In this five part series, we examine the primary dispute resolution forum for construction disputes in England and Wales for those who are unfamiliar, namely, adjudication. We will answer some frequently asked questions from clients in relation to adjudication. Last time we explained the basics. This time we will look at the process of starting an adjudication.
How does an adjudication start?
The first step is to serve the Notice of Adjudication. Within seven days of service of the Notice of Adjudication the adjudicator must have been appointed and then the Referral must be served on the adjudicator and the Responding Party. If an adjudicator is not appointed within the 7 day period, the Referring Party will have to start again by re-serving the Notice of Adjudication and re-applying for the appointment of an adjudicator.
What is a Notice of Adjudication?
The service of a Notice of Adjudication by the Referring Party on the Responding Party is the first step in an adjudication and commences the formal proceedings.
There is no specific form for the Notice of Adjudication. However, the Scheme for Construction Contracts states that the Notice of Adjudication should briefly set out a description of the nature of the dispute (including the parties involved, details of where and when the dispute arose, the nature of the remedy being sought and the names and addresses of the parties to the contract).
The Notice of Adjudication is an important document as it details the scope of the dispute to be determined and as a result what "jurisdiction" the adjudicator will have (i.e. the parameters of the issues they are being asked to address). If the adjudicator exceeds the jurisdiction set out in the Notice of Adjudication and decides issues that were not referred to them, then there may be challenges that can be made in relation to that decision.
Many issues can arise from a poorly drafted Notice of Adjudication – so this is one of the most important steps in the adjudication, in addition to being the first one. Particular attention should be paid to the declarations being sought from the adjudicator i.e. the decisions that he is being asked to make.
An adjudicator is not obliged to give reasons for its decision unless expressly requested and this request should always be made as part of the redress sought. A request should also always be included for the opposite party to pay the adjudicator's costs.
What is the Referral?
The Referral is the Referring Party's case, detailing the issues set out in the Notice of Adjudication. It should contain all the evidence put forward to support the Referring Party's position. This may include, as appropriate and relevant correspondence, meeting minutes, photographs, witness statements and expert reports and any other relevant evidence.
It should however, not introduce new disputes which are not expressly referred to in the Notice of Adjudication.
As above, it must be served within 7 days of the service of the Notice of Adjudication so it is prudent not to issue a Notice of Adjudication unless the Referral has been finalised.
What happens after service of the Referral?
The Responding Party has an opportunity to submit a "Response". If the contract is silent on the time period for service of a Response, the default timetable in the Scheme is for the Response to be served within 7 days of receipt of the Referral. This may be appropriate for more straightforward disputes but parties routinely request that the timetable to be extended if the dispute is more complex.
Whether or not any requests for extensions are agreed depends on the adjudicator and the reasonableness of the parties. If reasonable requests for more time are not agreed, the adjudicator can decide to resign to avoid the risk a breach of natural justice challenge to the adjudication decision.
There is usually then a "Reply" from the Referring Party to the Response. There is potentially also an a "Rejoinder" from the Responding Party. Occasionally there can be further submissions but the adjudicator should seek to limit the number of submissions as much as is possible.
How long does it take to get a decision?
The Scheme provides that the adjudicator should reach a decision within twenty eight days after the date of the Referral or forty two days after the date of the Referral notice if the Referring Party so consents. However, the reality is that the submissions may take longer than this and many disputes cannot be determined in this period. The Scheme provides for the parties to agree a longer period and the adjudicator may seek to persuade the parties that a longer period is needed to deal with all the issues involved.
In Part 3, we will discuss how the adjudicator is appointed and their powers.