To begin, this post will discuss what adjudication actually is, the advantages and disadvantages of the process and the steps to take when serving a notice of adjudication.

With the initial investment in construction projects often running into hundreds of thousands if not millions of pounds, the last thing parties to a contract need is to have their venture delayed due to a deadlocked dispute. 

Adjudication is a disputes resolution procedure which offers a fast, cost-effective way of settling disagreements, using an impartial adjudicator, who will make an interim binding decision based on the information provided to him or her by the parties to the adjudication.

The right to adjudicate is given either expressly in the construction contract itself or, if the contract makes no mention of adjudication rights, the right will be implied as deriving from the Housing Grants, Construction and Regeneration Act 1996.

Under the Housing Grants, Construction and Regeneration Act 1996 (the Act), the following criteria must be met in order for one party to instigate adjudication for contracts entered into between 1 May 1998 and 30 September 2011:

• There must be an actual ‘dispute’    

• The dispute must arise under a ‘construction contract’     

• The dispute must relate to a ‘construction operation’ defined in section 105(1) of the Act.        

• The construction contract must be in writing

If the contract dates after the 1^st October 2011, the amendments to the Housing Grants, Construction and Regeneration Act 1996  brought about by the Local Democracy, Economic Development and Construction Act 2009 apply.  For adjudication to be sought under the amended legislation, the construction contract does not need to be in writing.

Parties to a contract can agree to grant jurisdiction to an adjudicator on an ad hoc basis if the dispute falls outside of a ‘construction operation’ as defined in section 105(1) of the Act, or is not in writing (in cases dating before 1^st October 2011).

The following situations fall outside the statutory right to adjudication:

• If the contract relates to residential property being used as a home by one of the party’s to the contract (unless the construction contract expressly allows the right of adjudication) ·     

• The contract is actually a development agreement     

• The extraction of oil, gas or minerals and the manufacture of building or engineering components (except if the contract provides for their installation) Advantages of Adjudication

The Adjudicator must reach a decision within 28 days of receiving a Referral of Adjudication from one of the party’s to the construction contract. 

When compared to formal litigation proceedings, the costs involved in the adjudication process are very low.

Adjudication proceedings are rarely made public and both parties are free to enter into a confidentiality agreement.

An Adjudicator’s decision is binding unless it is appealed through arbitration or litigation.

The parties can agree to extend the 28 day time limit and grant additional powers to the Adjudicator if they feel the complexity of the dispute warrants more in depth analysis of the facts.

The responding party can be on the back foot from the beginning of the process due to strict time constraints.  The referring party has the advantage of time on their side in order to prepare and present a strong, detailed argument to the Adjudicator.  Therefore, it is important the responding party seek professional legal advice as soon as they receive notice of the proceeding so they can prepare a quick and detailed response for the Adjudicator to consider.

Parties to adjudication are generally responsible for their own costs, unlike litigation proceedings where an order costs can be awarded by the courts.

Keep your eyes peeled for the next part of this series - Notice of Adjudication, or (so not to miss out) if you would like us to email you the series and future updates please subscribe here. 

If you wish to enquire further about the Adjudication Process (click here) or please phone our office on 0207 993 6960.

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Fisher Scoggins Waters is a leading construction, engineering and manufacturing litigation firm, specialising in disputes and disasters. For further information on this article or any of our litigation services, please contact us on +44 (0) 207 993 6960.