The 'must know' guide to construction contract principles
04/06/13 - This 1 DAY COURSE will consider the principles of contract law in practice and their application to construction contracts and administration.Read More
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Adjudication is a form of Alternative Dispute Resolution or ‘ADR’. This is a procedure for the resolution of disputes other than through the Court.
Adjudication is in essence meant to be a cheaper and quicker dispute resolution procedure to Arbitration and Litigation, with a time period of 28 days from Referral (issuing the statement of case) to Decision. This time can only be extended by 14 days initially with the consent of the Claimant (Referring Party) and thereafter with the consent of both Parties.
Adjudication can be a procedure Parties enter into by consensus only, i.e by the incorporation of an adjudication procedure within the Construction Contract. Alternatively the Parties may agree that the best way to resolve a dispute is by the procedure of Adjudication and the rules of that procedure are entered into post contract.
The above two scenarios in Construction are generally the exception though rather than the norm.
Statutory Adjudication in Construction Contracts, albeit by way of a procedure to comply with the adjudication procedure requirements of the Housing Grants Construction and Regeneration Act 1996 (the Act) are most common.
Adjudication within the Construction Industry enables Parties to have their disputes and differences settled by Adjudication under the Statutory procedure afforded by the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996). This procedure has now been adopted to become ‘Act compliant’ in most standard forms of Main, Sub and Consultancy Contracts.
Provided the contract satisfies Section 104 of the HGCRA 1996 the other Party cannot refuse the right to adjudicate. Moreover providing that the Adjudicator acted within their jurisdiction the Decision shall be enforceable through the Courts.
Once the Contract falls within the ambit of the Act the next test is to see if the adjudication procedure complies with Section 108 of the Act. If the procedure in the Contract fails to comply with any part of Section 108 of the Act the whole procedure is replaced by the adjudication procedure set out in the Scheme for Construction Contracts (England and Wales) Regulations 1998 (‘the Scheme’).
The Scheme is the default procedure in terms of Payment and Adjudication, of the Act. Non-compliance with the Act has the effect of making the appropriate Scheme rule implied terms of the Contract.
To test whether the terms of the Contract comply with the Act s108 sets out 6 requirements, which briefly are that the Contract shall:
- enable reference to adjudication at any time;
- provide a timetable for the adjudicator’s appointment within 7 days of the Notice of Adjudication;
- provide 28 days for the Adjudicator to reach and issue their Decision or a longer period by Party agreement;
- allow the claimant (Referring Party) to consent to a 14 day extension to the 28 days by the Adjudicator;
- require the Adjudicator to act impartially; and
enable the Adjudicator to take the initiative in ascertaining the facts and the law.
Albeit the proposed changes to the Act under the ‘Local Democracy, Economic Development and Construction Act 2009’ may impinge upon how a Contract is drafted Silver Shemmings can advise how to draft Act compliant adjudication terms that advantage you and best suit your business.
The affect of the proposed changes to the HGCRA 1996 are currently being assessed and advised upon by Silver Shemmings to our clients and in seminars on the effect of the ‘Local Democracy, Economic Development and Construction Act 2009’
Silver Shemmings are at the forefront of understanding, teaching and utilising Adjudication. Also they have practicing Adjudicators who can accept nominations not only via professional institutes and institutions but from the Parties by agreement.
Should you need advice as to how to take your claim forward using Adjudication, have to defend Adjudication proceedings, require an Adjudicator or need terms drafted that provide an Act compliant adjudication procedure that suites you then contact the following experts in Adjudication:
For more information on ADR and Adjudication contact:
Sarah Shemmings or Richard Silver
Tel.: 0845 345 1244
Robert Shawyer – Cardiff
Tel.: 02920 474 570
Don’t forget that you can also make initial contact through our free helpline 08455 1 92 92 1