Adjudication

Adjudication is a mechanism often adopted in the construction industry for interim determination of disputes by a professional whose decision is usually binding, and may become final if not challenged.

The Housing Grants, Construction and Regeneration Act 1996 (as amended by Part 8 of the Local Democracy, Economic Development and Construction Act 2009) gives parties to construction contracts which relate to the carrying out of construction operations in England, Wales or Scotland the right to refer disputes to adjudication. Construction contracts are required to make express provision for adjudication. The Act specifies certain requirements for the adjudication procedure - and if these are not satisfied then the Act specifies Scheme rules that will apply. If the draftsman does not wish the Scheme rules to apply, he must be careful to ensure that the procedure rules selected comply with the requirements of the Act.

The following is a suggested clause that complies with the requirements of the Act:

"(a) Either party may give notice in writing at any time to the other party of its intention to refer any dispute arising under, out of or in connection with or relating to this Agreement to adjudication ("Adjudication Notice"). [Subject to Clause [(b)] below,] upon service of an Adjudication Notice, the parties shall within 7 days endeavour to agree an adjudicator from the panel listed in Schedule [#] to this Agreement, secure his appointment and refer the dispute to him. If, within 4 days of service of the Adjudication Notice, the parties have not agreed an adjudicator and secured his appointment, then the adjudicator shall be appointed by [specify appointing authority] with the object of securing the appointment of the adjudicator and referral of the dispute to him within 7 days of service of the Adjudication Notice.

(b) [If, within 4 days of service of an Adjudication Notice, either party notifies the other party that the dispute which is the subject of that notice (the "Adjudication Dispute") touches and concerns another dispute which is the subject of an existing adjudication under any of the [Associated Contracts], then those adjudications shall be consolidated and, within 7 days of service of the Adjudication Notice, the parties shall refer the Adjudication Dispute to the adjudicator of the existing adjudication].

(c) The adjudicator shall conduct the adjudication in accordance with [specify procedural rules].

(d) Neither party may commence [court/arbitration] proceedings (other than proceedings for the enforcement of an adjudicator's decision) in relation to an Adjudication Dispute more than [60 days] after the decision of the adjudicator has been given.

(e) [drafting note: to be used where arbitration is the ultimate dispute resolution procedure] Notwithstanding the terms of clause [arbitration clause], any dispute or difference arising in connection with the enforcement of an adjudicator's decision shall be decided by the Courts of England only and not by arbitration."

Please refer to the External Links Appointment of Adjudicators section for hypertext links to relevant bodies.