What Is Construction Adjudication?

The value of construction disputes in the roofing sector is reaching record levels. Not surprising perhaps, considering the delays created by Brexit, the Covid pandemic, materials shortages and material cost inflation. This article explains what is the construction adjudication process. It outlines how it can be started by any party to a non-residential construction project contract.

ADJUDICATION in the construction industry is a statutory right protected in law under the Housing Grants, Construction and Regeneration Act 1996 (Construction Act 1996).

Under the Construction Act 1996 all parties to a construction contract have the right to refer a dispute to adjudication at any time.

Adjudication is a compulsory dispute resolution mechanism that applies to all construction projects. It can be used retrospectively up to the end of the six years of statutory limitation. It is applied to all construction contracts under the Scheme for Construction Contracts 1998 as ‘implied terms’. This is whether or not there is a verbal or a written contract and cannot be written out of the contract terms.

Construction adjudication is designed to protect cashflow during a project. It embeds immediate payments within the process on a ‘pay first, argue later’ basis. This means that interim, stage payments can be made even before the dispute has been resolved.

Adjudication can also be used for more complex claims that involve professional negligence, breach of contract terms or ending of a contract.

Typically, adjudication will be used to resolve roofing project disputes about:

• stage payments
• delays and disruptions to projects
• time extensions for the completion of roofing projects
• roofing defects and snagging
• final payments

Construction Adjudication

Construction adjudication is a 28-day procedure, although this period can be made longer if the parties agree to do so. It should not be started until the parties have tried to resolve the dispute themselves and are crystal clear on what the exact issues are that are being disputed. This is called a dispute which has ‘crystallised’.

The dispute can only formally be started once the subject matter of the issue or claim has been communicated to the opposing party. Additionally, they must have had the opportunity of considering and admitting, modifying or rejecting the claim or assertion. The issues should then be clearly notified to the opposing party in a written notice of adjudication.

Notice of Adjudication

A notice of adjudication should state whether there is a written or verbal contract and what their terms are. Again, this is whether it refers to terms that are written down or verbal. The notice should set out the dispute clearly, precisely and that the exact area of dispute is defined.

Within seven days of the notice of adjudication an adjudicator must either be agreed to be appointed by both parties. If the parties do not agree an ajudicator then a request should be made to an adjudicator nomination body. Their terms and conditions should be accepted and thought should be given to any legal or jurisdictional challenges. One such jurisdictional challenge would be, for example, if the dispute has not been crystallised.

After a notice of adjudication has been issued, the opposing party then has an opportunity to respond, setting out their defence and evidence. If there is no response within a reasonable time, such as 7 days, the adjudication can still proceed.

The adjudicator is likely to invite both parties to further respond to each other’s responses. This is especially likely to happen if there is new evidence, but it has to be done within the 28-day timeframe. After this the adjudicator will give their ruling. The adjudicator’s decision is binding until the dispute is resolved by agreement, arbitration or otherwise heard in a court of law.

Challenging an Ajudicator’s Ruling

The adjudicator’s ruling can only be challenged if:

• timescales were not adhered to
• there are errors or mistakes that need correcting
• there is a breach of natural justice, such as a conflict of interest on the part of the adjudicator
• or if the adjudicator failed to address the correct question

There are around 2,000 cases of adjudication each year in the UK. The vast majority – over 90% – are accepted and are not taken further.

Decisions can be enforced by the Technology and Construction Court (TCC), which is a specialist court for these types of cases.

The Adjudication Society commissions research each year into adjudication cases. It has extended its survey in 2022 (conducted by Kings College) to include all those involved in the procedure. It will report its findings in the autumn.

>> Read more about construction adjudications in the news