Adjudication Explained

What is Adjudication?

Adjudication is a form of Alternative Dispute Resolution which is, in respect of this guide the procedure for determining disputes introduced by the Housing, Grants, Construction and Regeneration Act 1996, as amended by the Economic Development and Construction Act 2009 (“the Construction Act”).

The right to the parties to adjudicate will often be expressed in the contract between them, such as under a JCT Contact (“Joint Contracts Tribunal”). If not, that right might be implied where the contract provides for “construction operations”.

Contracts between homeowners and a builder instructed to undertake work for them is not covered. Those that are covered generally involve disputes arising under the Construction Act including, but not limited to:-

  • Defective works
  • Interim payments
  • Extensions of time
  • Scope of works
  • Payment, valuation of works, assessment of loss, delay, outstanding applications for payment
  • Professional negligence, where the professional and the client agree to adjudicate as a preferable alternative to litigation

Timing

Any one of the parties to a contract may elect to adjudicate at any time and therefore a dispute can be subjected to adjudication during the course of the contract or indeed at conclusion. Adjudication therefore enables minor issues between the contracting parties to be determined whilst the main works continue and prevent minor issues exploding into litigation and on occasion can enable the parties to a contract to complete a project with a quick determination.

Process

Adherence to the following guidelines is essential in the absence of which the Referring Party may find themselves having to start the process again, and the party responding to the adjudication finding a decision being made against them

  • The Referring party examines the contract to ensure that the right to adjudicate has arisen and that the dispute has crystallised.
  • The Referring party serves a Notice to Adjudicate on the Responding party
  • The Referring Party nominates an Adjudicator in accordance with the contract, or if nor provided for by an appropriate governing body such as RICS within 7 days of the Notice to Adjudicate
  • The Referring party serves a Referral Notice within 7 days of the Notice to Adjudicate
  • The Responding Party files a Response within 14 days of the above
  • The Referring Party files a Reply to the Response in 14 days from receipt of the Response
  • The Responding Party can file a Response to the above within 7 / 14 days
  • An Adjudicator may allow further submissions within 56 days of the whole processing being started.

Once the Adjudicators decision has been made it is binding on the parties and legally enforceable. Non-compliance with usually lead to a referral to the Technology and Construction Court who will even enforce the decision even if it is wrong in fact / law!

Advantages / Disadvantages

Advantages

  • Speed – particularly in relation to cash flow and where projects are in progress
  • Scope – not just for cash flow now all nature of disputes are determined this way
  • Costs – each party meets their own costs unless that have authorised the Adjudicator to award costs
  • Expert – the Adjudicator will be an expert in his field, unlike a Judge who will often have to consider conflicting expert evidence disclosed by each party
  • Flexible
  • Saving in management time with Adjudications being determined in a matter of days, rather than years

Disadvantages

  • Speed – often a rough and ready approach has to be adopted within the time allowed. Not always appropriate where often multi-million pound disputes are determined by Adjudication
  • No meeting with the Adjudicator as many disputes are dealt with on paper. Lees important now following Covid 19 and the advent of remote court hearings.
  • Even if the decision is legally and factually incorrect the court system will enforce until the decision is overturned by a subsequent court decision.
  • Cost – often ‘top heavy’ in costs for the Referring party. Witnesses may still be called and hearings may still take place.

Further Information

Marcus Chapman, Solicitor Associate and Head of the Dispute Resolution Team at Rudlings LLP can advise further in relation to construction disputes and appropriate methods of dispute resolution on 01842 757421 or email Marcus.chapman@rudlingsllp.co.uk

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