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Adjudication costs must be paid by the loser for system to be fair

LETTERS

Sir, I take issue with Rudi Klein that it is 'preposterous' that a successful party to adjudication should be allowed its party costs (Law Report, August 31).

But I agree with him that the original intention of the Construction Act may have been that adjudication should be a process where 'lawyerising' was to be kept to a minimum'.

As a consequence of the jurisprudence that has developed in adjudication, it is plain that the involvement of lawyers and other specialists has become an almost essential part of the adjudication process.

That means that any party that engages in the adjudication process, without the assistance of lawyers or other specialists, may be at a distinct disadvantage.

The industry may not like it and it may not have been the original intention of Parliament, but that is the way it is.

The involvement of lawyers or other specialists means that significant party costs are almost inevitable.

It also means that where the parties are obliged to bear their own costs, a dispute needs to be of a significant value to make adjudication commercially worthwhile.

The inevitable result is that many disputes that should properly be able to be referred to adjudication are not, simply because of the costs that would be incurred.

That is not good for the industry, neither is it good for the reputation of adjudication as a very effective tool in dealing with disputes economically, particularly concerning payment.

If a party (either claimant or respondent) has been forced into adjudication as a consequence of which it has incurred expense and it has been able to satisfy the adjudicator as to its case, I see no logical reason why that party should be penalised by having to bear its costs.

Steve Rudd By email