What are the Steps in a Construction Adjudication?
Adjudication was created to provide a quick solution for cash-flow issues during a construction project. Its purpose was to prevent the problem of prolonged arbitration or court litigation, which could deprive one party of its money while incurring high legal costs to recover it. This system benefits sub-contractors and small construction companies, who often cannot afford the costly and lengthy process, enabling them to enforce payment and contractual rights more effectively.
Adjudication is a highly popular and widely used method for resolving disputes in the UK. It is generally seen as successful in maintaining cash flow during construction projects. It is particularly suited for resolving financial disputes, such as delay and disruption claims, extension of time claims, and final account disputes.
In practice, the inherent flexibity of adjudication (assuming a sensible opponent and adjduciator) has extended its scope beyond simple payment disputes during the project. It now includes disputes related to breach of contract and termination issues, often arising after practical completion.
Whilst each adjudication is likely to be different, the steps that are ordinarily taken are as follows:
Party 1 makes a claim under the construction contract
Party 2 rejects, or ignores, that claim
In light of the above, the dispute becomes ‘crystallised’
Party 1 serves a notice of adjudication (i.e. the notice of intention to refer a dispute to adjudication) on Party 2
Party 1 applies to an adjudicator nominating body for an adjudicator to decide the dispute
The adjudicator nominating body selects and appoints an adjudicator, and notifies the parties
The adjudicator accepts the nomination, and may give intial directions (e.g. concerning timetable for submissions)
Party 1 formally refers the dispute to the adjudictor, by serving on him/her (and Party 2) the referral notice and all evidence in support
Party 2 decides how to respond to the adjudication. It may, for example, challenge the adjudicator’s jurisdiction, or ignore the adjudication altogether. Ordinarily, however, Party 2 serves its response, and all evidence in support
Party 1 serves a reply (if directed, or permitted, by the adjudicator) and further evidence in support
Part 2 serves a rejoinder (if directed, or permitted, by the adjudicator) and further evidence in support
The adjudicator considers the submissions and evidence received
The adjudicator may (if appropriate) call an oral hearing to allow the parties an opportunity to present or respond to specific points
The adjudicator issues a decision
The parties commence court proceedings, if so advised. This may be to enforce the decision if it has not been complied with, or to ask the court to decide a point afresh which has the potention to render the decision unenforceable
Hamshaw are experts in adjudication. If you need help preparing an adjudication, or responding to one that has been served, contact Hamshaw today.