What is an Adjudication?
Adjudication is a form of legal proceedings developed as a quicker and less formal means of resolving construction disputes, having been described as the process of 'Pay now, argue later' (a phrase used in various cases - Homer Burgess Ltd v Chirex (Annan) Ltd [1999 ScotCS 264, RJT Consulting Engineers Ltd. v DM Engineering (Northern Ireland) Ltd. [2002] EWCA Civ 270, Pegram Shopfitters Ltd v Tally Weijl (UK) Ltd [2003] EWCA Civ 1750).
Adjudication is intended as a way of replacing the court process on matters that fall within the remit of the adjudicator, as outlined by Mr Justice Fraser in Dacy Building Services Limited v IDM Properties LLP [2018] EWHC 178 (TCC) at 86: "A trial, with contested evidence given orally, will only in my judgment very rarely be justified, even on the question of whether there was a contract at all. It must be remembered that adjudication decisions simply deal with the positions of the parties on an interim basis."
This is a short process only lasting between 28-42 days from the date of the referral notice being issued, typically being decided on by a quantity surveyor, a solicitor or a barrister. Upon commencement, each party is permitted to make a series of submissions throughout the adjudication.
Costs are not recoverable in Adjudication
It is important to note that a key difference between arbitration and adjudication is that the successful party cannot recover their costs from the unsuccessful party. Whilst up to the Adjudicator's discretion, typically the usual rule follows that the unsuccessful party pays the Adjudicator's fees.
The Adjudication Process (timeline)
- Claim under the Construction Contract;
- Dispute has 'Crystallised' (i.e., within the knowledge of the parties);
- The Notice of Adjudication is served by the referring party on the responding party;
- Issuing and service of the Adjudicator appointment form;
- The Responding party can challenge the Adjudicator's jurisdiction;
- Appointment of the Adjudicator and service of the Referral Notice;
- Response from the Responding Party;
- Reply by the Referring Party;
- Further submissions (e.g. the Rejoinder, Surrejoinder);
- The Adjudicator investigates the claim and may ask for further information from both parties;
- The Adjudicator publishes their decision; and
- Enforcement proceedings are commenced (if the unsuccessful party does not comply with the decision), an agreement is entered into or the Adjudicator's decision is finally binding.
What can an Adjudicator do?
- Under Paragraph 13 of the scheme for Construction Contracts ("the Scheme"), the Adjudicator is entitled to be inquisitive during the course of the adjudication, and can:
- Ascertain the facts of the case by requesting any outstanding documents;
- Hold a meeting with the parties and question them;
- Invite both parties to make representations;
- Extend the timetable limits to serve submissions (although note, under section 108(2)(d) the referring party must consent to this);
- Refer to only written evidence and representations when making their decision;
- Ask the parties to make oral submissions at a hearing;
- Ask the parties to supply a document(s) or specific information.
What can't an Adjudicator do?
An Adjudicator cannot unfairly prejudice a party's ability to make a submission, or unfairly prejudice a party's ability to make a submission based on timetable considerations, if the party makes the submission slightly late. This point was established in CJP Builders Limited v William Verry Limited [2008] EWHC 2025 (TCC), whereby Mr Justice Akenhead held that the Adjudicator refusing to take into account a submission which was made 5 hours late was a breach of natural justice and restricted the responding party's right to make a representation. In Paragraph 84, Mr Justice Akenhead stated the following: "One must consider the end result of what the adjudicator actually did which is that Verry's Response... was expressly and consciously not considered by the adjudicator".
Whilst this remains the case, the Adjudicator may be allowed to refuse a further submission if it is late. In the case of Amec Group Limited v Thames Water Utilities Limited [2010] EWHC 419 (TCC), Mr Justice Coulson stated at Paragraph 64, "in my judgment, in an adjudication with a tight timetable, an adjudicator is not obliged to consider in detail a second round submission or pleading, served very late in the adjudication process."
It is important to note that an Adjudicator cannot decide on matters which were not referred to them in the notice of adjudication. Further if a matter has already been referred to adjudication, an Adjudicator cannot deal with that matter a second time.
In accordance with rule 19(3) of the Scheme, as soon as the Adjudicator has reached a decision, a copy shall be distributed to each of the relevant parties. It follows therefore that upon making their decision, an Adjudicator cannot place pre-conditions on their ability to release that decision. This was discussed further in the case of Mott Macdonald Ltd v London & Regional Properties Ltd [2007] EWHC 1055 (TCC) whereby this very scenario occurred. It was established that the Adjudicator could not impose a lien on his decision pending the payment of his fees, and that in doing so was in breach of Rule 19(3) of the Scheme.
An Adjudicator cannot commit what may be deemed a breach of natural justice. For example, this could be by refusing to allow the responding party to respond to the referral on spurious grounds. Although, it seems unlikely the Adjudicator will be allowed to refuse a response at all.
In accordance with rule 12 of the Scheme, an Adjudicator cannot act in a biased or partial way in making their decision.
This topic was discussed in our webinar 'Hung(a)ry for Construction & How to Win Adjudications" in April 2021 with Dr Gabriella Gálikof KCG Partnersand Kim Franklin KCof Crown Office Chambers. Click hereto view the webinar and presentation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
