What is Adjudication?

In an industry with tight profit margins, as scaffolding contractors, you can be unfairly targeted with claims of delay, contra charges or reductions in your payment applications.

So what do you do? You could consider court proceedings but are you aware of the dispute mechanism known as Adjudication (not to be confused with mediation)?

This article explores the right to adjudicate which is a statutory right arising from construction contracts.

What is Adjudication?

As a scaffolding contractor, it is likely your contracts fall within the definition of ‘construction contracts’. The only caveat to that is when you are contracting with a residential occupier, then it will depend on whether the contract contains an adjudication provision.

Adjudication is not mediation! Mediation is alternative dispute resolution in which parties voluntarily agree to appoint a mediator. Adjudication is not an “opt in” and an Adjudicator will simply reach a binding decision even if the other party refuses to take part.

Adjudication has strict timelines and is a usually 28-day process (from the Referral Notice) unless extended by agreement. The Scheme for Construction Contracts (England and Wales) Regulations 1998 (“the Scheme”) applies if the contract is silent on the applicable Adjudication rules. Here is a typical Adjudication timeline:

Issue Adjudication Notice

Apply to nominating body

Issue Referral Notice

Issue Response

(Issue Reply)

(Issue Rejoinder)

(Issue Surrejoinder)

(Meeting)

Decision

Enforcement

Day 0

Day 0 Day 7 Day 14 Day 21 Day 24 Day 26 Day 28-35 Day 35-49 Day 35+

Adjudication is particularly suitable for helping to resolve financial disputes relating to, for example, delay and extension of time claims, interim payment disputes and final account disputes and variations (i.e. extra hire!) all of which we have seen arise in relation to scaffolding disputes.

Who makes the decision?

The decision maker in Adjudication is usually someone who has considerable experience in the construction industry, e.g. quantity surveyor or a specialist construction lawyer. Although judges are legally trained, they do not always have specific knowledge of the construction industry. Having someone decide the dispute who has first-hand knowledge of the construction industry can be a benefit to you.

So you have got a dispute, you know what Adjudication is but why would you want to issue an Adjudication to resolve your dispute?

Speed:

You may have heard it referred to as ‘pay now, argue later’. It is a fast-paced process and designed to resolve disputes quickly to keep cash flowing through the industry while disputes are being resolved.

Current pressures mean claims in court can be lengthy. However, there may be times where issuing a claim in court might be more appropriate than Adjudication. It is important to consider the commercial outcome of a dispute for your business; a large complex dispute with years of delay analysis, may be better argued in court. This is all dependent on the facts of the case and it is always best to seek legal advice when settling disputes.

The “Surprise” Factor:

The party issuing an Adjudication, known as the referring party, may take a responding party by surprise providing approximately 7 days to respond. This is an extremely tight turnaround when the referring party may have spent months preparing. It is even more likely for a subcontractor to take a main contractor by surprise as they often do not think smaller businesses will pursue legal action. Adjudication is often considered ‘rough justice’ as it is typically a document only process.

Cost Saving:

No-one wants a dispute hanging over them, nor do they want to throw good money after bad. The advantage of adjudications is that costs are considerably less when compared to Court proceedings. Costs is always something we consider and how to make any legal costs proportionate to the dispute.

Conclusion

If you believe you have been unfairly targeted with claims of delay, contra charges or reductions in your payment applications, consider adjudication. Adjudication is a useful tool when used correctly, but be aware of strict timelines and rules that can be imposed, therefore seek legal advice before proceeding with an adjudication.

In the last 12 months, we have run over 15 adjudications for members of the Scaffolding Association, including 3 enforcements. Adjudication is fast and effective, and we would be happy to discuss the process with you further.

If you wish to discuss adjudication further, contact the Construction Team at Holmes & Hills LLP on 01206 593933.