Adjudication is a fast-track dispute resolution process for the construction industry, administered under the Construction Contracts Act 2002 (“CCA”). Adjudication provides a faster alternative than the District Court or High Court for resolving disputes between parties to a construction contract.
Adjudicators (the decisionmakers) have substantial freedom in determining a dispute, including powers to engage their own expert advisors, request information from the parties, and inspect the construction site.
By way of example, the following disputes can be suitable for adjudication:
- A dispute over whether a payment is due under a contract
- for example, whether a progress payment is due.
- A dispute over whether one or more parties have breached a contract
- for example, where the work set out in the scope of works has not been completed.
- A dispute about whether a party has breached warranties set out in the contract
- for example, where the work completed does not meet the building code.
Although there are significant advantages to adjudication, the process will not suit every construction dispute.
The major advantages to the adjudication process are:
- Adjudicators typically have specialist experience in dealing with construction matters.
- You will typically receive a decision within weeks of making an application.
- A decision made by an adjudicator can be enforced in much the same way as a decision of the District Court or High Court.
The disadvantages of the adjudication process are:
- Unlike the High Court and District Court which can award costs to successful parties, in adjudication the general rule is each party bears its own costs unless a party has acted unreasonably in the adjudication.
- Once the adjudication process has started, both parties will have to prepare evidence and draft legal submissions quickly. This can leave little time for the parties to engage in settlement discussions which could lead to a better outcome.
- For both parties, adjudication can be expensive, and costs can accrue quickly. Typically, a number of expert reports need to be arranged, paid for, and finalised in a short space of time.
- Adjudication is generally only an interim measure. It does not prevent either party from later commencing legal proceedings in the High Court or District Court.
Adjudication is a useful process for those in the construction industry. For advice on adjudication and any other dispute, feel free to talk to our helpful team.