Everything you need to Know about Adjudication.
Adjudication is a contractual or statutory procedure for swift interim dispute resolution. It is provided by a third-party adjudicator selected by the parties in dispute.
Adjudication is often subject to a strict timetable and may be based purely on documentary submissions (see NEC Engineering and Construction Contract, option W2). However, adjudicators can adopt an inquisitorial role which may involve taking the initiative in ascertaining facts and law.
Adjudication decisions are binding unless and until they are revised by arbitration or litigation. There is no right of appeal and limited right to resist enforcement. Award of legal costs is at the adjudicator’s discretion adjudicatoradjudicator unless the terms of the contract exclude this contractcontract. Based on the decision and written information received from both parties, the process can take up to 28 days, and the findings are binding.
Suppose parties to a construction contract do not agree on an adjudication procedure. In that case, the construction contract does not agree on an adjudication procedure. One is imposed by statute (see the Housing Grants, Construction and Regeneration Act 1996 Part II Section 108 and the Local Democracy, Economic Development and Construction Act 2009 Part 8, which took effect in England and Wales in October 2011 and Scotland in November 2011).
Contractual adjudication procedures must comply with Section 108 of the Housing Grants, Construction and Regeneration Act.
The adjudicator is either named in the contract, agreed by the parties or appointed by a nominating body, usually called in the contract (see, for example, the Technology and Construction Solicitors Association (TSCA), which has developed its own Adjudication Rules (now version 3.1).
Suppose the parties do not agree on procedural rules which comply with the Housing Grants, Construction and Regeneration Act. In that case, the Housing Grants, Construction and Regeneration Act, then Act imposes the regulations set out in the Scheme for Construction Contracts.
Advantages and disadvantages
- The parties can select the expert or the characteristics of the expert.
- The expert can act as an investigator.
- Seldom lengthy oral arguments or legal submissions.
- No cross examination or formal evidence.
- Streamlined, speedy and flexible procedures as agreed between the parties.
- Less expensive.
- The expert cannot go beyond the jurisdiction specifiedin the contract.
- The expert determinationis not supported by statute.
- The expert powersare limited.
- The expert’s determinationsmust be enforced by commencing court proceedings.
Section 108 - key adjudication provisions
Section 108 of the Act
- The requirements for adjudicationthat all construction contracts should provide for.
- If the contractdoes not comply with these requirements, then the statutory scheme will apply.
- A party to a construction contractwill thereby be able to refer any dispute arising under the contract for adjudication under either the contractual scheme or the statutory scheme.
Section 108 (2) – stipulates that the contractual scheme for adjudication should
The scheme for construction contracts
- The party seeking adjudicationserves written notice on every other party to the contract.
- This briefly sets out the nature of the disputeand the relief sought.
- A copy is sent to the adjudicatorof nominating
- Enable a party to give noticeat any time of his intention to refer a dispute to adjudication.
- Provide a timetable with the object of securing the appointmentof an adjudicator and referral of the dispute to him within 7 days of such notice.
- Require the adjudicatorto reach a decision within 28 days of referral or such longer period as agreed by the parties, or by up to 14 days with the consent of the party by whom the dispute was referred.
- Impose a dutyon the adjudicator to act
- Enable the adjudicatorto take initiative in ascertaining the facts and law (the adjudicator is not required to act judicially when applying the law, nor is there any obligation upon him to reach the right answer).
- Provide that the decision of the adjudicatoris binding unless and until the dispute is finally determined by legal proceedings, by arbitration or by agreement.
- Provide that the adjudicatoris not liable for anything done or omitted in the discharge of his functions unless in bad faith.
- Selection of an adjudicatorby a body must be communicated to the parties within five days of referral.
- The selected adjudicatorhas two days to decide whether he is willing to act.
- This person must not be an employeeof a party to the dispute.
- Once appointed, the referring party must serve noticeon the adjudicator, accompanied by copies of all documents on which that party intends to rely.
- Copies of this noticeand documents are sent to all other parties in the dispute.
- The adjudicatormay decide more than one dispute arising out of one contract if there is consent between the parties. Typically the Adjudication Dispute will only deal with one dispute.
- May decide related issues arising under different contracts.
Objection to adjudicator
- The objection of a party to the appointmentof a particular person as adjudicator will not invalidate the appointment or decision of the adjudicator.
Powers of adjudicator
- To open up, revise and reviewcertificates unless the contract provides that they are final and conclusive.
- To decide and order paymentof sums due under the contract.
- To decide whether interest should be paid.
NB: In 2017, the Construction Industry Council (CIC) published a new Users’ Guide to Adjudication, providing a general introduction to adjudication in the context of construction contracts, and in particular the right to adjudication in the UK and Northern Ireland.
In the case of Michael J Lonsdale (Electrical) Limited v Bresco Electrical Services Limited (In Liquidation)  EWHC 2043 (TCC), Mr Justice Fraser QC ruled that where there are claims and cross claims between the parties to a contract, a claim cannot be settled by adjudication because it is not a claim under the contract and so an adjudicator could rule on it.
NB The Global Construction Disputes Report published by Arcadis in 2019 found that the UK remains the jurisdiction with the shortest average length of time to solve a dispute at 12.8 months, and that the average value of disputes in the UK has fallen 47% to US$ 17.9 million. Negotiation remains the preferred method of resolution.
- Adjudicators and bias.
- Alternative dispute resolution.
- Alternative Dispute Resolution legislation.
- Arbitration v Adjudication.
- Breach of contract.
- Causes of construction disputes.
- Contract claims.
- Contract conditions.
- Dispute resolution.
- Dispute resolution board.
- Expert determination.
- How does arbitration work?
- Pay now argue later.
- Pendulum arbitration.
- PFIs and adjudication.
- The Housing Grants, Construction and Regeneration Act.
- The role of the mediator.
- The Scheme for Construction Contracts.