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Can you avoid paying after losing an adjudication? 

When money is owed to you, adjudication can prove to be a quick way to resolve a dispute. By Alastair Young

You can get a decision within 28 days of starting the process. This can result in a business receiving a significant cash injection. However, if you are on the wrong end of an unfavourable decision, adjudication is also a way of losing considerable sums in a very short timescale. So if you do receive an unfavourable decision – can you avoid paying?

There are only very limited circumstances in which a party can avoid paying. Courts are keen to uphold the adjudication process and ensure that it remains an effective way of resolving disputes in the construction industry. As such, courts will generally uphold a decision that an adjudicator makes. This was emphasised in the recent case of Balfour Beatty Construction Northern v Modus Corovest (Blackpool) [2008] where the judge made it clear that a court “will always endeavour to enforce” adjudicator’s decisions.

There are limited circumstances in which a party can seek to challenge the decision of an adjudicator:

  • If the adjudicator has no jurisdiction, that is, if there is no contract in writing between the parties.
  • If the adjudicator was biased/there was a breach of natural justice.
  • In some circumstances where the successful party is in liquidation.

Generally an adjudicator’s decision will be enforced. Therefore, in the majority of cases the unsuccessful party will have to pay the sums awarded by the adjudicator in his decision. It is possible if a party does not accept the decision of an adjudicator for it to commence legal or arbitration proceedings to finally determine the dispute.

However, when resolving a dispute by litigation or arbitration it can take several months or even years for a decision. At the conclusion of a time consuming and costly process the unsuccessful party may receive exactly the same decision. Therefore, in the vast majority of cases parties accept the decision of an adjudicator and move on.

Consequently, if an adjudication is started against you it is imperative that you make every effort to defend your position robustly. It is likely you will be aware of the dispute well before the Notice of Adjudication lands on your desk.

Therefore, you should be proactive from the outset and make sure you investigate your position, gather together all the relevant information and speak to all those involved so that you have a clear picture of what actually happened and the strength of your position. If you do not deal with the dispute until the adjudication is commenced, it is likely that you will only have 7-10 days to prepare your response which will make collating a strong defence very difficult.

Alastair Young is a partner in the construction unit at law firm HBJ Gateley Wareing