The Alberta Government has promised to
enact the new Prompt Payment Amendment Act, often referred to as “Bill 37”, in
July 2021. One of the major changes introduced in Bill 37 is the implementation
of an adjudication system to resolve payment disputes.
What We Know
The current version of Bill 37 lacks
detail with respect to what the adjudication process will look like. Here is
what we know.
The Minister of Service Alberta will
appoint “Authorized Nominating Authorities” who will be able to assign third
party adjudicators to disputes.
Although the adjudications are intended
to be a final and binding process, the parties to the adjudication process will
still have the option to register a builders’ lien and enforce the lien through
the Court process.
Parties to a contract may refer matters
to adjudication “respecting any prescribed matter”. There is no information yet
with respect to what will be included in the list of “prescribed matters”. Adjudications
will be conducted in accordance with the procedures set out in the Regulation
or as established by the Authorized Nominating Authority.
The Adjudication process is not mandatory;
however, either party (owner or subcontractor) may refer a dispute to
adjudication. Once a matter is referred to adjudication, the adjudicator’s
decision is final and binding. The adjudicator’s decision is subject to
judicial review or appeal only in limited circumstances such as where the
adjudicator made a mistake of law or did not follow the procedures for
adjudication.
Where a contract contains a dispute
resolution clause that provides for adjudication this clause will apply only to
the extent it does not conflict with the Regulations which govern the Bill 37
adjudication process. Where there is a conflict between a contract and the
Regulations, the Regulations will apply.
Bill 37 has received royal assent and
proclamation is expected in the summer of 2021.
What We Are Still Learning
The Regulation with respect to the
adjudication process has not yet been released. Without this information it is
impossible to know exactly what the adjudication process will look like.
However, Ontario has already implemented legislation similar to Bill 37 which
includes an adjudication process.
In Ontario adjudications are conducted
through the Ontario Dispute Adjudication for Construction Contracts. Unlike the
proposed process in Alberta, the adjudicator’s decision in Ontario is an
interim decision and therefore not binding on the parties.
Also in contrast to Ontario, Alberta has
provided for the appointment of multiple nominating authorities and these may
include private entities.
In Ontario parties to a construction
contact may apply for adjudication with respect to the following categories of
disputes:
- The valuation of services or
materials provided under the contract;
- Payment under the contract,
including in respect of a change order, whether approved or not, or a proposed
change order;
- Disputes that are the subject
of a notice of non-payment (i.e. disputed invoices);
- Payment of a holdback;
- Non-payment of holdback; and
- Any other matter that the
parties to the adjudication agree to, or that may be prescribed.
Likely, the “prescribed matters” that can
be referred to an adjudicator in Alberta will be of a similar nature.
Although the adjudication process in
Ontario has been in place for a while now, industry experience with the process
is still quite limited, as there appears to be a strong tendency to seek a
negotiated resolution prior to adjudication. Perhaps this is an indication that the legislation is meeting the
objective of promoting early resolution, albeit not directly through the
adjudication process.
What’s Next?
This is a new concept and we are still
learning about the benefits and consequences of this scheme. It appears that
the goal of the adjudication process is to provide a quick and cost-effective
means for parties to resolve disputes without the need to resort to the
Courts. Although this is an attractive
concept, the final and binding nature of this process can leave parties who are
unhappy with the outcome of an adjudication with little recourse.
We will continue to monitor the
development of Bill 37 and provide updates.
To review Bill 37 click here.
To review our previous articles on Bill 37 follow the links below:
