Why might adjudication be a cheaper and quicker way of resolving issues for small and mid sized construction companies?
Parties to a construction contract have the right to refer any dispute to adjudication. Adjudication can be a relatively quick and cost-effective mechanism for resolve disputes on an interim basis. This means that the decision of the Adjudicator is binding on the parties until the dispute is finally determined by the Courts, and arbitrator or by agreement.
Benefits of Adjudication
- Speed – the parties can obtain a decision within 28 days (although this can be extended in certain circumstances). In contrast, Court proceedings can take in excess of 12 months to conclude if contested through to trial. This also means that an adjudication can take place to resolve a dispute without causing too much disruption to a project.
- Enforcement – if necessary, a successful party can enforce an Adjudicator’s decision with a summary judgment application in the Technology and Construction Court. This process typically takes a further 28 days.
- Cost – whilst a successful party in an adjudication will generally not be able to recover its legal costs from its opponent, the costs incurred in pursuing an adjudication will invariably be less than if Court proceedings were instigated.
- Timing – the parties to a construction contract have the ability to refer a dispute to adjudication at any time. This means that a referring party can gain a tactical advantage by timing an adjudication at a time that is inconvenient to its opponent.
Notwithstanding these benefits, it is not always appropriate to refer a dispute to adjudication. It is therefore important to seek legal advice as soon as a potential dispute arises in order to properly assess the options available.