Alternative Dispute Resolution (ADR) can take many forms. Court cases can be long, stressful and costly. If you have a dispute with another party then you should consider methods of ADR which could be used to resolve your issue quicker, easier and cheaper. These days you will be actively encouraged by the courts to engage with ADR, as going to court should be a last resort and any refusal to take part in an ADR process will be taken into account by a Court (in a negative way) when determining costs of a claim.
What is Adjudication?
Adjudication is one form of ADR that is most commonly used in construction disputes. Its aim is to provide a cheaper and faster method of resolving construction disputes which is underpinned by legislation. It was designed to remedy the cash-flow issues which arise when there are disputes in the course of a construction contract hindering its progress. An adjudicator is appointed to provide a binding decision on an interim basis on disputes as they arise during the contract.
When to use Adjudication?
As mentioned above, this form of ADR is used most commonly in construction disputes, and more specifically for resolving financial disagreements arising from delays and disruption, requests for extensions of time or in relation to the builder’s final account. Due to its flexibility it has also been used to solve disputes relating to breach of contract and termination issues following practical completion of a contract. Arguably, it can also be used where there are allegations of professional negligence. Some commentators believe that the adjudication framework is not really suitable for issues concerning professional negligence.
What is the outcome of using Adjudication?
An adjudicator will provide a decision which has an interim binding effect, meaning that the decision is binding until the parties come to any future agreement which alters its effect. A decision by an adjudicator is enforceable, so a successful party can apply to the Technology and Construction Court (TCC) if needs be following a decision.
What are the benefits and potential risks of implementing Adjudication?
It is very quick, as it is a 28-day process, offering a speedy resolution to disputes which can also be enforced quickly in the TCC. A dispute can be referred for adjudication at any time, allowing a party to reach a resolution quickly so as to not jeopardise or disrupt the performance of a contract. Due to the tight timetable, the costs of adjudication are typically cheaper than litigation with each party bearing their own costs. Adjudication aims to balance out financial inequalities between the parties to construction contracts. The proceedings are private, and the parties can choose the adjudicator and potentially the procedure followed (if this is not provided in the contract).
As with any dispute resolution process there are some risks in implementing adjudication, such as the tight timescale potentially causing the adjudicator to make a rushed decision in particular for matters which are legally or factually complex. If an unjust decision is reached, then litigation may be needed to rectify this, which would inevitably lead to a duplication of costs. Those costs are also not recoverable in adjudication or any subsequent litigation. The short timescale could also leave the parties with insufficient time to investigate and compile submissions fully. In addition, as adjudication does not have specific pre-action steps to adhere by, a party can take another party by surprise when referring a matter to adjudication.
All in all, adjudication can be extremely useful when used in the right manner for the correct type of matter, and so should be considered as an option when possible.
If you are intending to pursue a construction claim, and would like to discuss the possibility of Adjudication being used in greater details, please contact our Dispute Resolution Team on 01206 700113 or contact us.