Adjudication of payment disputes under construction contracts
has the advantage of being relatively quick and cost effective,
with a determination (usually) guaranteed within 28 days of the
application being made under the Construction Contracts Act. Also,
experience shows that, right or wrong, once a payment award is made
in favour of a subcontractor, head contractors tend not to dispute
the claim in court or arbitration even though they retain the right
to. They usually just accept the adjudicator's payment award
and move on.
An adjudication award has the further advantage of being an
interim determination only, which neither side can use in evidence
and which does not finally determine the rights and interests of
the parties. So the risk of an adjudicator getting it wrong is
mitigated, and an adjudicator cannot permanently jeopardise a
party's rights under the contract.
The down side is that, respectfully, some adjudicators
misunderstand that their role is simply to enforce the contractual
payment regime, not to arbitrate or determine the facts of any
underlying dispute. This creates a risk that what is designed to be
a "rough and ready", pay now, argue later way of getting
contractors paid can become unnecessarily complicated in the hands
of some adjudicators. One way to deal with this, for example, may
be for a party to refuse an adjudicator's inappropriate request
for further evidence and submissions that will only complicate and
increase the costs of the statutory process unnecessarily, and
insist that they make a determination on the papers in front of
them, according to the contract. The worst that can happen is, they
wrongly dismiss the application and the party then proceeds to take
the dispute to a court or an arbitrator without any real loss
except time, and without wasting the cost of litigating a dispute
in a forum that was never designed for litigation. ? The other
answer of course is better and more unified education of
adjudicators as to their unique, non-curial role, and its
Generally, parties should only adjudicate over relatively large
amounts; if a contractor can survive without the money until the
end of the project, it is sometimes commercially and strategically
better to include the payment claim in the mix with any other
issues that might arise by the time of practical completion
(delays, EOTs, defects, etc.). Remember: if a party decides not to
adjudicate a pay dispute within the 28 day deadline, this will not
cause that party to lose the right to payment. It just means the
party is limited to the other legal means for recovery of payment
claims including arbitration, or it may be better to wait until
practical completion. Often it is the case that these methods are
more appropriate that adjudication. That judgement is best informed
by specialist legal advice.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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