A guide to the adjudication process in construction disputes in Cardiff

Adjudication is used more often in the construction industry than in any other commercial sector. This is largely because, if you are a party to a construction contract, you have a legal right to use adjudication to resolve your dispute. In this article, our experienced commercial property dispute solicitors will provide you with an overview of adjudication, when it’s used, what’s involved, and how it can help resolve your dispute.

If you are currently involved in a construction dispute and you need practical legal advice and support, contact our commercial property dispute solicitors today. Our team of experienced lawyers will be able to guide you through the adjudication process and resolve your dispute quickly, limiting any disruption to your business.

Is adjudication mandatory in construction contracts?

Any party to a qualifying construction contract has a statutory right to refer a dispute to an adjudicator at any time. It is mandatory in construction in the sense that one cannot exclude this automatic right from the construction contract. Even if the contract makes no mention of it at all, the right to refer is still implied. Adjudication isn’t compulsory; you can choose another method of resolving disputes if you wish. If one party to a qualifying contract initiates the adjudication process, the other party has to participate.

Is an adjudicator’s decision binding?

Yes, an adjudicator's decision is legally binding, but only in the interim. The decision settles the dispute for the time being, pending final determination by a court or arbitrator further down the line.

When is adjudication appropriate?

Common construction disputes that adjudication might be appropriate for resolving include those about:

• Non-payment of monies due for particular stages of a development
• Delays to construction
• Requests for extensions of time
• Poorly executed and defective work
• Clarification of the scope of a project

Even though adjudication was originally designed to address straightforward issues on an urgent basis, more complex contractual issues and negligence claims can also be resolved this way.

When is adjudication not appropriate?

Not every disagreement is suitable for adjudication. It’s important to remember that the adjudication process in construction disputes has been developed to provide fast, practical solutions. If a dispute is particularly complex, court proceedings or arbitration may be the more appropriate method to employ.

Advantages and disadvantages of adjudication

Advantages:

• Provides a basis for a quick resolution to the dispute.
• Minimises disruption to the overall construction project.
• The focus on quick payment following adjudication reduces the chances of contractor insolvency.

Disadvantages:

• Corners will on occasion be cut and crucial facts may be overlooked.
• The successful party won’t necessarily recover the costs of the adjudication.
• The 28-day timetable does not give the parties time to examine all the facts in cases of any complexity.

What does adjudication cost?

Adjudication is a short process, so exposure to costs is limited. Each party usually pays its own legal fees, which can be a significant consideration. Expenditure includes:

• Adjudicator’s fee: typically £200-£300 plus VAT.
• Fee to the professional body that nominates the adjudicator.
• Fees to your professional advisor.

How do you know if you have a construction contract?

The right to adjudication applies to ‘construction contracts’ that are in writing. The Construction Act describes a construction contract as an agreement to carry out construction operations, arrange for construction operations to be done by others, or provide labour for construction operations.

Can you refer more than one dispute to the adjudicator?

The general rule is that only one dispute can be referred to the adjudicator at a time. If there are multiple disputes, you’ll need to check the contract terms.

What documents and evidence do I need to submit during adjudication?

Unlike litigation, there are no formal rules surrounding evidence and disclosure for adjudication. Key documents include:

• Notice of Adjudication
• Referral Notice
• Key Supporting Documents

Key steps in the adjudication process timeline

The adjudication process is designed to be clear-cut and efficient. A summary of the adjudication process timeline is as follows:

• Check that there is a right to adjudication.
• The referrer serves a Notice of Adjudication.
• Agree upon an adjudicator within 7 days.
• The responding party serves a Response within 7 to 14 days.
• Adjudicator reaches a binding decision by day 28.

Enforcing an adjudicator’s decision

The adjudicator’s decision is binding. If one side does not comply, enforcement procedures are available through the court.

Challenging the enforcement of an adjudicator’s decision

Challenging an adjudicator’s decision should only be done following specialist legal advice. A successful challenge is rare.

Summary

The adjudication process plays a vital role in dispute resolution in the construction sector. It provides a streamlined approach to solving problems that might otherwise be subject to lengthy and costly court litigation. Seeking advice from a commercial property dispute solicitor is essential before embarking on any course of action in this field.