We want to help clients avoid costly litigation and allow their projects to continue. Our team possesses expert understanding and experience in dealing with construction contract disputes, and are able to support clients through settlement, adjudication proceedings and trial.Where we assess a payment claim to have become due as a notified sum, we offer a comprehensive and cost-effective recovery service including adjudication, if necessary, for the fixed and contingent prices set out here.
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Overview of Adjudication in Construction
The adjudication process was introduced with the UK Housing Grants, Construction and Regeneration Act of 1996, as an informal method of resolving construction disputes without the need to resort to expensive formal court procedures. However, since then adjudication has become more formalised, and parties must serve detailed submissions, expert reports and witness statements.
Despite its formalisation, construction adjudication is still a quick and cost-effective way to settle construction disputes. In normal procedures, the adjudicator’s decision is made within 28 days, unless all parties agree otherwise. A party can refer a single issue to the adjudicator, which can prevent responding parties from relying on a counterclaim.
Adjudicator decisions can be enforced by a summary judgment process in the Technology and Construction Court. In the majority of cases, the losing party accepts the decision and does not arbitrate or litigate. Adjudication is an important tool that should be known to all construction professionals.
The Adjudication Process
Notice of Intention
The process begins when a party makes a notice of intention to refer a dispute to an adjudicator. A notice of intention is a written document filed at court, and should include:
- An overview of the dispute and the involved parties;
- Where and when the dispute occurred;
- The desired remedy;
- The names and addresses of all parties involved, including addresses where documents should be served.
These are the minimum requirements of a Notice of Adjudication. Apart from these steps, documents can be compiled whichever way the serving party deems fit.
The next step of the procedure is the appointment of an adjudicator. This must happen within seven days of the notice being served. To secure an adjudicator, the parties have two options:
- The parties decide on an individual to act as adjudicator;
- Or the party who brought the dispute may apply to an Adjudicator Nominating Body (ANB) for a fee. This happens if the parties cannot reach an amicable agreement between themselves.
If an application is made to an ANB, they should refer their selection to the party who made the application within five days. If the ANB fails to do this, the entire process must begin again.
A referral notice should be served a maximum of seven days after the Notice of Adjudication. This details the disputing party’s case, and should include documentation that supports the claim, as well as witness statements and expert reports (if needed).
It should be ensured that the disputing party is able to serve this notice. There have been cases where the ANB has appointed an adjudicator a day before the seven-day window expired, meaning the adjudicator will need the referral notice within 24 hours. At the same time as it is served to the adjudicator, a copy should also be sent to the other parties.
The Construction Act dictates a strict timetable. From the service of the referral notice, the adjudicator’s final decision must be made within 28 days. This timeframe may be extended with permission from the adjudicator.
The purpose of these tight deadlines is to enforce a cost-efficient and quick alternative to court proceedings through which to settle disputes.
The Other Party’s Response
The responding party’s response to the referral notice is essentially their defence. It must be served within seven days of the referral notice. Sometimes the other party will request for this to be extended to fourteen days, which is usually granted.
The Adjudicator’s Decision
The adjudicator must reach their decision within 28 days of receiving the referral notice. This period may be extended by fourteen days if the party who referred the dispute agrees to it, or by a longer period if all parties involved agree.
The adjudicator’s decision is final and legally-binding, provided that it is not challenged by further litigation or arbitration. The decision should be complied with by all parties, even if they intend to commence court or arbitration proceedings afterwards.
The majority of decisions are accepted by both parties. However, in the case that they choose to pursue court or arbitration proceedings, the dispute is heard again from the start; not as an ‘appeal’ of the decision.
What Will It Cost?
As the Construction Act makes no reference to costs, this can be a grey area. However, changes to the Act which were made in 2011 state that contractual provisions attempting to allocate costs of adjudication between the parties are not valid unless they were made after the adjudicator’s appointment. This applies to agreements made with regards to allocating the adjudicator’s fees as well as who will pay the parties’ own costs.
This provision was put into place to prevent parties from agreeing on contractual terms which place all financial risk on one party.
Both parties are jointly and severally responsible for paying the adjudicator’s fees for work they have reasonably undertaken and reasonable expenses incurred by them. This means both parties are liable and can be pursued for the adjudicator’s fees, or either party may be pursued for the full amount.
The adjudicator may decide a reasonable sum, but if there is dispute over this sum, a court application can be made to have it determined. Note that this only applies to adjudication procedures that follow the provisions set by the Construction Act, not ones that follow the Scheme for Construction Contracts’ provisions.