In the fast-paced world of UK construction, disputes are an inevitable part of the landscape. From contested payment notices to unforeseen project delays, disagreements can threaten to derail progress and strain business relationships. To counter this, the law provides a powerful and streamlined process for resolving such conflicts: Construction Adjudication.

This month, we take a more detailed look at this crucial dispute resolution tool, exploring its legal basis, the step-by-step process, and its practical implications for your construction projects.

The Legal Foundation: The Construction Act

The right to adjudicate stems from the Housing Grants, Construction and Regeneration Act 1996 (commonly known as the 'Construction Act'), which was later amended by the Local Democracy, Economic Development and Construction Act 2009. This legislation was a game-changer for the industry, introducing a statutory right for any party to a "construction contract" to refer a dispute to an adjudicator for a swift, temporarily binding decision.

Crucially, this right exists "at any time" and cannot be contracted out of. Even if your contract makes no mention of adjudication, the provisions of the Scheme for Construction Contracts (the "Scheme") will automatically apply, ensuring this vital remedy is always available. The 2009 amendments further strengthened this by extending the right to cover oral and partly-written contracts, not just those fully in writing.

When is Adjudication Appropriate?

Adjudication can be used to resolve virtually any dispute arising under a construction contract. Common examples include:

• Payment Disputes: The most frequent use of adjudication, covering disagreements over interim payments, final account valuations, and the validity of payment or pay less notices.

• Variations: Disputes concerning the scope, instruction, or valuation of changes to the works.

• Delays and Extensions of Time: Claims for extensions of time and associated loss and expense.

• Defective Works: Conflicts over the quality of workmanship or materials.

• Breach of Contract: Claims arising from alleged breaches of contractual obligations by either party.

• Contract Termination: Disputes surrounding the validity or consequences of a contract's termination.

For a dispute to be ready for adjudication, it must have "crystallised". This simply means a clear claim has been made by one party and rejected or ignored by the other, creating a defined point of disagreement.

The Adjudication Process: A Step-by-Step Guide

The adjudication process is designed for speed, with a statutory timescale of just 28 days from referral to decision, although this can be extended. Here’s how it typically unfolds:

1. Notice of Adjudication: The process begins when the complaining party (the "Referring Party") serves a 'Notice of Adjudication' on the other party (the "Responding Party"). This document sets out the nature of the dispute and the remedy being sought.

2. Appointment of the Adjudicator: Within seven days of the Notice, an Adjudicator must be appointed. This can be an individual named in the contract or, more commonly, an appointment made by an Adjudicator Nominating Body (ANB) such as the Royal Institution of Chartered Surveyors (RICS) or the Royal Institute of British Architects (RIBA).

3. The Referral Notice: The Referring Party then serves their detailed claim, the 'Referral Notice', on both the Adjudicator and the Responding Party. This document contains the full arguments, evidence, and legal basis for the claim.

4. The Response: The Responding Party is given a short period, often just 7 to 14 days, to submit their 'Response', rebutting the claim and providing their own evidence. They may also include a counterclaim.

5. Subsequent Submissions: The Adjudicator has discretion to allow further short submissions, such as a 'Reply' from the Referring Party or a 'Rejoinder' from the Responding Party, to ensure both sides have a fair opportunity to state their case.

6. The Decision: The Adjudicator must issue their decision within 28 days of the Referral Notice. This can be extended to 42 days with the consent of the Referring Party, or for longer if both parties agree.

The Role of the Adjudicator

The Adjudicator acts as an impartial expert. Their role is quasi-judicial, meaning they must ascertain the facts and apply the relevant law to reach a decision. They have wide procedural powers, including:

• Requesting specific documents or written statements.

• Meeting with the parties or conducting site visits.

• Appointing their own experts or legal advisors.

• Setting the timetable and procedure for the adjudication.

Adjudicators are bound by the rules of natural justice, meaning they must act fairly and impartially, giving each party a reasonable opportunity to present their case.

After the Decision: Enforcement and Finality

The Adjudicator's decision is temporarily binding. This means it must be complied with immediately. If the losing party fails to pay a sum awarded, the winning party can enforce the decision through a summary judgment procedure in the Technology and Construction Court (TCC), which is typically a rapid process.

The principle is often described as "pay now, argue later." While the decision is binding in the interim, it is not necessarily the final word. A dissatisfied party retains the right to have the dispute finally determined by a court or through arbitration (if provided for in the contract). However, they must comply with the adjudicator's decision first. This ensures that cash flow, the lifeblood of the construction industry, is protected, and projects are not held hostage to protracted legal battles.

How We Can Help

The speed of adjudication is its greatest strength, but it also presents a significant challenge. The tight deadlines demand immediate action and the rapid preparation of a comprehensive and persuasive case.

At KarSen Legal, we are adept at navigating the pressures of the adjudication process. We provide expert, strategic advice from the moment a dispute arises, ensuring your case is presented robustly, whether you are initiating a claim or responding to one. Our goal is to leverage the power of adjudication to secure your commercial interests and achieve a swift, positive resolution.

Disclaimer: This newsletter provides general information and does not constitute legal advice. For advice on your specific circumstances, please contact us directly.

Construction Adjudication in the UK: A Fast-Track Solution to Disputes