clear practical advice

Adjudication: The Process

Stephen McLellanJanuary 2013

Stephen McLellan

Solicitor

Construction and Engineering

Watson Burton LLP

Telephone: 0845 901 0936

Email: stephen.mclellan@watsonburton.com

Adjudication

1. Background to adjudication

2. The process

2.1 starting the process

2.2 submissions

2.3 decision / enforcement

3. The future of adjudication

1 Background to Adjudication

What is adjudication?• 3rd party adjudicator• 28 day process (up to 42 days)• Interim decision

• Costs not recoverable

1 Background to Adjudication

- Housing Grants, Construction and Regeneration Act 1996

“The intention of Parliament in enacting the Act was plain. It was to introduce a speedy mechanism for settling disputes in construction contracts on a provisional interim basis, and requiring the decision of adjudicators to be enforced pending the final determination of disputes by arbitration, litigation or agreement….”

“…The timetable for adjudications is very tight…many would say unreasonably tight, and likely to result in injustice. Parliament must be taken to have been aware of this. So far as procedure is concerned, the adjudicator is given a fairly free hand”.

(Macob Civil Engineering Ltd -v- Morrison Construction Ltd

[1999])

1 Background to Adjudication

1 Background to Adjudication

- Local Democracy, Economic Development and Construction Act 2009• came into force October 2011• requirement for construction contracts to be “in writing”

removed• parties cannot agree who will pay the costs of the process

before the Notice of Adjudication is issued

2 The Process

- When can you use adjudication?

• there must be a dispute• qualifying contract – the following are excluded:

– sale of goods contracts– extraction of oil, gas, materials– work associated with nuclear processing, power generation,

water or effluent treatment, production and processing of chemicals etc.

– contracts with residential occupants

2 The Process

2.1 Starting the process

• the Notice of Adjudication– identifies intention to adjudicate – defines the adjudicator’s jurisdiction

• can be deliberately narrow or wide

2 The Process

2.1 Starting the process

• appointment of an adjudicator– named in contract? – agreed between parties– nomination

7 days after Notice of Adjudication

2 The Process

2.2 Submissions

- Referral Notice• re-statement of the dispute • complete explanation of the claim:

- identify the parties- contract documents and relevant terms- what obligations have been breached?

• relevant supporting documentation: - witness statements?

2 The Process

2.2 Submissions

- Referral Notice (continued…)• points of law• request for a meeting or hearing?

2 The Process

2.2 Submissions- Response• be prepared • understand the extent of the dispute

- is clarification required? • are there any jurisdictional issues? • extension of time?

7 days from the Referral Notice

2 The Process

2.2 Submissions

- written questions- meeting- further submissions

2 The Process

2.3 Decision / enforcement

- Decision• reasons to be provided? • 28 to 42 days from referral• effect of decision• payment • other, e.g. construing contract• temporarily binding

2 The Process

2.3 Decision / enforcement

- Enforcement• binding

- must comply, cannot appeal- if a party disagrees with a decision, can challenge by

litigation / arbitration• courts will enforce the decision, in the first instance• shortened process – summary judgement

3 The Future for Adjudication

• verbal contracts – disputes over oral terms?

• costs– “Tolent” clauses banned

Further information

- Useful websites

www.rics.org/drs

www.adjudication.org

www.adjudication.co.uk

www.watsonburton.com

clear practical advice

Adjudication: The Process

Stephen McLellanJanuary 2013