Good question. First things first, it’s not arbitration – something adjudication is often confused with. It is an entirely separate process: arbitration is akin to litigation (court proceedings), whereas adjudication is a fast-track interim method of alternative dispute resolution (ADR).
Adjudication was introduced by the Housing Grants, Construction and Regeneration Act 1996 (the Construction Act). It allows for an adjudicator, either appointed by a third party nominating body such as the Royal Institution of Chartered Surveyors (RICS) or the Institution of Civil Engineering (ICE), or selected by the parties, to reach a decision within 28 days of a dispute bring referred (or longer by agreement).
Subject to a few procedural exceptions, the decision will be binding on the parties on an interim basis – ‘unless and until finally determined’ by court or arbitration proceedings. That is the case regardless of its legal or factual correctness – as long as the adjudicator answers the right question, it doesn’t matter if they get the answer wrong. That might seem bizarre – that the decision can be demonstrably wrong and still enforceable – but it is the only way of making the adjudication process work: to provide a resolution of sorts to construction disputes quickly.
The Construction Act provides that all construction contracts must give the right to refer a dispute to adjudication. If one doesn’t, the right will be implied by statute anyway – and there’s no ability to agree otherwise. So it is in a sense a compulsory form of dispute resolution – and some contracts go even further, such as the NEC ECC which makes adjudication a pre-condition to going to court or arbitration.
The 28 day time period is almost uniquely quick in legal terms. By contrast, court proceedings rarely take less than 12 months and very often considerably longer. The speed is deliberate – to facilitate a ‘pay now, argue later’ approach originally aimed at getting cash moving down the supply chain. But it can trap an unwary party, and does further the perception of adjudication as ‘rough and ready justice’.
No one knows quite how many adjudications take place every year. But it is a lot. The industry has widely accepted it as its preferred method of disputes resolution, and it’s frequently been praised by the courts.
We are experts in adjudication – it’s what we do day in, day out. If you have any queries on adjudication, drop us a line.