Adjudication: The Insight

If you need your money and the other side are not paying you for some reason, adjudication is the place to go. But there are some key points to consider.

What is adjudication?

It’s a dispute resolution process for construction contracts. An independent gets appointed to act as the adjudicator – often adjudicators are professionals such as engineers and quantity surveyors. The aim is that the adjudicator will decide the dispute in 28 days. But there are key steps:

• You need a dispute – so you must have claimed something that the other side has rejected. A classic would be you have claimed payment and the payer has not paid it.
• The aggrieved party serves a “notice of intention” to refer the dispute to adjudication – you need to get this right! If it is not done correctly, you can run into all sorts of problems.
• Then you need to get the adjudicator appointed. The contract might stipulate who to use, if not, then there are adjudicator nominating bodies. The leading ones would be the RICS or ICE.
• Then it’s over to the adjudicator. The adjudicator will set the procedure and aims to reach a decision on the dispute within 28 days of its referral. The adjudication roller coaster has several twists and dives, but you end up with something enforceable in short order.

Pay now, argue later

The adjudicator’s decision is interim binding – meaning that it is not absolutely final and conclusive, it is open to be superseded by a subsequent decision in arbitration or court proceedings. However, 90% of the time, the adjudication decision settles the matter.

But the main point is that the winner is entitled to enforce the adjudicator’s decision. The loser must pay, even if it is likely to be overturned later. So, the principle is “pay now, argue later”. If the payer does not pay, the courts are very reluctant to prevent enforcement.

The “pay now, argue later” mechanism means that adjudication is effective in protecting cash-flow. Adjudication was designed this way to provide a quick process which is cheaper and more accessible than litigation or arbitration – this helps to keep the contract period running and makes sure the parties are paid.

When can you adjudicate?

Under both the UK and Irish legislation, parties have a statutory right to refer a dispute arising from a construction contract to adjudication “at any time” – even if your construction contract does not include any provisions for dispute resolution procedures you can still refer your dispute to adjudication. The right to refer “at any time” has been interpreted plainly and literally by the courts. For example, contractual agreements such as escalation clauses, which provide for a pre-adjudication procedure, cannot postpone or limit adjudication time frames. Even where the contract has been discharged, adjudication will be allowed to proceed.

When should you adjudicate?

It is important to know what disputes are worth pursuing. So do speak to us about when it is appropriate (or less so). The amount you are claiming matters. So does the complexity of the issues and how good your evidence is. You should always think it through before starting into an adjudication process. The adjudication process differs from that of conciliation and mediation as each of these require a consensual approach. Instead, adjudication requires only the unilateral choice of one party to the construction contract. The other party must comply as adjudication is a statutory right in both the UK and Ireland.

It is usually better to avoid any form of formal dispute resolution. So, have you attempted to negotiate on the dispute? You might be able to mediate or conciliate. These might be better options. Check that adjudication is the most suitable procedure to resolve the dispute. If adjudication is looking likely then counter-claims, costs and commercial relationships should all be considered.

Things to note

• Make sure you have a clear dispute. You must be clear what you are after and the other side needs to have considered it and rejected it (or left it so long that it is clearly not accepted).
• Follow the right procedure to appoint an adjudicator and adhere to the correct timings.
• Bear in mind the adjudicator’s job is to decide on the rights of the parties under the contract. They will decide the case (usually) on what is put forward by the parties. An adjudicator will not make a case for the parties. So you need to be able to explain your case clearly.
• If you are the payer, be ready! A claimant can come at you at any time. Do not allow matters to fester.

So, what really matters in an adjudication? – Records, records, records!

The side with the best evidence wins. Preparation is key and should begin as soon as possible. Far too often parties fail to understand the importance of records – this includes payment records, labour allocation sheets, meeting minutes, site diaries and photographs, emails, programmes and more. A general rule of thumb is to record EVERYTHING.

Quigg Golden comment

All in all, adjudication is a very powerful tool, when used correctly. The processes of (a) commencing an adjudication; (b) responding to a notice of adjudication; and (c) challenging the enforcement of an adjudication decision are all actions which require strict adherence to the statutory provisions provided for in the HGCRA 1996 and the Construction Contracts Act 2013 in the UK and Ireland respectively.

Knowing when and how to use adjudication is fundamental to the process.

Quigg Golden is one of the market leaders in adjudication. We have been doing adjudication since the process arrived in the UK over 25 years ago. We can assist you in understanding and maximising the benefits of this and many other procedures that help you sort out your problems efficiently and as painlessly as possible. Should you need any advice on adjudication do not hesitate to contact us.