Adjudication in Construction Contracts: The Complete Guide

If you decide to adjudicate, define your construction dispute in writing and serve it to the opposing party. You can only refer one dispute on one contract at a time. This is called the notice of intention to refer a dispute to adjudication or notice of adjudication. It sets the parameters of the adjudication and it is important to get it right – it sets the boundaries of the power/jurisdiction granted to the adjudicator. Make sure you have received legal counsel from specialist solicitors before serving a notice of intention/ notice of adjudication.

Your notice should set out:

• A description of the dispute and the persons involved
• Identify the construction contract that the dispute arises under
• Identify the adjudication clause in the contract or the statutory right to adjudicate
• Details concerning when and where the dispute occurred
• The remedy requested
• The names and addresses of all parties to the disputed contract, and addresses of where the document is to be served

If you receive a notice of adjudication or notice on intention, within seven days you will also receive a referral notice setting out the full details of the dispute the referring party wants the adjudicator to decide. As soon as your reply to the adjudication in any way you are at risk of waiving any valid objections you may have to the jurisdiction of the adjudicator unless you reserve your position on jurisdiction as clearly as you can. The more general the objection the less effective it may be. The referral notice submissions can be lengthy and complex, and you often have just seven days to issue your response.

It is important to get legal advice from a specialist lawyer or building claims consultant. Do this as soon as possible upon receiving a referral notice, as the time to construct a response to the referral notice is limited. Your lawyer will be able to tell you whether an adjudicator will have jurisdiction over the issue and whether to reserve your position on jurisdiction. They can also answer any questions in general about the adjudication process. It is often better to use a solicitor, rather than a construction claims consultant, as the solicitor will be able to access the picture beyond adjudication and will be able to carry on with enforcement and litigation if required later on and will be more aware of not compromising those claims in construction adjudication.

It is difficult to get extensions to an adjudication timetable, so contacting a lawyer quickly after receiving a notice of adjudication is essential.

Helix Law tries to answer emails and queries within an hour during working hours. Contact us now to find out how we can help with claims and discuss the costs associated with adjudication.

If a referring party exercises their statutory or contractual right to refer a dispute to an adjudicator by issuing a notice of adjudication/notice of intention, appointing an adjudicator and then issuing a referral notice you must be careful to assess whether the right to adjudicate exists. If it does not and you don’t want an adjudicator to decide the dispute then be careful not to take any steps in the construction adjudication without first reserving your position in relation to jurisdiction. Before engaging in the process in any way you should reserve your position in relation to jurisdiction or you may grant jurisdiction where it did not exist by taking steps without reservation.

Contact a specialist lawyer to help you decide if you should act to challenge an adjudicator’s jurisdiction if you are unsure. The more specific your reservation is, the more likely it is to be effective. Put your challenge to the adjudicator’s jurisdiction straight away.

If the appointment is accepted by the adjudicator, they will give a binding decision within 28 days of the referral notice unless the referring party accepts an extension to the time limit. The decision is binding unless and until it is overturned by litigation or arbitration. Until it is, the parties must comply with it unless they can challenge the adjudicator’s decision.

Once the adjudicator has made their decision, it is unlikely that the court will not uphold and enforce it – even if it’s wrong. The philosophy of adjudication in construction is that it’s a quick and easy resolution. This means you must act upon it before challenging it. Essentially, you must pay up and argue later.

If you think the adjudicator got it wrong, you can commence court proceedings or arbitration (depending on what your contract says) to get a final and binding decision on the issue in dispute. This will trump the adjudicator’s decision but may take up to two years to obtain.

There are two ways to challenge an adjudicator’s decision, and arguing that an error of law has been made isn’t one of them. The two ways are:

• To argue that a breach of natural justice has occurred; and
• To argue that the adjudicator does not have jurisdiction.

If a challenge cannot be made, the decision must be paid or performed before beginning arbitration or court proceedings in an attempt to claim back the money. It is only in rare conditions that parties might be able to commence and win a court procedure before they must pay. Alternatively, there may be a chance to stay the enforcement of an adjudicator’s decision.

If you don’t pay the decision, you may end up paying significant sums for the referring party’s legal costs. If you refuse to pay, the opposing party can apply to have it enforced. They can add a claim for the costs of doing so, which can amount to £10,000-£35,000.

If a challenge is to be maintained against the decision’s ability to be enforced, then it must be raised early in the process. You must also be careful to not waive it by deed or by word.

This means that from the moment the notice of construction adjudication is received, everything you do could determine your rights within the process. Sometimes, the referring party does not actually have the right to commence adjudication under the legislation or contract. If you participate then, you could actually validate an adjudication that was initially invalid.

This is why it’s imperative to secure expert legal advice from Helix Law’s specialist solicitors. If you make a wrong move, you could end up needlessly losing a case.

Helix Law can fully explain the process and guide you through proceedings. Contact us today for an initial consultation.