What adjudication actually involves

Every construction contract caught by the Construction Act gives each party the right to refer a dispute to adjudication at any time. If the contract does not provide a compliant procedure, the Scheme for Construction Contracts supplies one.

At any time is not a figure of speech. There is no requirement to wait for practical completion, to exhaust other procedures, or for the other side to agree.

The timetable

A notice of adjudication starts it. An adjudicator is appointed, usually within seven days. The referring party then serves the referral, and the adjudicator has twenty-eight days from that point to reach a decision.

The referring party can extend by fourteen days. Anything beyond that needs both parties to agree.

The practical consequence is severe asymmetry. The referring party can prepare for months. The responding party gets a bundle it has never seen and, typically, seven to fourteen days to answer it.

Binding, but not final

The decision binds the parties and must be complied with immediately, but only until the dispute is finally determined by litigation, arbitration or agreement.

In practice most decisions are never revisited. The cost and delay of starting again after a decision is usually greater than the sum in dispute, which is exactly the outcome the Act was aiming at.

Enforcement is close to automatic

The courts enforce adjudicators’ decisions robustly. Arguments that the adjudicator got the facts or the law wrong will not resist enforcement. Only jurisdictional challenges and serious breaches of natural justice have any real prospect, and both are narrow.

Assuming a bad decision can be resisted at enforcement is one of the more expensive misunderstandings in the industry.

Costs

Each party generally bears its own legal costs whatever the outcome. The adjudicator’s fees are usually allocated to the losing party, but the parties are jointly liable, so an unsuccessful referring party that disappears leaves the other side exposed.

Attempts to contract out of the costs position are restricted by the Act, and clauses purporting to make the referring party bear all costs regardless of outcome are generally ineffective.

What actually decides them

Documents, and specifically documents created at the time. In twenty-eight days no adjudicator is reconstructing a two-year history from witness statements. They are reading the notices, the valuations, the instructions and the correspondence, in date order.

A file that tells the story chronologically wins arguments that a better legal position without records will lose.

Before you refer

Make sure a dispute has actually crystallised, that the contract is caught by the Act, and that what you are referring is one dispute rather than four. Adjudicators have limited jurisdiction, and the commonest way to lose on a jurisdictional point is to refer more than the notice describes.