Understanding The Adjudication Process: A Step-by-Step Guide- Part 2

Author: Bart Kolosowski
Published: September 9, 2023
Understanding The Adjudication Process: A Step-by-Step Guide

Continuing from- Understanding The Adjudication Process: A Step-by-Step Guide- Part 1

 

The Adjudication Procedure

The adjudication procedure is a crucial phase in the resolution of construction disputes, often setting the tone for the ultimate decision. This process starts with the claimant referring the dispute to the adjudicator under the provisions of Section 111 of the Act. The defendant then responds as per the dictates of Section 112, presenting their side of the argument. Throughout this procedure, certain rules govern the presentation of evidence and the overall conduct of both parties. Integral to this process is the adjudicator whose powers and role are enshrined in the Act, ensuring a fair, transparent and efficient process towards a binding decision.

Referral of dispute to adjudicator by claimant

Once the adjudicator has been appointed, the next crucial step in the adjudication process is the referral of the dispute to the adjudicator by the claimant. This involves formally presenting the nature of the dispute, the facts, and the relief being sought to the adjudicator. This is governed by Section 111 of the Housing Grants, Construction and Regeneration Act 1996. The Section specifically states that the referral should be made seven days following the Notice of Adjudication.

It is important to note that the referring party (the claimant) has the burden of proof. Therefore, the claimant must be thorough in presenting all relevant documents and evidence to support their claim. This includes witness statements, expert reports, and any contract or relevant communication that substantiates their position. It is crucial for the claimant to be comprehensive and clear in this step for the adjudicator to make an informed decision.

Requirements for referral under Section 111

Upon serving a Notice of Adjudication, the claimant is then tasked with the responsibility of referring the dispute to the adjudicator. Section 111 of the Housing Grants, Construction and Regeneration Act 1996 meticulously details the requirements for such a referral. Firstly, the referral must be made in writing and should include the nature and a brief description of the dispute, the parties involved, and the redress sought by the claimant.

In addition to these details, the referral must also be accompanied by all supporting documentation that the claimant intends to rely upon throughout the adjudication process. The Act specifies a strict timeline for this process; the referral must be made within seven days of the Notice of Adjudication. Any delay or failure to meet these requirements may invalidate the adjudication process, thereby stressing the importance of strict adherence to the provisions of Section 111.

Defendant’s response under Section 112

Under Section 112 of the Housing Grants, Construction and Regeneration Act 1996, the defendant is provided with an opportunity to present their case. This usually involves a detailed response, along with supporting evidence and documentation, to the matters raised in the referral notice by the claimant. The defendant’s response should be thorough, addressing all aspects of the claims made, with a clear presentation of their own claims if any, and should be submitted within the prescribed timeframe stipulated in the Act. It’s worth noting that the process under Section 112 is an important stage of the adjudication and that the defendant’s response has a significant impact on the adjudicator’s decision. Therefore, the defendant should consider their response carefully to ensure that they provide a comprehensive and compelling case.

Rules governing procedures and evidence

The adjudication process in the UK is guided by a set of rules that dictate the procedures and evidence that can be used. These rules are primarily derived from the Scheme for Construction Contracts (England and Wales) Regulations 1998 and the Housing Grants, Construction and Regeneration Act 1996.

Under these regulations, the adjudicator, once appointed, has the right to take the initiative in ascertaining the facts and the law necessary to determine the dispute. This can include requesting relevant documents, carrying out inspections or instructing tests to be conducted. It is essential that all parties comply and cooperate fully with the adjudicator, ensuring that all evidence and documentation required is presented accurately and within the defined timeframes. Failure to do so can have severe consequences, which can include an adverse decision or even costs being awarded against the non-compliant party. Consequently, the understanding and adherence to the rules governing procedures and evidence is of paramount importance in the adjudication process.

Powers of the adjudicator

In the adjudication process, the adjudicator holds significant authority to examine and resolve the dispute. Under Section 108(2)(f) of the Housing Grants, Construction and Regeneration Act 1996, the adjudicator has the power to take the initiative in ascertaining the facts and the law. This involves a wide range of actions such as requesting additional documents, carrying out site inspections, questioning parties and their witnesses, and even obtaining expert advice if necessary.

Furthermore, the adjudicator has the power to decide on the methodology of the adjudication process, provided it falls within the legal and contractual parameters. They are also granted the authority to make a decision ‘on the balance of probabilities’, based on the evidence presented by the disputing parties. The adjudicator’s decision, whether it is favourable or unfavourable, is temporarily binding until the dispute is finally determined by legal proceedings, arbitration or agreement.

Exploring The Various Dispute Resolution Methods In The UK Construction Industry

 

The Adjudicator’s Decision

The adjudicator’s decision is a pivotal stage in the adjudication process, whereby the dispute resolution process starts to come to fruition. The timeframe for the decision is primarily dictated by the contract, but it must comply with the contents requirements under Section 108 of the Housing Grants, Construction and Regeneration Act 1996. This stage is laden with significant implications, particularly concerning potential errors in the decision, which could lead to appeals or requests for a review.

Timeframe for decision dictated by contract

The stipulations outlined in the contract dictate the timeframe within which the adjudicator must come to a decision. The period typically extends to 28 days from the referral notice, as per the Housing Grants, Construction and Regeneration Act 1996. However, this timeframe can be extended to 42 days with the agreement of the referring party, giving the adjudicator additional time to consider all aspects of the dispute thoroughly.

Despite the possibility of an extension, the speedy nature of the adjudication process is one of its defining features, making it an attractive option for parties eager to expedite dispute resolution. Therefore, it’s crucial for all parties involved to adhere to these timeframes to ensure a smooth and efficient adjudication process. Delays or failures to comply may result in unnecessary complications or the adjudication decision being rendered invalid.

Requirements for decision content under Section 108

Under Section 108 of the Housing Grants, Construction and Regeneration Act 1996, there are specific requirements for the content of an adjudicator’s decision. The adjudicator’s decision must be in writing and should clearly outline the nature of the dispute and the reasons for the decision. The decision should also detail the redress, if any, to be provided to the aggrieved party. This could include payment of a sum of money, the completion of certain tasks, or a combination of both.

In addition to the above, the adjudicator’s decision should also clearly state the date it takes effect, indicating the timeline for compliance. Any failure to meet these stipulations may render the decision unenforceable. Therefore, it is essential that parties involved in a dispute are aware of these requirements and ensure that they are adhered to in the adjudication process.

Consequences of errors in decision

In adjudication proceedings, the significance of an adjudicator’s decision cannot be overstated. Yet, it’s important to note that errors can occur in the decision-making processes. There may be procedural, factual, or legal mistakes that could affect the outcome of the adjudication.

Under Section 108 of the Housing Grants, Construction and Regeneration Act 1996, the adjudicator’s decision is binding, unless and until it is revised by legal proceedings, arbitration (if the contract allows for arbitration) or by agreement of the parties involved. If an error is identified, it does not automatically invalidate the adjudicator’s decision. The circumstances, type, and impact of the error will be factored into whether a decision stands or is overruled. However, if the error is deemed to have denied natural justice or if the adjudicator has acted beyond their jurisdiction, the decision may be unenforceable. Therefore, while errors can occur, their consequences are carefully evaluated within the legal framework provided by the Act.

Enforcement and appealing the decision

Once the adjudicator has reached a decision, it is enforceable by law. If a party fails to adhere to the decision, the other party can apply to a court for a summary judgement under Part 24 of the Civil Procedure Rules. It’s crucial to note that an adjudicator’s decision is binding unless set aside in legal proceedings.

The adjudication process is designed to provide a quick and cost-effective resolution, and the prospect for appealing is limited. If a party believes the adjudicator has made an error, they may be able to challenge the decision in court, but only on very limited grounds such as jurisdictional or procedural issues. The court’s deference to the adjudicator’s decision underpins the efficiency of adjudication as a dispute resolution mechanism in the construction industry.

Understanding The Adjudication Process: A Step-by-Step Guide

 

Adjudication Costs and Payment

The costs associated with the adjudication process are generally divided into two categories: the adjudicator’s fees and the parties’ own costs. The adjudicator’s fees, including any associated expenses, are usually handled by the parties equally, unless the adjudicator decides otherwise based on the circumstances of the dispute. Such a decision would be included within the final adjudication decision.

The parties’ own costs, such as legal representation and expert advice, are typically borne by each party individually. However, the Housing Grants, Construction and Regeneration Act 1996 does not contain any express provision in relation to this. It should also be noted that the adjudicator does have the power to consider and make orders in relation to costs, so the allocation of costs may ultimately depend on the adjudicator’s decision. It’s essential, therefore, that parties are mindful of their potential liability for costs when embarking on an adjudication process.

Conclusion

In summary, the adjudication process in UK construction disputes encompasses several key stages, each significant in their own right. From initiating the adjudication by serving a Notice of Adjudication, through to the appointment of the adjudicator, the referral of the dispute, the response of the defendant, and culminating in the adjudicator’s decision, each step is meticulously governed under the Housing Grants, Construction and Regeneration Act 1996.

Understanding and adhering to the Act’s requirements is paramount, not just in terms of the adjudication procedure, but also the enforcement and potential appeal of the adjudicator’s decision. Equally important is the aspect of costs and payments, which involves the apportionment of responsibility for costs, payment of the adjudicator’s fees, and the recovery of costs through the decision. Every party involved in the process must be aware of their responsibilities and rights to ensure a fair and efficient adjudication process.

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