Is Adjudication The Route To Cash In The Current Crisis?

These are unprecedented times with restrictions of movement and restrictions on how business can be conducted. Companies trading under construction contracts have, however, an advantage over those companies that trade under regular contracts. Delays in Court processes for contested contractual disputes are inevitable. Construction companies can, however, use the Adjudication process to kick-start their claims.

What is Adjudication?

An Adjudication is an alternative form of dispute resolution, providing a quicker and more cost-effective option than resolution through arbitration or litigation.

A lot of sub-contractors and smaller companies in the construction industry often find it difficult to afford the costs associated with these forms of dispute resolution when they have not received payments by their contractors. Adjudication offers a quicker and cheaper alternative.

Adjudication process and ground rules

Adjudications operate by the Housing Grants, Construction and Regeneration Act 1996 and the Local Democracy, Economic Development and Construction Act 2009.

The Adjudication process is straightforward, relatively quick (compared with the Courts) and best of all, can be dealt with by email.

There are ground rules to Adjudication which include the following:

  • Only one dispute between the parties to a construction contract may be adjudicated at a time. That dispute must have ‘crystallised’.
  • An Adjudicator has to be appointed, but if the contract is silent there are some 20 or so ‘nominating bodies’ who will appoint experienced Adjudicators.
  • Adjudicators govern their own process but with some fundamental steps that must take place in every Adjudication. First, the Notice of Adjudication which is a summary of the Claimant’s (aka the Referring Party) case.
  • Once the Adjudicator has accepted jurisdiction then he/she will receive a Referral Notice from the Referring Party which sets out in detail the basis of the claim. This must be served within seven days of the Notice of Adjudication – and is usually supported by statements and copies of the relevant documents. Electronic bundles of documents and statements can be prepared and served by email.
  • The Defendant (Responding Party) has a right of Response which will be detailed and may also be supported by statements and documents.
  • Thereafter, the Adjudicator will permit or decline, as appropriate, the parties’ further rights of reply.
  • The Adjudication itself must conclude within 28 days, unless the parties agree to an extension.
  • The successful party has then an Adjudication award which is enforceable in the High Court – usually the Technology and Construction Court (the TCC) in London. The TCC operates a fast–track system for summary judgment on Adjudication enforcement cases to ensure that the mantra ‘Pay Now, argue later’ is maintained!

AdjudicationHow Nelsons can help

Jon Roberts is a Partner in our Dispute Resolution team, specialising in construction and engineering.

For further information, please call Jon or another member of the team on 0800 024 1976 or contact us via our online enquiry form.