Construction Disputes – Adjudication

What is adjudication?

Adjudication is an alternative way of resolving disputes in construction contracts.

Adjudication is an alternative to Court proceedings. Other alternatives include arbitration or evaluation by an expert.

What is the difference between Court and adjudication?

Adjudication aims to offer a quick means of resolving disputes under a construction contract. Generally, the adjudicator is required to give a decision within 28 days of the dispute being referred to him / her. On the other hand, Court proceedings could take 18 months to 2 years to resolve, if they are fully contested and go to trial.

Unlike a Judge in the Courts, an Adjudicator will usually be an expert in the field of the construction dispute such as an architect, lawyer or surveyor.

If the parties are able to refer a matter to adjudication, the general process is as follows:

• There must be a dispute between the parties which must have “crystallized”.
• The Referring Party prepares and serves a Notice of Adjudication, indicating the intention to refer to the dispute to adjudication.
• The Referring Party has an adjudicator appointed following the mechanism in the contract; for example by the Royal Institute of Chartered Surveyors.
• The Referring Party sets out its case in detail in a Referral Notice along with any Witness Statements and Expert evidence.
• The Responding Party will file a Response – usually within 7 days.
• The Adjudicator will then make a decision. This will not ordinarily involve a hearing.

In theory, an adjudication should be cheaper to prepare than proceeding through the Court. However, expert and barrister input may still be required meaning costs are not always low. Unlike in Court proceedings, the legal costs of an adjudication will not be recoverable by the successful party from the losing party. The adjudicator’s costs will likely be paid by the unsuccessful party.

Can I adjudicate my construction dispute? Is adjudication a good idea?

Before starting an adjudication, it is important to establish that there is a right to do so. The parties can adjudicate a dispute if it is permitted by the terms of the contract. This may be expressed, for example in a JCT contract. Some contracts will make adjudication compulsory.

Legislation can imply a right to refer a matter to adjudication if the parties to a “construction contract” are both companies.

Adjudications are commonly used in:

• Disputes regarding delay, disruption to a project and extensions of time – click HERE
• Disputes regarding defects and the quality of works – click HERE
• Disputes relating to payment including both interim and final accounts.

Adjudication is particularly useful during the life of a project in relation to interim payments as it provides a relatively quick decision as to who should be paid throughout, rather than having to wait until the conclusion of the project.

As will be seen from the above timetable, the Referring Party is in control of the adjudication process, leaving the Responding Party on the back foot with a short time period to respond.

The Adjudication is binding on an ‘interim basis’ i.e. until the dispute is determined by Court proceedings. However, the Adjudication award is usually enforced by a shortened set of Court proceedings and is rarely successfully challenged by the losing party.

Adjudication can, therefore, be a very useful way of resolving a dispute in the right circumstances. If you have any queries regarding an adjudication (whether you are the Referring Party or Responding Party), please do not hesitate to contact us for assistance.