Adjudication is a form of dispute resolution that specifically applies to construction disputes. It was introduced as a process for contractors and subcontractors to quickly resolve disputes, and maintain cashflow, without enduring lengthy Court proceedings.
What is the legal framework for adjudication?
The conditions in which a matter can be referred to adjudication and the process by which to do so are set out in sections 104 to 117 of the Housing Grants, Construction and Regeneration Act 1996 (‘the Act’).
The Scheme for Construction Contracts (England and Wales) Regulations 1998 (‘the Regulations’) contains an alternative, but broadly similar set of provisions. The Regulations apply where a contract does not comply with the provisions of the Act. In this article, however, we will concentrate on the Act.
Who can refer a dispute to adjudication?
Under s108 of the Act, any party to a construction contract has the right to refer a dispute arising under the contract for adjudication. The person referring the dispute is often known as the ‘Referring Party’.
A construction contract is an agreement with a person for:
- The carrying out of construction operations;
- Arranging for the carrying out of construction operations by others (for example, under a sub-contract); or
- Providing their own labour, or the labour of others, for the carrying out of construction operations.
It includes agreements to do architectural, design or surveying work or to provide advice on building, engineering, interior or exterior decoration; or on the laying-out of landscape in relation to construction operations. A ‘dispute’ simply means a difference. It could be about anything from disagreements about payment; to a dispute about the way the parties should interpret contract terms; or whether works exceed the agreed scope.
Can I refer multiple issues to adjudication at the same time?
The Act permits parties to refer a dispute arising under the contract to adjudication. This appears to suggest that only one dispute and one contract can be the subject of any one adjudication. However, it is possible for the parties to agree between themselves that they can refer more than one contract and more than one issue to the same adjudicator.
What are the timescales involved in adjudication?
The Act sets out strict timescales which parties must adhere to when pursuing an adjudication. Failure to comply with the timescales may mean that the adjudication cannot proceed and you have to start the process again.
An adjudicator should reach a decision within 28 days of the date the dispute is referred to them. The adjudicator can extend that date by up to 14 days if the Referring Party agrees.
What are the steps involved in adjudication?
The Act sets out the timescales within which various stages of an adjudication should take place. The contract should set out the specific details. Generally, an adjudication will include the following steps:
- The Referring Party must send a Notice of an intention to refer a dispute to adjudication to the opposite party;
- The Referring Party contacts an adjudicating body (for example, the RICS) to request they appoint an adjudicator;
- The adjudicating body then identifies and appoints an appropriate adjudicator;
- The adjudicator will provide a timetable for providing documents in relation to the case and for providing their final decision;
- The Referring Party sends a Referral Notice setting out details of the claim to the adjudicator and the opposite party;
- The opposite party then sends a Response to the adjudicator and Referring Party;
- If required, the Referring Party prepares and circulates a Reply to Response
- If required, the opposite party then prepares and circulates a Rejoinder to the Reply to Response. This is essentially a reply to the Reply to Response.
- Finally, after considering all the information provided, the adjudicator makes his decision and circulates it to all parties.
Can I enforce an adjudicator’s decision is the defaulting party does not pay?
Yes. If a defaulting party does not, or refuses to, pay within the timescales provided you can apply to the Technology and Construction Court to enforce the decision.
Can I appeal an adjudication decision?
Yes. An adjudicator’s decision is a non-binding decision. If a party does not accept the adjudicator’s decision it can choose to refer the dispute to arbitration, it can reach alternative settlement with the opposing party by agreement or it can issue Court proceedings to resolve the dispute. Only once a Court provides a decision is it binding upon the parties.
It is important to note that adjudication proceedings contain very strict timescales which the parties must adhere to. Your claim may be unsuccessful, or your defence (known as a response) disallowed if you fail to comply with the deadlines.
If you are a party to a construction contract and have a dispute with another party to the contract and would like further advice regarding pursuing adjudication, we can help. Call our dispute resolution team on 0800 988 7756 for a free initial discussion.