What Do I Do When I Receive an Adjudication Notice?
Adjudication is the name given to a process of private dispute resolution which is very common in the UK construction industry.
Starting an adjudication against someone is similar to suing them in court, but there are some significant differences between adjudication and litigation.
Sometimes, the party against whom a claim is made (known as the ‘responding party’) can be caught by surprise by the party making the claim (known as the ‘referring party), and can be unsure of what to do next.
Whilst each adjudication is likely to be different, the initial steps that are ordinarily taken are as follows:
The referring party makes a claim under the terms of the construction contract;
The responding party rejects, or ignores, that claim;
The referring party serves a ‘notice of adjudication’ (i.e. the notice of its intention to refer the dispute to adjudication);
An adjudicator nominating body selects and appoints an adjudicator;
The referring party then formally refers the dispute to the adjudicator, by serving a ‘referral notice’ along with evidence in support.
The responding party then has a decision to make as to what to do in response.
Broadly, the responding party has three courses of action open to it:
Ignore the adjudication: a referring party is not required to participate in an adjudication. If it wishes, it can simply ignore the adjudication altogether. However, this adjudication will continue without the responding party’s input. Without an explanation of the responding party’s side of the dispute, an adjudicator is much more likely to make a decision in favour of the referring party. In other words, ignoring the adjudication is a high risk strategy because the referring party is likely to succeed in the adjudication;
Object to the adjudication taking place: a responding party may identify reasons why the adjudication cannot continue, such as that no dispute has yet crystallized, or that there is no underlying right to refer a dispute to adjudication. Such objections are normally referred to as challenges to the adjudicator’s jurisdiction (i.e. his/her right to decide the dispute). Where successful, such challenges can put an end to the adjudication process without the referring party having to deal with the detail of the claim. However, where an adjudication is brought to an end this way it may be the case that the referring party can simply re-start the adjudication (correctly, this time) and so the responding party may only be deferring (rather than avoiding) having to face the issue;
Respond to the adjudication: a responding party may give its version of events and explain why the adjudicator should not decide the dispute in favour of the referring party. Ordinarily, an adjudicator will give directions to the parties and specify (amongst other things) a date by which the responding party must serve its response (to the referral) and the evidence it relies upon in support.
Adjudication is often fast-paced, and in particular it is ordinarily the responding party that is only given a few days to prepare its response. A response may need support from fact witness evidence, expert evidence, and documentation.
As a result, the best thing to do upon receipt of an adjudication notice is to contact an experienced firm of solicitors who can quickly advise which course of action is best, and start taking steps to prepare the necessary documents.
If you have received an adjudication notice and require help and advice, contact Hamshaw today.