Adjudication in Construction Contracts
Adjudication in construction contracts is a type of dispute resolution between parties involved in construction contracts.3 min read
Adjudication in construction contracts is a type of dispute resolution between parties involved in construction contracts. In order to be able to adjudicate the construction contract, you must be an actual party identified in the contract. There could be several potential issues in a construction contract, particularly with regard to work that is or isn’t within the scope of the agreement or even a failure to perform under the contract.
The Adjudication Process
The process of adjudication occurs when one of the parties involved in the construction contract provides written notice to the other party indicating that he or she is beginning the adjudication process.
The notice of adjudication should identify the following:
- The nature of the dispute
- The parties involved
- When and where the dispute arose
- What type of remedy is being sought
- The addresses of both parties in the contract
The adjudication notice should also identify the other party’s obligation in responding to the dispute. While there are no specific rules as to what is to be included in the document, it must specify the above-mentioned items, as the other party will need to fully understand the purpose of the adjudication, as well as what is expected of him or her. There should also be a deadline as to when the receiving party should respond to the notice.
Appoint an Adjudicator
After the service of adjudication is complete, you’ll need to appoint an adjudicator within 7 days after the notice is delivered. Generally, the parties have to agree on an adjudicator, but if the parties can't come to an agreement, then the party who filed the notice of adjudication will need to apply to an Adjudicator Nominating Body (ANB). This ANB will need to identify the choice of an adjudicator within a period of 5 days after the initial notice of adjudication was served.
Once an adjudicator is chosen, he or she can adjudicate the dispute in any way. Generally, however, an adjudicator requests written statements from both parties; appoints an expert to report on certain issues; and inspects the work that is already completed. Thereafter, the adjudicator must come to a decision as to whether the parties in the contract are liable for payment under the contract.
A referral must be served within 7 days after the Notice of Adjudication was served on the other party. This document specifies the details of the case, and the party who is referring the dispute for resolution.
Under the Construction Act, the adjudication procedure must be complete within 28 days after the referral notice was served. While the deadline can be extended, adjudications usually don’t last more than 6 weeks.
Once the adjudicator has come to a decision, it will be somewhat final; however, the other party will be able to respond to the notice and defend his or her argument in an attempt to have the decision reversed. The answer must be provided within seven days after the adjudicator made the decision.
If the adjudicator still holds the same decision that it will be binding, unless the other party decides to bring a subsequent lawsuit in court. If the losing party does in fact take it to court, the prior adjudication hearing cannot be used, and the court will hear the dispute with no previous notes regarding that prior adjudicated dispute. However, if the other party doesn’t take it to that level, then the parties will need to comply with the decision, and the losing party cannot adjudicate the same issue in another adjudication dispute.
Adjudication Fees and Costs
The parties in the construction contract will both be liable for payment to the adjudicator in a reasonable amount relating to the actual work being conducted by the adjudicator. In fact, the adjudicator him or herself can provide an amount that he or she will charge. If there is a dispute in terms of the payment, then an application can be filed with the court to determine the appropriate costs.
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