The party that commences proceedings is at a significant advantage – so make sure you understand the timetable, Jerome O’Sullivan explains.
Adjudication is a rough and ready dispute resolution procedure introduced by the Housing Grants Construction & Regeneration Act 1996, with subsequent amendments.
Section 108 of what is commonly known as the Construction Act grants a party to most commercial construction contracts the right to refer any dispute to adjudication. Subject to strict procedures and limited timescales, the adjudication process is designed to ensure each party has a chance to make their representations.
There is, however, a distinct advantage in being the party that instigates the process. Not only does the referring party have more time to prepare, they also benefit from the right to file both an initial referral as well as a reply.
Understanding the adjudication timetable is key to ensuring that you act first when you are involved in a dispute – and capitalise on your advantageous position.
The procedure is commenced by the referring party serving a notice of intention to refer a dispute to adjudication on the responding party, setting out brief details of the dispute.
“Because of the timescales involved, the adjudication timetable unquestionably benefits the referring party”
At the same time the referring party requests that the nominating organisation stipulated in the contract – RICS, for example – appoints an adjudicator. The appointment of an adjudicator (the referral) must occur within seven days.
Once appointed, the adjudicator will set out a timetable for the adjudication. The following is a typical example:
- The referring party serves a referral notice on the responding party within seven days of the referral. This notice can include detailed particulars of the claim, several supporting witness statements with exhibited documents and experts’ reports, and can extend to several lever arch binders.
- The responding party must file its response, together with supporting evidence, within 14 days of the referral.
- The referring party may file its reply, together with any supporting evidence, within 21 days of the referral.
- The adjudicator must issue a decision within 28 days of the referral, which is binding on the parties until it is finally determined by means of arbitration or litigation.
- The overall timetable can be extended by a maximum of two weeks; however, the extension has to be agreed by both parties.
Two bites of the cherry
Because of the timescales involved, the adjudication timetable unquestionably benefits the referring party, which can spend as long as it wishes carefully compiling its referral notice and the supporting evidence before even commencing the adjudication process.
The responding party, on the other hand, has only two weeks at most to instruct its solicitors and compile its response, together with supporting evidence.
Already at an advantage, the referring party will now generally get an opportunity to file a reply: it effectively has two bites of the cherry.
With the referring party enjoying significant advantages, the position of the responding party is much less favourable in comparison. Therefore, if a significant dispute arises in a commercial construction contract and your opponent mentions adjudication, you should carefully consider preparing for and initiating the process.
Alternatively, you should instruct solicitors to commence preparing a detailed response document and underlying evidence in the event that your opponent launches a ‘smash and grab’ adjudication.
Jerome O’Sullivan is a partner in the construction dispute resolution department at Healys