The right to adjudicate a dispute under a “Construction Contract” came into force in 1998 when the Housing Grants Construction and Regeneration Act 1996 (the Act) became statute.
One of the primary objectives of the Act was to assist with ensuring that cash flowed down the supply chain. The adjudication provisions were amongst other things intended to assist in this process by providing a relatively quick and inexpensive means of settling disputes about payment issues as they arise.
Reading trade journals, twitter and speaking to fellow professionals at networking and technical briefings the current consensus appears to be that the Adjudication procedure is too expensive. It also appears that the finger of blame is pointed at the lawyers.
This is done by lodging challenges to the appointed adjudicator’s jurisdiction and by seeking to establish a similar level of case presentation as is produced for arbitration or litigation. This can lead to expensive legal fees which make all but substantial monetary claims commercially unviable to pursue given that the parties bear their own costs.
This raises a number of questions:
- Are the lawyers entirely to blame?
- Are the costs of adjudication high due to jurisdictional challenges introduced by lawyers?
- Has the industry brought upon itself this outcome due to using the adjudication procedure for resolving major final account disputes?
- Was the Act introduced with final accounts disputes in mind?
- Has adjudicating final accounts contributed to the need to ensure Referrals contain a similar level of detail as pleadings?
- Is adjudication the right forum for final account disputes?
Large final account disputes often include extension of time and loss and/or expense claims and large variation accounts involving numerous items in dispute, all requiring substantial evidence in support.
What can be done to make adjudication more affordable? Are the costs of adjudication to become even higher to the Referring Party?
I originally wrote this article in 2011. After all these years I suspect the answer that people would give today would be very much the same and depend on their experience of the system. Some would say that the cost of Adjudication is frighteningly high but some would say that by taking timely action and using ADR they arrived at a satisfactory resolution for a fair price.
Ian Brant
Construction Quantum Expert