Adjudication is the most popular form of alternative dispute resolution in construction having been introduced into all construction contracts following the Housing Grants Construction and Regeneration Act 1996, often referred to as the Construction Act. 

Adjudication is a legal right that cannot be removed under contract and which can be relied upon at any time to resolve a dispute. While it is often described as a quick fix form of dispute resolution, adjudication is also a great way for parties  to resolve their differences. Adjudication is popular as it was designed to be completed quickly, within 28 days of the date of the Referral, and rarely lasts more than 42 days. The courts have supported adjudication and if you obtain, or already have, an adjudicator’s decision in your favour, the courts will most likely enforce it and compel the other side to pay.

Druces’ Construction team includes solicitors who are very experienced in conducting adjudications, both for those with claims and defending claims. The team has worked at some of the best known construction law firms in the UK and is well equipped to advise clients, (where appropriate, in conjunction with other experts) on the strength of your claim and/or defence.

Today there are essentially two different types of adjudication. The first is known as smash and grab adjudications which are technical claims where the employing party under the contract has failed to issue a valuation of the works for that particular month. The second is more common. These are contested issues of valuation or extension of time and loss and expense claims or similar issues.

The biggest drawback of adjudication is the cost: the adjudicator has power to award costs to the winning party or split them between the parties. However, your costs of bringing or defending a claim will not be recoverable. This makes the cost of adjudication all the more important where the claim is of a lower value. We understand this and that is why we offer a fixed fee adjudication service.

Below, we set out an outline of the adjudication process.

Getting Started – the Notice of Adjudication

The process begins when the party making the claim (the Referring Party) gives notice to the defendant (the responding Party) of its intention to refer a commercial dispute to adjudication. The requirements for this notice are set out in The Scheme for Construction Contracts, as follows:

• a description of the nature of the dispute and the parties involved;
• details of where and when the dispute arose;
• the nature of the remedy being sought; and
• names and addresses of the parties to the contract, including addresses where documents may be served.

Although the Notice of Adjudication formally commences the process, there are no additional requirements for the document beyond those listed above.

Great care should be taken in the preparation of the Notice of Adjudication however, as this document frames the parameters of the dispute and creates the jurisdiction of the adjudicator to decide upon it.

Appointing your Adjudicator

After serving the Notice of Adjudication (and complying with the relevant service requirements of the underlying contract), the next step is to appoint an adjudicator within seven days.

The parties may have already agreed upon an adjudicator (either by way of specification in the underlying contract, or separately) failing which the Referring Party will apply to an Adjudicator Nominating Body (ANB) to make the selection. This process normally involves completing a short form identifying the parties and setting out the details of the dispute and the skills or experience required.

Care should be taken to ensure a suitable adjudicator is nominated and the form also provides for the exclusion of those adjudicators conflicted from nomination. A fee (generally less than £500) is payable by the Referring Party and the ANB must make a nomination within five days of the application being made (failing which the parties are obliged to recommence the entire process). 

Preparing and serving the Referral Notice

The deadline for service of the Referral Notice is seven days from the Notice of Adjudication. It is therefore advisable (however tempting it may be) to exercise restraint until the document is substantially ready before commencing the adjudication process. 

There will inevitably be some last-minute changes to the submissions or delays in the collation of evidence and failing to put your best foot forward as the Referring Party can be a costly (and often entirely avoidable) error.