Whilst adjudication has been available for a number of decades, legislation passed in 1996 provided statutory legislation as a formal dispute resolution procedure which is available for all construction projects other than contracts for residential homes, unless provided for by the contract itself.
The procedure is fast track. The referring party issues a Notice of Intention to Refer and a nominating body such as the RICS or RIBA appoint an adjudicator. Within seven days of the Notice the referring party then has to issue its claim document (known as a referral) and any supporting information. Subject to an additional 14 days which the adjudicator can seek, the adjudication must be completed within 28 days of issue of the referral.
This process was intended to promote cash flow within the Construction Industry and was particularly targeted at interim payments.
The process has been hijacked, to a large degree, by lawyers and is now seen as a particularly efficient way of addressing disputes, either during the currency of a contract or at the end, replacing what would otherwise have been an expensive piece of litigation or arbitration, especially with respect to extensions of time and final accounts.
There are a set of standard rules governing adjudication, although the parties can vary these by agreement or through the mechanism of the original contract.
The standard rule on costs is that each party bears its own costs and the adjudicator is entitled to award his/her costs against either or both of the parties as appropriate. The normal course of events is for the losing party to pay the adjudicator’s costs in full.
Our advice when referring an adjudication is to ensure that the referring party is fully prepared.
When defending an adjudication our advice is always to consider whether the adjudication should be defended and if so then to ensure that adequate resources are made available very quickly to prepare a defence in what is often no more than 7-10 days from receipt of the referral.
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