New adjudication process for resolving technology disputes launched

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In response to a marked increase in tech disputes, a ground-breaking contractual adjudication process has been unveiled by the Society for Computers and Law (SCL). The SCL Procedure offers an alternative dispute resolution forum for contractual matters related to a range of technology goods and services, including various contracts, licensing agreements and outsourcing arrangements.

Adjudication has gained in popularity as a method for resolving construction disputes, as it provides a quick and cost-effective alternative to court procedures. Decisions are generally made by a single adjudicator and limitations set on grounds of appeal. The nature of adjudication also allows the project under scrutiny to continue with limited cash flow impact whilst the process is completed.

As with the closely linked construction industry, there is a parallel need among tech companies for the efficient resolution of disputes. Covering all tech disputes, the SCL Procedure operates within a three-month timeframe which compares favourably with the 7-day limit imposed on construction adjudications, and parties can choose a specialist adjudicator from a panel pre-selected by the SCL. All decisions reached will be binding on a provisional basis, subject to any subsequent litigation or arbitration undertaken within a six-month limit, again with the intention of reducing disruption and cost to a minimum.

Unlike in the construction industry, entering adjudication to resolve tech disputes will be voluntary rather than mandatory. It will be interesting to monitor how this affects engagement in the process.

The advantages of pursuing an adjudication over other alternative dispute resolutions methods include:

  • Significantly lower costs involved due to the shorter process required and reduced exposure the other party’s costs if unsuccessful
  • Adjudication decisions are binding and help preserve the business relationship between the parties involved, thus allowing existing projects to continue
  • The specialist knowledge, expertise and experience in the technology industry of the adjudicating panel

However, there are some concerns that the relative conciseness of the process in comparison to other methods may leave the parties involved with insufficient time to prepare their case thoroughly. In turn, this could lead to a decision which contains errors and may then be subject to challenge.

And, even with an accurate decision, parties may still decide to pursue arbitration or litigation, the rulings of which are more easily enforceable as they are backed up by a legislative framework.

The need to diversify and extend the dispute resolution methods available to the tech industry to cope with demand has also led to innovations such as ‘online arbitrations’ to deal with less complex matters. The introduction of the SCL Procedure is yet another much-needed addition to the market to help reduce the burden on time and finances for tech companies whilst bolstering the expertise available to them in handling disputes.