What is adjudication?
Dispute resolution takes many forms. The most well-known is litigation. However, parties can also use arbitration, mediation, negotiation, and adjudication. These forms of dispute resolution are known as alternative dispute resolution (“ADR”).
In adjudication, a third party will review the case put forward by both sides and will make a decision. The decision of the adjudicator is binding and enforceable. Adjudication is a quick method of ADR, as an adjudicator is required to decide matters within 28 days.
This can seem appealing when compared with litigation where the court process can take months or even years to come to trial, making adjudication seem comparatively cost-effective. However, unlike many other court proceedings, where costs are awarded to the “winning” party, adjudication is cost-neutral, meaning each party pays their own legal fees, regardless of the outcome.
The Civil Procedure Rules do not apply to the adjudication process and only become relevant should enforcement through the Courts be required.
Adjudication is most commonly used to resolve construction disputes.
Why is it relevant to the construction industry?
Under the Scheme for Construction Contracts 1998, adjudication is mandatory for dealing with disputes regarding construction contracts. That is, even if adjudication provisions are not included in the written terms of a contract, the requirement to adjudicate disputes will be implied in the contract in any event.
There is no escape from adjudication where there is a construction contract.
How do you know if you have a construction contract?
The Housing Grants, Construction and Regeneration Act 1996 (commonly known as “The Construction Act 1996”), describes a construction contract in detail, but section 104(1) gives the overview:
“104 Construction contracts.
In this Part a “construction contract” means an agreement with a person for any of the following—
- the carrying out of construction operations;
- arranging for the carrying out of construction operations by others, whether under sub-contract to him or otherwise;
- providing his own labour, or the labour of others, for the carrying out of construction operations.”
“Construction operations” is a broad term, but covers everything from building, maintenance, demolition and the repair of temporary or permanent buildings.
Section 106 of the Construction Act 1996 makes it clear that the provisions do not apply to any construction contracts with a residential occupier.
Enforcing an adjudicator’s decision
An adjudicator’s decision is binding unless and until it is finally determined by court proceedings, arbitration or agreement.
If one side does not comply with the decision, the court can be used to enforce the decision through the Technology and Construction Courts (in the High Court).
The losing party can rarely successfully challenge an adjudicator’s decision, and so is put to the cost of the more expensive and protracted court proceedings or arbitration routes if the losing party wishes to overturn the decision of the adjudicator.
The process
Adjudication generally takes 28 days:
- The referring party serves a Notice of Adjudication on the responding party.
- Within seven days of serving the Notice of Adjudication the referring party appoints an adjudicator (the identity of which may be agreed between the parties).
- Within 7 days of serving the Notice of Adjudication, the referring party must serve a Referral Notice on the responding party and the appointed adjudicator.
- The adjudicator may require the responding party to serve a response, typically within 7 days of the Referral Notice (although requests may be made to extend this)
- The adjudicator’s decision must be made within 28 days of the service of the Referral Notice. This can be extended by 14 days if the referring party agrees, or further extended if both parties agree.
The adjudication provisions in construction were put in place to keep the construction industry going without the risk of cash flow issues causing development to grind to a halt.
If you have a dispute and require assistance with navigating the adjudication process, Griffin Law can assist.
Griffin Law is a dispute resolution firm comprising innovative, proactive, tenacious and commercially-minded lawyers. We pride ourselves on our close client relationships, which are uniquely enhanced by our transparent fee guarantee and a commitment to share the risks of litigation. For more details of our services please email justice@griffin.law or call 01732 52 59 23.
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