What is Adjudication?

  • Adjudication is a way of resolving disputes in construction contracts. If a construction contract does not provide for adjudication, then Section 108, Housing Grants, Construction and Regeneration Act 1996 (the Act) gives any party to a construction contract a right to have a dispute decided by an adjudicator. 
  • Adjudication is intended to be quicker and more cost effective than litigation or arbitration An adjudicator must decide the dispute within 28 days of the matter being referred (subject to any agreed extension) 
  • Adjudication is normally used to ensure payment but it can also be used to resolve contractual disputes with and between designers, contractors and subcontractors during construction or after completion. 
  • The decision is binding and is usually upheld by the courts. Once the adjudicator has made his decision, the other party must comply with it. If it does not, a court hearing to compel compliance can usually be obtained in a matter of days. 
  • Adjudication does not always result in final settlement of a dispute. Either party has the right to have the same dispute heard afresh in court (or where the contract specifies arbitration, in arbitration proceedings). In practice the majority of adjudication decisions are accepted by the parties as the final result.

How do I know whether I can go to adjudication or not?

If the contract does not contain any adjudication provisions, or it does but the procedure does not comply with the Act, then to refer a dispute to adjudication you must make sure that:

  • The contract is a ‘construction contract’ as defined by sections 104 & 105 of the Act;
  • There is a ‘dispute’;
  • The dispute arises ‘under the contract’.

What is the Scheme for Construction Contracts?

  • A construction contract must contain all eight principles set out at section 108, Part II of the Act concerning the right to adjudication. If the contract does not, then any adjudication provisions in the contract (with the exception of the naming of an adjudicator or adjudicator nominating body) are ignored and the Scheme applies
  • The Scheme for Construction Contracts is a set of rules which includes all eight principles and will automatically apply to any Construction Contract which omits even one of these. The Standard Forms of Contract generally include all of the principles. The Scheme will usually apply to non standard contracts or ad-hoc agreements.

How do I start the adjudication process?

If your contract provides for adjudication, the procedure in your contract should be read carefully and followed. For adjudications under the Scheme, there are three main steps:

  • Notice of adjudication (see the Scheme for full details of what this must contain. The Notice must be consistent with the Referral)
  • Appointment of adjudicator; and
  • Referral notice – This document contains all the information you wish the adjudicator to consider. The Referral should be sent to the adjudicator and the other party. The 28 day period for the decision starts on the date when the adjudicator receives the Referral Notice.

How are Adjudicators appointed?

  • An adjudicator or an adjudicator nominating body may be named in your contract. If it does then you must use the named person or body. If it does not, or if the person named declines to act, then you may approach an Adjudicator Nominating Body (ANB) of your choice to select a person to act and we can assist .Most ANB’s will charge a fee to make an appointment. They have 5 days from when the application was received to nominate an adjudicator. 

How long does the process take?

  • The clock starts as soon as the Notice of Adjudication is served. You then have 7 days to get an adjudicator appointed and refer the dispute to him.
  • The adjudicator then has 28 days from the date he received the Referral Notice to make his Decision.
  • The adjudicator can extend this by up to 14 days with the consent of the Referring Party.
  • If both parties agree, they can extend the period for as long as they wish, provided the agreement is made after the date of the Referral Notice.

Who pays for the adjudication?

  • Both the Scheme and standard forms of contract usually provide that the adjudicator can decide who is to pay his fees and reasonable expenses by apportionment between the parties in his decision.
  • Usually, the successful party is not required to pay the adjudicator’s fees. But both parties are jointly and severally liable, so should an unsuccessful party refuse to pay the adjudicator’s fee, he can lawfully claim the fee from the successful party.
  • Most standard form contracts and adjudication rules provide that the parties cannot recover their own costs in the adjudication so neither party can claim the fees incurred by lawyers or anyone else who helps prepare his case. The Scheme is silent on the parties’ own costs.

What will the adjudicator charge?

  • There is no set rate for adjudicators. Most adjudicators will normally have an hourly rate but this rate will vary and may depend upon the experience of the adjudicator or the complexity of the dispute to be decided.
  • If the adjudicator was named in the contract or agreed by the parties, then the hourly rate should be agreed at that time.
  • If the adjudicator is nominated by an Adjudicator Nominating Body, there is no opportunity for the parties to agree an hourly rate and the adjudicator must set a reasonable rate. It is up to the adjudicator to record and determine how many hours have been spent on the adjudication.

How can I enforce the adjudicator’s decision?

  • If a losing party refuses to comply with the adjudicator’s decision, the other party can enforce the decision by applying for ‘summary judgment’. Proceedings are usually started in the Technology and Construction Court (TCC) and are usually heard very quickly.

Do I need professional help to take a case to adjudication?

  • You are able to represent yourself if you wish. However, it is worth bearing in mind that preparation and presentation of your written case to the adjudicator may be a critical factor in the success or failure of your arguments.
  • Where technical or legal issues are involved, you will benefit from seeking professional help at the earliest opportunity, preferably before you start the adjudication process.

Where can I go to find someone to support me ?

Prime Dispute hold details of professionals who are able to assist you. Contract us for more information.

Please Note: Whilst every effort has been made to ensure that this information is correct, it is intended only as a guide and is not intended to be comprehensive, or to provide legal advice. Neither Prime Dispute nor any contributor assumes any liability to anyone for any loss or damage caused by any error or omission whether such error or omission is the result of negligence or any other cause. Any and all such liability is disclaimed.