What is Construction Adjudication?
Adjudication is a popular fast track Alternative Dispute Resolution (ADR) process to obtain a legally binding third party decision on issues taking approximately 28 days to complete. The commercial advantage being speed and lower cost compared to Court proceedings in achieving an enforceable decision. Consequently, it is now the most powerful, universally accepted ADR method to resolve disputes in the Construction Industry in the UK.
Adjudication is conducted by an Adjudicator, who must be a professionally qualified expert in their field. Most construction disputes relate ultimately to money, therefore the selected Adjudicator should ideally be a Chartered Quantity Surveyor with years of experience in dispute resolution, expert work and has the ability to measure. The profile of Arbicon Adjudicators.
Adjudication has become a practical commercial process and has become powerful thanks to Statute Law backing the process. On 1st May 1998, the Housing, Grants, Construction and Regeneration Act 1996 (Part II), (The Construction Act) came into force and changed the UK Construction Industry forever. It became a statutory right, as defined by the HGCR Act 1996, for parties to contracts operating in the construction industry, to adjudicate their issues. The HGCR Act 1996 was then importantly updated and amended by the Local, Democracy, Economic and Construction Development Act 2009 (Part 8) (The New Construction Act), which came into force for all contracts formed on or after 1st October 2011. The Statutes are also made to work practically with a further Statutory Instrument known in the industry as "the Scheme" (The Scheme for Construction Contracts (England and Wales) Regulations 1998 (Amendment) (England) Regulations 2011 (for English Contracts). The Scheme effectively provides implied contract terms for payment and adjudication where the contract fails to adequately provide terms or if at all. (See also our advice guides on Adjudication and Getting Paid under the Construction Acts).
Construction Contracts for the purposes of Adjudication legally can be divided into TWO categories Commercial and Consumer Contracts.
(1) Commercial Construction Contracts
Including business to business parties such as Commercial Building Employers, Main Contractors and Subcontractors. Anyone that is engaged in construction work that is not for residential occupation.
Adjudication Rights - Commercial Contracts in brief.
- Subject to the Construction Acts
- Statutory Right to Adjudicate "at any time".
- Adjudication clause must comply with the Act or the "Scheme" applies.
- Cannot contract out of Adjudication.
- Where there is no Adjudication clause, the Statutory "Scheme" applies.
In essence if you are in commercial construction contract you generally have the right to Adjudicate irrespective of whether you have a written or oral contract. You do not need an Adjudication clause, indeed we at Arbicon suggest that the law is so well developed in respect of Adjudication that you are better off without an Adjudication clause. In such an instance, the Scheme would apply and you get to choose any Adjudicator Nominating Body and the risk of any breach in procedure is nil for the purposes of any later enforcement proceedings.
(2) Consumer/Household Contracts
Relating to contracts between builders and householders where at least 65% of the building is used or to be used as a home for the Consumer party. Note that buy to let contracts on second homes are commercial contracts. If you are having a house built, refurbished or extended for your personal use there are no Adjudication rights unless expressly agreed in the contract. This position has been the subject of much legal debate of late as Consumers that fall foul of Cowboy Builders effectively have no commercial remedy to obtain damages as Court proceedings are expensive, longwinded and thus prohibitive.
Adjudication Rights - Consumer Contracts in brief:.
- Not subject to the Construction Acts
- Contract must have an Adjudication clause to Adjudicate
- No Statutory Right to Adjudicate but can contract in rights such as "the Scheme"
- Can contract out Adjudication
- Subject to Consumer Rights Laws
If you have no contract at all in writing, as a Consumer there will most likely be nothing we can do for you other than negotiate or assist you in Court proceedings.
In essence, if you are a consumer and you want Adjudication it must be agreed in writing. If not, you will lose the most effective and economic way of dealing with any disputes when they arise..
If you would like to fight your case using adjudication, appoint an Adjudicator or have your rights evaluated, please use our contact form or call one of our offices.