Since the introduction of the Housing Grants, Construction and Regeneration Act, known as ‘the Act’, in 1996, adjudication has become a highly popular and established route to resolving disputes in the construction industry.
Construction contracts that fall under section 108(3) of the Act state that an adjudicator’s decision will be one of a temporarily binding quality, unless and until the dispute is finally determined by legal proceedings, arbitration or agreement. If a contract does not provide for adjudication, the Scheme for Construction Contracts (England and Wales) Regulations 1998 (known as ‘the Scheme’) applies, which adopts the same wording as the Act.
The existence of the Act means that adjudication is mandatory for any contract that falls within its scope. But even when a contract falls outside of the scope of the Act, if disputing parties agree they wish to initiate adjudication proceedings anyway, then this is also allowed. So although the right of adjudication under the Act or Scheme may not apply to a specific contract, it does not hinder the disputing parties’ freedom to explore and agree to an adjudication agreement of their choosing if they so wish.
In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.”
Theodore Roosevelt
Contractual adjudication refers to cases where the contract is outside of the scope of the 1996 Construction Act, but the disputing parties have nevertheless agreed to adjudicate their disputes by adding an adjudication procedure into the contract.
By contrast, ‘ad hoc’ adjudication refers to cases where the parties have agreed to submit their dispute to adjudication thereby giving an adjudicator ad hoc jurisdiction to decide the dispute in circumstances where the Act does not apply and where there is no pre-existing contractual agreement to adjudicate. Whether the courts will enforce ad hoc adjudication will depend on the type of agreement, as well as any reservation on that agreement.
Although the parties may actively agree to use adjudication to resolve their dispute, it is more likely that ad hoc adjudication will be considered in the context of a jurisdictional challenge. Because of the nature of ad-hoc adjudication, the parties make the decisions and are not restrained by the limitations in either the Act or the Scheme.
For directory of articles on adjudication services please click here.
Expert Evidence is a professional firm concentrating on the four main areas of dispute resolution; acting as expert witnesses in financial litigation, mediation, arbitration and adjudication. The firm has a civil, criminal and international practice and has advised in many recent cases. Areas of specialisation include banking, lending, regulation, investment, and tax.
Ask a question about adjudication services. We are here to help!
Disclaimer – Please confirm any of the above views with your solicitor. Expert Evidence takes no responsibility or provides any guarantee that the views above are correct for your particular case or jurisdiction.
