Adjudication Under The Act (Part 3)

Adjudication Process – Adjudication Under The Act (Part 3)

This is the last of three posts about the Adjudication process under the Construction Act.

The Adjudication Process – How does it end?

It sometimes happens that the other party will seek to negotiate a settlement once the Notice of Adjudication has been issued. You should be alive to this possibility but should not expect it to happen. Nor should you become distracted from the adjudication process itself.

It is often the case that the Notice of Adjudication brings about a hardening of attitude from the other party who will then fight tooth and nail to defend their position.

If the process runs all the way through it will result in the Adjudicator’s Decision. This will be published to the parties and it will set out the decision in respect of the matters referred to him/her. It will also set out the date by which any monies to be paid by one party to the other must be paid, and it will set out his/her fees and the proportion to be paid by each party.

If you are the Referring Party and you obtain a monetary decision in your favour then you should contact the Responding Party to establish how they intend to make payment. e.g. BACS transfer, collect a cheque etc.

adjudication process in construction contracts

Is the Adjudicator’s Decision legally enforceable?

If you win and the losing party refuses to pay, then it is a matter for you to enforce the decision in the courts and this is a job for a solicitor with specialist construction expertise, as it should be a relatively quick process.

The Adjudicator’s Decision is binding on the parties until the dispute is finally decided by arbitration, litigation or agreement. Because it is binding the courts will enforce the decision in summary proceedings. In order to do this it is necessary to issue a claim form and an application for Summary Judgment in the Technology & Construction Court (TCC).

Courts aim to provide a hearing date within 28 days of the issue of the claim form, and this is rightly a tight time scale for the Defendant to serve its evidence in response, setting out his reasons for non-payment and for the Claimant to respond prior to the hearing date. Ordinarily, provided the Judge is satisfied that the adjudicator’s decision is valid, and that the Claimant is entitled to enforce that decision, then Judgment will be given in the Claimant’s favour, together with an award of costs.

Challenging an Adjudicator’s Decision

Adjudication is sometimes referred to as a form of “rough and ready” justice. Not surprisingly therefore, there are occasions when the decision reached, or the way it has been reached, give rise to the Responding Party wanting to challenge the decision.

Challenging an adjudication decision can only be successful for certain specific technical reasons. Simply having received what appears to be the “wrong decision” is not sufficient grounds for a challenge. As a form of “rough and ready justice”, adjudication has worked well.

Adjudicators have quite sweeping powers of investigation, but they must act within certain defined limits, and if they exceed those limits then their decision could be unenforceable.

Adjudicators have to act within the jurisdiction which has been given to them, and in accordance with the rules of natural justice. If they do not then the courts may refuse to enforce their decision.

What is the Scheme for Construction Contracts?

The Act provides, at s108 that a ‘construction contract’ must embody eight principles concerning the right to adjudication. If the contract does not comply with Section 108 then any adjudication provisions in the contract (except for 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. The Standard forms of contract generally include all of the principles, but be extremely careful that the contract does not try to amend the Scheme.

Is adjudication the only way to resolve the dispute?

Most certainly not! In fact, it may be that adjudication is definitely not the best way to resolve the dispute. There are potentially various ways to resolve the dispute ranging from informal negotiation to litigation.

If your own efforts to settle the matter have failed, the sooner you take professional advice the better.

Adjudication Process – Conclusion

Adjudication is designed to be a straightforward process to enable disputes to be resolved quickly and inexpensively. In some cases, it may be unnecessary for you to incur the cost of obtaining professional assistance from lawyers, consultants, or other specialists. However, adjudication is a serious process and mistakes can be very costly.

The proper preparation and presentation of your written case with supporting evidence to the adjudicator will invariably be a major factor in determining the success or failure of your arguments. Don’t forget that the adjudicator only has a short time in which to consider the arguments put forward by both parties before reaching a decision.

If you are considering adjudication you should always take professional advice before proceeding.

Handled well, the adjudication process is an effective means of resolving disputes. Handled badly it can be an expensive nightmare!

Need Further Advice?

Construction Act adjudication was originally intended to be a simple process by which disputes could be resolved. To a certain extent adjudication is a simple process, but it is nonetheless a legal process and not one to be undertaken lightly.

If you have no experience of legal process, then it is best to take professional advice. Bear in mind that the whole adjudication process takes place very quickly, so you need to act fast if you are on the receiving end of an Adjudication Notice!

You can call us for initial no cost advice on 01773 712116, and our Gold and Platinum Buddies can use their commercial and contractual consultancy to establish the best course of action.

Whatever level your business is at, and whatever your specialisation I want to encourage you to experience and enjoy a better more profitable, less stressful way.

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