Adjudication is a form of dispute resolution that is regularly used in the construction industry.
In the last blog post (available here) mediation was explained and broken down for those who might be considering it for their dispute.
Statutory adjudication is a mandatory right under the Construction Act when the contract in question is a construction contract. One of the most common adjudications is in respect of payment disputes and is referred to as ‘pay now argue later’.
How much does adjudication cost?
Only one dispute in respect of one contract can be referred to an adjudicator at any one time.
Combined with the quick turnaround and the fact that hearings and meetings between the parties are uncommon, the cost of adjudications is usually low compared to more formal processes.
The parties can agree that the adjudicator’s fees and expenses can be allocated between them, provided the term is set out in writing and is contained in the construction contract. The adjudicator does have the power to award payment of his fees and expenses typically to be paid to the losing party, however, he/she can apportion his fees and expenses to both parties.
In practice, the parties bear their own legal costs of adjudication. It is for this reason the Palmers have a Fixed Fee Adjudication Scheme.
What are the benefits of adjudication?
Adjudication is a very quick process in comparison to other more formal methods. The adjudicator has 28 days to decide the dispute once it has been referred to them.
This can be extended to 42 days by the referring party or longer by the agreement of both parties.
With limited rights to challenge the decision even if it is wrong, adjudication is often termed “quick and dirty” justice.
Awards given under an adjudication process need to be enforced by the Courts.
The thinking behind this approach is to prevent one party from withholding payment to the other for a significant period. In this way, cash flow is protected.
Should I use adjudication to resolve my construction dispute?
If any of the following sound beneficial to your circumstances, it is worth considering adjudication:
- Quick way to resolve the dispute
- Relatively low costs compared to other processes
- Less formal than arbitration
If you have a construction dispute and are considering using adjudication to resolve it, contact us.