Construction disputes: The case for adjudication

The foundations
Mandatory adjudication for disputes arising out of construction contracts was introduced in 1996 by statute [1] (‘The Act’). The Act was backed by regulations in the Scheme [2] which contained adjudication (and payment) provisions that would be incorporated into construction contracts that did not comply with the Act.

In the construction sector adjudication was intended to provide the means by which the right to payment, often described as “the lifeblood of the construction industry”, would be maintained but, more importantly, that construction projects (particularly the larger Government infrastructure projects of the time) could resolve disputes quickly with minimal impact to time and cost arising from delay and disruption to the schedule.

In 2009 the Act was amended to extend its scope to all contracts, not just those made or evidenced in writing.

Over time the process has become used to dealing with all manner of disputes: the existence of a contract; its terms; the meaning of terms; claims for extension of time, loss and expense; disputes over termination and repudiation; and damages for breach. Some eminent practitioners (and judges) said adjudication was never intended or was unsuitable to deal with large complex claims, claims involving professional negligence, or allegations of fraud. In practice, adjudicators have arguably become adept at dealing with every kind of dispute thrown at them often including large volumes of documents, expert reports and witness statements.

The process has become accepted as the Alternative Dispute Resolution (ADR) mechanism of choice and has received judicial approval at the highest level (see the judgment of Lord Briggs in Bresco [3]).

In short, adjudication works.

The benefits
Lord Briggs lists the benefits of adjudication in his judgment as follows:

• It is grounded in statutory and contractual right (not compulsion).
• It is a right conferred on every party to a construction contract.
• Wide and simple jurisdiction: it covers every dispute under a qualifying contract.
• Speed.
• Economy.
• A decision by an independent adjudicator with specialist knowledge.

The Chartered Institute of Arbitrators (Ciarb), itself an adjudicator nominating body, explains the benefits further:

• The adjudication process is quick – it takes just 28 days from start to finish (or up to 42 days if the referring party agrees).
• The speed of the adjudication process helps to ensure the progress of works is not disrupted, limits cashflow issues but also supports project continuity.
• Parties are afforded more control over proceedings as a request for adjudication can be commenced during the course of works.
• Parties can select the background and discipline of the adjudicator based on the technical expertise required.
• It is a private and confidential method of dispute resolution.
• Unless set aside by arbitration or the courts, the decision is binding.

In other words, adjudication helps to protect parties’ time, money and reputation.

Costs
The original hope that parties would act in person and dispense with legal or professional assistance has proved to be the exception not the rule. Still, in small or medium value disputes, parties can and will act for themselves to avoid irrecoverable expense. Big corporate parties with deep pockets and participants in large project disputes will engage all the professional assistance they think they need.

For non-complex, low values disputes (£100,000 or under), there is the Construction Industry Council Low Value Disputes Model Adjudication Procedure (LVD MAP) Second Edition. This offers an efficient, streamlined and low-cost adjudication procedure with capped fees.

The contract
There is a duty on lawyers asked to draft or advise on contracts to consider and discuss with their clients, amongst many other things, appropriate and effective dispute resolution provisions. Experience and Judicial approval of adjudication surely means that it, and any available rules or scheme, must be discussed and considered. By naming an adjudicator nominating body such as Ciarb in an adjudication clause ensures that if a dispute should arise, there is less time wasted on deciding which ANB to choose.

Getting the right adjudicator
Each dispute is unique and requires an adjudicator with specific skills and expertise to resolve it. Ciarb’s panel of construction adjudicators comprises dispute resolvers with specialist knowledge, experience, skills and expertise in a variety of disciplines. For example, panellists include Architects, Barristers, Engineers, KC’s, Solicitors and Surveyors.

Ciarb is committed to increasing the diversity of its panels and is a signatory to the Equal Representation in Adjudication Pledge.

Parties can have confidence in Ciarb’s independent appointment process which is designed to select the adjudicator best suited to the particular requirements and circumstances of the dispute.

About the authors:

Kenneth T. Salmon MCIArb is a qualified solicitor in England, Wales and Eire. He is a Ciarb qualified and CMC accredited Mediator and Chair of Education at Ciarb North West Branch. Kenneth is a construction specialist currently working as a consultant to Slater Heelis Limited. He has extensive experience of all forms of dispute resolution including arbitration, adjudication, expert determination and mediation.

Marcus Cato FCIArb, MICE, CEng is MD of McComb Partnership Ltd in UK and Rwanda and founding Committee Member of the newly formed Ciarb Rwanda Branch. He has over 25 years’ experience in international construction and engineering disputes resolution as a certified commercial mediator and qualified arbitrator. Marcus has over 20 years’ experience in working as a party representative and in managing adjudication disputes for large and small clients in all aspects of construction and process engineering.

Develop your knowledge and skills in construction adjudication through Ciarb’s internationally recognised training courses.

Read more about adjudication and Ciarb’s role as an ANB.

[1] The Housing Grants, Construction and Regeneration Act 1996 coming into force 1998; amended in 2009 by the Local Democracy, Economic Development and Construction Act 2009 coming into force in 2011.
[2] The Scheme for Construction Contracts (England & Wales) Regulations 1998 (amended 2011) with separate Regulations for Scotland in 1998 amended 2011 and a separate Scheme for Construction Contracts in Northern Ireland 1999 amended in 2012.
[3] Bresco Electrical Services Ltd (In Liquidation) v Michael J Lonsdale (Electrical) Ltd [2020] UKSC 25.