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Adjudication Costs and Fees – What to Expect.

Posted on 28/05/2018 · Posted in Adjudication

Adjudication is a form of alternative dispute resolution. Introduced in the UK in 1996 by the Housing Grants, Construction and Regeneration Act (the Construction Act) it is a compulsory method for resolving disputes in the construction industry, such as cases involving cost recovery, delay and disruption, although disputing parties in other sectors can elect to use adjudication in certain circumstances.

Adjudication is often preferred to the formal litigation route as it is a quick (usually designed to provide a decision within 28 days) and relatively inexpensive process in comparison. However, the process is not a free one and there are inevitably some associated costs.

Peace if possible, truth at all costs.”
Martin Luther

The key component of adjudication costs will be the adjudicator’s fee. This is normally charged at an hourly rate, which will be agreed upfront with the disputing parties. The adjudicator (again, with prior agreement from the disputing parties) is also entitled to appoint experts or legal advisers as required or undertake checks, and this is included in his or her fee, with the understanding that he or she will not incur additional expense where not strictly necessary.

The disputing parties may also incur costs for any additional expert professional or legal advice they seek. And finally, there may also be a nomination fee which is charged for the appointment of an adjudicator. For example, the AICA (the Association of Independent Construction Adjudicators) charges a nomination fee of £300 pre VAT (with free nominations for Build UK members.)

There is no set rate for an adjudicator, with a range of hourly rates being charged, but the cost of the adjudication will very much depend on the size, nature and complexity of the dispute. It is generally up to the adjudicator who pays his or her fees and in what proportion. This usually falls to the unsuccessful party in the dispute, however, under paragraph 25 of the Scheme for Construction Contracts 1998 (the ‘Scheme’) both disputing parties are jointly and severally liable for the adjudicator’s reasonable fees and expenses, with the starting point therefore being that each party bears its own legal costs.

While the expense of adjudication will depend on the size and complexity of the dispute, adjudication is still likely to be much more cost effective than arbitration or litigation, and is now the compulsory route to solving construction industry disputes in the UK.

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.

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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.