Adjudication

Adjudication is a statutory mechanism for resolving disputes in the construction industry. It was introduced by the Housing Grants, Construction and Regeneration Act 1996 (the Construction Act).

It was designed to be a quick fix remedy to protect cash-flow during the construction phase, but is used in respect of any type of “dispute or difference” arising under a construction contract.

When is adjudication available?

Adjudication can be used where a dispute or difference has crystallised. Only one dispute under a single construction contract can be referred to adjudication at a time unless the parties agree otherwise.

The same dispute cannot be referred to Adjudication more than once. For construction contracts entered into from 1 October 2011, adjudication is available even if the contract terms (or some of them) were agreed verbally.

What types of disputes can be referred to adjudication?

Any dispute or difference may be referred to adjudication. However, the process is generally best suited to resolving the following claims:

Interim payments
Delay and disruption of the works
Defects
Extensions of time for completion of the works (including entitlement to LADs)
Valuing the final account

How long does it take and what is the process?

Once the Referral Notice has been served, the Adjudicator must reach a decision within 28 days (subject to any agreed extensions).

The process usually involves the consideration of written submissions but the Adjudicator may request a site inspection or a meeting with the parties where appropriate.

The parties should always check the terms of the contract to determine which adjudication rules apply and which adjudicator nominating body may select the adjudicator. A failure to do so may result in jurisdictional challenges and may invalidate the adjudicator’s decision.

What is the effect of the Adjudicator’s decision?

The Adjudicator’s decision is binding unless or until the dispute is finally determined by legal proceedings, arbitration or by written agreement.

The decision can be enforced in the Technology & Construction Court (TCC) by way of an expedited summary judgement application. Successfully challenging an Adjudicator’s decision is difficult butmay be possible if:

The Adjudicator was incorrectly appointed
The dispute or difference had not crystallised
The terms of the contract are not evidenced in writing (for pre-October 2011 contracts)
The Adjudicator has exceeded his jurisdiction
The Adjudicator showed bias
The decision was delivered late

Avoiding Adjudication

Most adjudication proceedings relate to non-payment. The amended Construction Act introduced a new payment regime and provisions in relation to the suspension of works due to non-payment. Parties to a construction contract should therefore ensure that their payment terms comply with the Construction Act and are adhered to.

James Coppinger, Head of Construction & Engineering at Buckles is a qualified adjudicator and since 2012 has been on the  TeCSA Adjudicator Panel.