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Most construction disputes never arrive in court or arbitration - the majority are resolved in adjudication.
What is adjudication?
Adjudication is a quicker, more cost effective alternative dispute resolution strategy.
A party to a construction contract can refer a dispute to adjudication. The relevant legislation provides for a wide definition of “construction contract”, which can include verbal agreements and ancillary documents such as collateral warranties or letters of intent.
Parties cannot contract out the ability to adjudicate and such provisions will be implied into any construction contract which fails to provide for the right.
What sort of disputes are referred to adjudication?
While the majority of disputes concern payment, but, can involve other issues, for example, the determination of a claim for an extension of time or a party’s liability for design. It is also possible for parties to adjudicate following the expiry or termination of a contract.
The adjudication process
There are several pre-requisites to commencing an adjudication:
- There must be a dispute between the parties.
- The dispute must have crystallised (i.e. the nature and scope of the claim(s) must have been clearly set out to the other party).
- A Notice of Adjudication must be served. This document sets of the parameters for the dispute and creates the jurisdiction of the adjudicator to decide the same.
- An adjudicator is nominated and appointed by the relevant nominating body.
The referring party, within 7 days of the Notice of Adjudication, serves on the responding party and the adjudicator its Referral notice. This document is a more developed and evidenced version of the Notice of Adjudication, and must seek the same redress.
The responding party then has an opportunity to issue its Response, following which the referring party may seek permission to serve a Reply. There can be further submissions as directed by the adjudicator.
The adjudicator is obliged to reach their Decision within 28 days of the Referral, although this time frame can be lengthened with the consent of the party who referred the dispute. This Decision is binding upon the parties pending litigation or arbitration of the underlying dispute. If a party fails to comply with a Decision then it can be enforced by way of summary judgment (a truncated court process which avoids a full trial).
- The ability to obtain an enforceable award within a few weeks is advantageous to businesses. Court cases often take years.
- The referring party is firmly in the driving seat and retains the benefit of its preparation time during the dispute. The responding party will be naturally more time pressured.
- The specialisation and/or expertise of an adjudicator can be chosen during the nomination process. There is therefore scope to appoint someone familiar with the issues in dispute.
- The costs are marginal by comparison to litigation or arbitration.
Notable examples of our adjudication successes include:
- Successfully defending 3 parallel adjudications relating to the renovation of a five-star London hotel.
- Obtaining a substantial settlement for a steelwork subcontractor at a London landmark.
- Securing delay and special damages on a Combined Heat and Power plant for a main contractor.
- Obtaining declaratory relief as to the form and content of contract on behalf of an employer at a factory development.
- Successfully adjudicating on behalf of a construction manager and subsequent court proceedings.
- Acting for a sub-subcontractor with a claim on one of the biggest high end residential developments in the country.
How much does adjudication cost?
The cost of going to adjudication falls into two parts, the adjudicators fee and expenses (including the fee for appointment of the adjudicator in most cases) which the adjudicator has the power to determine who pays these or in what proportion. Generally if you have won you do not pay. Then there are the costs of pursuing the adjudication. These costs are not recoverable and therefore it is vitally important to know what the cost will be up front. Due to the number of successful adjudications that our team has undertaken and defended, we are able to provide accurate cost estimates at each stage of the process. We can also provide fixed fee arrangement for elements of the dispute or indeed its entirety especially for cases where the value in dispute is low, under £100,000.
How we can help
At Goodman Derrick we pride ourselves on providing commercial, cost effective advice. We generally commence this with a high level review of your case and then provide an outline adjudication strategy to you. This could include separating claims into different disputes for strategic purposes, or indeed not pursuing some weaker elements which could undermine your overall claim. If the matter is particularly complex or requiring substantial evidence, we may even advise that adjudication is not the correct form of dispute resolution.
We have a substantial network of construction professionals that we work with and who we can recommend to help you prepare your claim or to act as experts in support of your claim. This means that when you commence the adjudication you are putting your best foot forward and maintaining the strategic advantage of being the referring party.
We generally advise that, save for instances of severe time pressure such as an impending termination notice, the Referral and all supporting documentation is prepared in tandem with the Notice of Adjudication. Too often parties rush into disputes and find themselves challenged to serve a Referral in the form and content they had anticipated.
If you have received a Notice of Adjudication call us as we can also advise you as the responding party. We are used to mobilising quickly and have regularly prepared detailed Responses and supporting documentation against tight timeframes. If required we can also arrange for input from our network of construction professionals on short notice.
What if you already have an adjudicator’s decision
Whether or not we have helped you with the adjudication we are able to assist in the recovery of unpaid adjudicators’ decisions, often referred to as enforcing the award. We can also advise you if you have lost an adjudication on whether the decision is enforceable and what steps you can take to deal with a poor decision.
If we have not acted for you we can advise you if there are any risks in enforcement or indeed whether you can resist enforcement. Our team has been involved in many hard fought enforcements and we can assist either before you commence proceedings or after receiving the papers. We can then prepare all the paperwork needed to enforce the decision very quickly and thanks to our relationships with barristers’ chambers you will have the best possible representation in court. We have conducted numerous enforcements and have a trusted selection of barristers for this purpose.