Disputes are a hurdle most construction businesses will face at some point and you need to make sure you are prepared for these disagreements.
One of the most common approaches to keep your project moving and resolve disputes is adjudication.
Drafting adjudication provisions properly is crucial and failing to do so could do more harm than good for your business.
Our Head of Construction and Engineering Law, Adam Davis, breaks down how to draft compliant adjudication provisions and the risks of getting it wrong.
What is adjudication?
Adjudication is a statutory dispute resolution process that was created specifically for the construction industry.
It allows either party to refer a dispute to an independent adjudicator at any time, who will consider the evidence and reach a decision, usually within 28 days. Although this date can be extended by agreement up to a maximum of 42 days.
This quick turnaround is what makes adjudication so effective in construction, as delays can be costly and disruptive.
These provisions can also ensure your cash flow remains healthy and your work can continue while disputes are dealt with in the background.
The decision is legally binding on the parties on an interim basis and it must be followed unless it is overturned by litigation or arbitration.
What adjudication provisions must a construction contract include?
Under the Housing Grants, Construction and Regeneration Act 1996, every qualifying construction contract must give parties the right to refer a dispute to adjudication at any time.
Adjudication provisions in a contract should ideally set out:
- How the adjudication process will work and on what basis (this is usually under the Act or the Scheme or a nominating bodies rules)
- How an adjudicator will be appointed
- How notices are served
What happens if the Contract does not include adjudication provisions?
If your construction contract does not include adjudication provisions, the Scheme for Construction Contracts will automatically apply.
The Scheme imposes a standardised process.
How can we support your adjudication provisions?
It’s easy to get caught up in the negotiations of a contract, but you cannot let adjudication provisions slip your mind.
These provisions are a safety net for when something goes wrong and getting them right at the drafting stage can make sure you retain control and are not putting your project at risk.
Our Construction Law team can help you draft compliant adjudication provisions and make sure you are protected if a dispute arises.
For further advice or support on drafting your construction contracts, get in touch.
