Adjudication in the Construction Industry. (Cont)
Click here to return to the main adjudication page.
Adjudication for the construction industry was introduced in 1996 by the Housing Grants Construction & Regeneration Act. It did not come in to force until 1998 when the Scheme for Construction Contracts Regulations were passed as secondary pieces of legislation to ensure that the Act could operate.
The purpose of Adjudication is to ensure cashflow within the construction industry and to bring certainty to payment dates when these were not expressly stated within a construction contract. The Act defines what is a construction contract and general exclusions are private dwelling houses for resident owners; supply contract; and certain works in respect of the energy processing contract.
An independent Adjudicator is appointed by an Adjudicator Nominating Body or an Adjudicator is agreed by the Parties. The Adjudicator is then required to make a Decision within 28 days of the dispute being referred to him. There are provisions for the 28 day period to be extended initially to 42 days with the agreement of the Referring Party and beyond 42 days with the agreement of both Parties.
Advantages of Adjudication are that it is relatively quick, relatively inexpensive and Parties get an answer generally when the issue fairly fresh in their minds rather than much further down the line. The Decision is binding upon the Parties unless either of them decides to take the dispute to a further forum e.g. Arbitration or Court or Parties agree otherwise.
Disadvantages of Adjudication are that Parties have to bear their own costs in referring the dispute and presenting it during the Adjudication and these are not refundable by the losing Party.
Although Adjudication has been very well supported by the Courts with the strap line “Pay now argue later” becoming a common theme when Judges support Adjudicator’s Decisions and enforce them. However, if there is a deep rooted dispute which requires further referral to Arbitration or Court then this option is open to Parties at a later date but in the meantime cashflow is maintained. Some may see this as a disadvantage as with all walks of life not every remedy is appropriate for every issue. However, the popularity of Adjudication since its introduction supports that it is a realistic choice. CDR regularly represent Parties in Adjudication and its Directors are qualified Adjudicators who are delighted to advise you in the process as it currently stands and its further developments. In this regard amendments and improvements to the Act and payment regimes will be introduced in 2011 by the Local Democracy, Economic Development of Construction Act 2009 (LDEDC Act) in England and reflected in Scotland by a Legislative Consent Motion.