare with practices and experiences abroad, such as in the EU or other European countries? These problems must occur everywhere, but have other countries developed more effective dispute resolution mechanisms, or do they, like ourselves, struggle on with these issues?

Professor Nael Bunni

I would answer that question by inviting the Deputy to read a paper published in the centenary magazine of the Chartered Institute of Arbitrators. The institute was 100 years old this year and for its festivities it asked various people from around the world to submit papers on the very question the Deputy asked. I was asked to give a copy of my paper for the journal in a light-hearted form.

These were published and I will make sure the committee receives a copy. This will explain, in a way, that conflict in the world has started for the very simple reason that we have language. It is a very difficult thing to master. I could say the same words in two different manners and mean totally different things. I could say "I wish him to survive" or "I wish to survive him." The sentences use exactly the same words, put in different places, and the meaning is totally different. In answer to the question, our problem with language results in our problems with disputes. We say things, hoping to be comprehensive, but it never works that way. The problem of disputes exists everywhere in the world. The problem of having to solve these disputes varies from one country, jurisdiction or legal system to another. In Parliament, one has to concentrate on what system of law exists because, ultimately, to resolve a dispute involves a legal process. It could be a non-legal process if the parties agreed to sit down and mediate or conciliate, but once one moves away from mediation, conciliation or simply discussing the matter, then it is a legal process. That legal process fits into one of three systems of law in the world today, including the common law system, which Ireland, England, America and Australia use, or civil law, which deals with the issue quite differently and operates in Europe, some parts of the Middle East and some parts of Asia. Countries with Islamic law deal with the issue completely differently. The question needs to be isolated into three different parts, so one can then see how things work around the world.

Having done this, unfortunately, one still comes to the same methods for which Senator Quinn asked at the beginning of the meeting. He asked how they compared. I was part of the committee in the Institution of Civil Engineers in London when the British decided to introduce adjudication. We had internal discussions and were invited to contribute. The system developed in England was designed to move from arbitration to adjudication, despite the fact that conciliation had been born there. It developed extremely well in the UK. Europe never went that way and never touched on adjudication, and people think more in terms of arbitration as the final or long-term solution because, as I said in my answer to Senator Quinn, it is probably the most comprehensive and fair way of dealing with the problem. It takes a long time and costs a lot more, but it is the best way. That is where Europe has gone.

One finds under Islamic law that conciliation takes place. In fact, it is written in the Koran, the holy book of Islam, that if one has a problem, one should try to conciliate, and it tells one how to do so. It says that one person must be brought in from one side and one from the other, and that they must sit down and come to a solution. It is a very wide subject, but I will make sure the committee receives a copy of my paper.

Chairman

I thank Professor Bunni for attending today to engage with the committee. On behalf of the committee, I wish him every success in his role and look forward to meeting him in the future.

Sitting suspended at 2.09 p.m. and resumed at 2.11 p.m.