Should You Accept a Named Adjudicator in a Construction Contract?

When negotiating a construction contract, the focus often won’t be on the adjudication terms; instead, your focus will be on the main commercial terms. Construction disputes involve numerous technical aspects that are central to any contract, with time, quality, and cost/price of work being key. 

A Clause Easy to Overlook

It is human nature, especially where your focus is on time and money, to miss the clause on how the adjudicator will be appointed (and who they are) under a construction contract if a dispute arises. Perhaps adjudication is a problem that hasn’t arisen thus far, and of course, you hope it never will.

However, in the case of a dispute, the referring party is bound by the adjudication provisions of the contract. There may be a term requiring the parties to use either a named adjudicator or select one from a panel of adjudicators.

Nothing in the Housing Grants, Construction and Regeneration Act 1996 (as amended) prevents naming an individual adjudicator in a contract, and there are some important benefits for the parties, including:

• Known expertise for a known project: On complex or specialist projects (e.g., a process plant, cladding remediation, tunnelling, or PFI/PPP handback), parties may want an adjudicator with a very particular technical or legal skillset. Adjudicators from nominating bodies can usually provide expertise, but naming an individual allows you to pre-select a person who you know understands the project type, perhaps even the contract form, and can “hit the ground running” if there is a dispute.
• Continuity across a programme of disputes: Frameworks and long-term alliances sometimes see serial adjudications. A named adjudicator can offer consistency in approach to recurrent contractual themes such as assessment mechanisms, compensation events, and extensions of time. That consistency can reduce tactical posturing because parties can predict how their arguments are likely to be received.
• Cost efficiency through reduced onboarding: Time spent educating a newly appointed adjudicator incurs a real cost. If a named adjudicator is already familiar with the job or form, the parties may incur less expense on background and orientation, especially when issues are narrow and time-sensitive.

There are also some significant drawbacks to naming a specific adjudicator. These include:

• Perceived (or actual) lack of independence: Adjudicators are high-integrity professionals, but they are also people, and people carry conscious and unconscious bias and prejudices. A losing party is going to find it harder to accept the decision if they suspect the adjudicator’s independence is affected by their familiarity with, or income derived from, a particular party’s contract. This can lead to messy and expensive jurisdictional challenges. It may even result in a referring party deciding against adjudication and choosing litigation instead.
• If the named adjudicator cannot act or fails to respond to the referring party, that may cause a problem if the adjudication provisions are poorly drafted and lack adequate fallback mechanisms. This could be a breach of the referring party’s right to refer a dispute at any time under the Housing Grants, Construction and Regeneration Act 1996 (as amended). Any defect in the drafting of the adjudication rules under the contract can result in the entire contractual adjudication framework being superseded by the adjudication rules under the Scheme for Contracts.

Summary

Generally speaking, if you are signing someone else’s terms and contract, you should check the adjudication rules being proposed. Suppose there is no good reason for a named adjudicator. In that case, it is preferable to avoid having to refer a construction dispute to one individual adjudicator who has been named in the other party’s standard terms and with whom there might already be a commercial relationship. If there is a good reason for naming an individual, make sure the drafting works so that the contractual adjudication rules do not limit the referring party from referring the dispute at any time.

If you are negotiating a construction contract or are already in a dispute that may require adjudication, you should seek specialist advice from solicitors experienced in construction adjudication. Often, there are tactical ways to approach your dispute around timing or procedure to maximise your prospects of success. There may also be pitfalls to avoid or opportunities to leverage in the adjudication process. Whatever your position and/or situation, the construction litigation team at Helix Law is experienced in advising in this area and is ready to assist you.