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Adjudication – Beware of Being Ambushed!

What is adjudication?

A statutory right to refer construction disputes “at any time” to adjudication, that the parties cannot contract out of, in relation to construction contracts and “construction operations” (not involving residential occupiers). A referral to adjudication can either be in accordance with the contract (if relevant provisions apply) or under the provisions of the statute.

Is it popular?

Since the Construction Act came into force, adjudication has been embraced by the industry, often in place of court or arbitration proceedings and is now the default option in many standard forms of contract (e.g. the JCT contracts moved over to adjudication instead of arbitration). Our experience is that it remains popular despite what is sometimes described as “rough justice” following fast paced arguments and a decision which can be issued within 28 days.

Why adjudicate?

Whilst the best solution is to avoid disputes or resolve disputes as quickly and cost effectively as possible, there are some construction disputes that simply cannot be resolved by the parties alone and require a formal process. Compared to other formal procedures, it is often cheaper, faster and with the adjudicator having construction experience.

Downsides:

Irrespective of success in your claim or defence, party costs are not usually recoverable but this has to be compared with an element of irrecoverable costs in other proceedings. Adjudication only leads to an “interim” decision (and is not final and binding) so the parties could still refer the dispute to the court or arbitration, though most accept the decision.

Process:

A Notice of Intention to Refer to Adjudication starts the process and sets out brief details of the dispute and redress sought. The adjudicator is then appointed, either by agreement, having been named in the contract, or by a nominating body. The adjudicator then confirms whether they are willing to act. The Referral Notice is then sent not later than 7 days from the Notice of Adjudication. By now, the adjudication is off and running and the adjudicator will set a timetable for the provision of a Reply, and any meeting, before issuing the decision.

What about Christmas?

If a party fails to comply with any request, direction or timetable, the adjudicator can continue with the adjudication and make a decision on the information before him. This coupled with the fact that Saturdays and Sundays count as working days has led in the past to “Christmas” ambushes (only Christmas Day and Bank Holidays are excluded).
So if you have staff coming in over the festive period, make sure there is a system in place for checking and actioning post. If you return to find an adjudication notice on your desk, action this immediately to avoid a decision being issued, and your having to “pay now, argue later“.

1 Housing Grants, Construction and Regeneration Act 1996 (as amended by The Local Democracy, Economic Development and Construction Act 2009).