UK: Adjudication Heads East

Last Updated: 15 December 2014
Article by Laura Coates

Statutory adjudication has been a great success in the UK, where it was first introduced. Other jurisdictions are following the UK lead and introducing more flexibility to the process.

Over the course of the last 16 years, the UK construction industry has become increasingly familiar with statutory adjudication, introduced as part of the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996) in 1998. Initially designed to abolish bad payment practices in the industry and improve cash flow, adjudication was also intended to deal with works being suspended for long periods of time whilst lengthy disputes were resolved. With the introduction of adjudication, it has become possible to obtain a decision in just 28 days, and if court enforcement is required, this generally takes place within a further 14 days.

To that extent, adjudication has been transformative in allowing parties who have not been paid to claim what they are owed in a relatively short period, and to that degree can be considered a success. Whilst initially slow to gain acceptance in the UK, once the courts demonstrated that they would robustly enforce adjudication decisions, adjudication developed a momentum of its own. Indeed, it could be argued that adjudication has been almost too successful in the UK, and at times has been both widely used and abused, with parties using it to refer all kinds of disputes to adjudication, including those that are totally unsuited to the fast-track procedure.

Following legislative amendments in 2011 (as contained in Pt 8 of the Local Democracy, Economic Development and Construction Act), statutory adjudication now applies to oral contracts as well as written ones. Court decisions have also helped to shape the adjudication procedure as it now stands, contributing to the recent amendments to the primary legislation such as incorporating a slip rule to allow an adjudicator to correct a clerical or typographical error. Whilst parties have been inventive in finding ways to resist enforcement, it is now fairly clear that there are only two potential options for challenging enforcement in the UK, these being (i) where the adjudicator did not have jurisdiction to make the decision, and (ii) where there has been a serious breach of the rules of natural justice.

Just as the use of adjudication has spread across the UK construction industry, it has successfully expanded across the globe, with Hong Kong being the latest jurisdiction to introduce security of payment for its construction industry through statutory adjudication, following in the footsteps of Australia, New Zealand, Malaysia and Singapore. New South Wales was the first state in Australia to take this step, with the Building and Construction Industry Security of Payment Act of 1999, followed by legislation in Victoria (2002), Queensland (2004) and Western Australia (2004), whilst New Zealand introduced the Construction Contracts Act in 2002. Perhaps unsurprisingly, the use of fundamentally different models in Eastern and Western Australia has now led for calls for a new harmonised national scheme.

In 2005 Singapore introduced the Building and Construction Security of Payment Act. The general aim behind all the legislation was, as in the UK, to ensure that money flows down the contracting chain by prohibiting 'pay if paid' or 'pay when paid' clauses in construction contracts.

Since the late 1990s, stakeholders in the Hong Kong construction industry have undertaken a critical review of the practices and culture of the industry and considered routes for reform. Indeed, in April 2002, the Construction Industry Review Committee (CIRC) was appointed to comprehensively review the state of the industry and to recommend measures for improvement, and reported that 'further consideration should be given to the merits of, and the need for, enacting security of payment legislation having regard to local circumstances and in the light of overseas experience.'

In the decade that followed the CIRC Report it was recognised that security of payment was fundamental to developing a healthy, professional and competitive construction industry, and the long-awaited security of payment legislation is expected to commence its public consultation shortly (the tentative consultation period has been identified as April to June 2015, with the legislation expected to come into effect as early as 2016).

The scope

In terms of its scope, the proposed legislation will apply to construction activities carried out in Hong Kong (main contracts, sub-contracts, consultants and suppliers), as well as those construction activities performed outside Hong Kong provided that the work products are finally delivered to, and incorporated into, a project in Hong Kong. As is now the case in the UK, the proposed legislation will apply to construction activities regardless of whether the contract was made orally or in writing. Conditional payment provisions (eg 'pay if paid' or 'pay when paid') will be prohibited and have no effect if included in a contract. Although wide in scope, it will exclude construction contracts with residential occupiers for a value of less than HKD5 million, as well as employment, insurance, guarantee and investment contracts.

Whilst parties to an applicable contract will be free to agree when and how frequently claims for progress payments can be made, how the progress payments are to be calculated, and when the progress payments are to be made, the agreed due dates cannot exceed 60 days for interim payments and 120 days for final payment. Where parties do not expressly agree any of these matters, default provisions will apply to the contract. Under the proposed legislation, the claiming party would be entitled to adjudicate a claim for a progress payment even without having to fulfil a condition precedent to their contractual entitlement to the claim.

It is intended that the contractor whose payment claim has been disputed or ignored will have the right to commence statutory adjudication, with the legislation setting a strict time limit within which to make an application for statutory adjudication. The parties may appoint an adjudicator after the dispute to be adjudicated has arisen. If there is no agreement, the nominating body named in the parties' contract will appoint by nomination an adjudicator, otherwise the adjudicator will be appointed by nomination from the HKIAC Hong Kong International Arbitration Centre. However appointed, the appointment must take place within five working days of commencement of the adjudication.

Time frames

In terms of time frames once adjudication has commenced, it is proposed that the responding party will have 20 days to serve its response from the date of receipt of the claimant's submissions, although this time period may be shortened or extended by the adjudicator without the parties' consent. The adjudicator will have 20 working days from the date of receiving the respondent's response to make his decision, but this period may be extended up to 55 working days from the date the adjudicator was appointed without the parties' consent, or extended further with both parties' consent.

It is anticipated that 55 working days will become the usual period for disputes of greater size or complexity, with knock-on implications in terms of the cost of the adjudication. Under the proposed legislation, each party will bear its own costs of the adjudication, although the adjudicator will have the power to determine which party pays the adjudicator's fees. It is therefore possible that the losing party will face a significant liability in relation to fees.

If the losing party fails or refuses to comply with the decision of the adjudicator, the adjudicator's decision can be registered as a court judgment and enforced by the courts accordingly. In terms of grounds on which to challenge a decision, these are limited to procedural grounds of unfairness, a failure by the adjudicator to act independently and impartially, or the adjudicator acting without or outside his jurisdiction (not dissimilar from the grounds for challenging the decision of an adjudicator in the UK). In that the adjudicator's decision is only provisionally binding, the parties to it are not prevented from commencing separate court or arbitration proceedings to seek a final determination of the dispute.

Following a decision of the adjudicator, the proposed legislation gives the contractor the right to suspend work for non-payment of sums that have been determined by the adjudicator as being due and payable, conditional on the contractor serving written notice of suspension on the employer and the site owner. As an alternative, the contractor may suspend part of its work or reduce the progress of its work, as a result of which the contractor will become entitled to additional time and reasonable costs for any delay and disruption caused by the suspension.

Security of payment

There are various ways in which the proposed legislation can be seen to mirror that of security of payment legislation in other jurisdictions. It limits adjudication to disputes involving claims for extensions of time, and delay and disruption cost, and also contains anti-ambush provisions (features of the Australian systems, lacking in the UK), providing the adjudicator with the power to disregard evidence or submissions that should have been provided beforehand, and encouraging parties to submit their submissions and supporting evidence as soon as possible to allow each to have a reasonable time to consider them.

In addressing the above, as well as providing the parties with the right to appoint their own adjudicator (by agreement) and permitting flexibility of time limits without the parties' consent, Hong Kong seems to have learnt lessons from the experiences of others.

In that the proposed legislation reflects some of the key provisions contained in the security of payment legislation in jurisdictions such as the UK, it seems inevitable that the process in Hong Kong will be open to the same criticisms as faced in other jurisdictions.

One of the main issues with adjudication is identified as being the quality of adjudicators, especially those with little 'real life' experience of construction disputes. To the extent that most adjudicators are appointed by a nominating body, the parties have little control over who is selected (unlike arbitration). Issues can arise when adjudicators without formal legal training are asked to grapple with interpreting complex contractual issues, and depending on which part of the industry the adjudicator comes from, they are open to claims of perceived or actual bias. Indeed, in the UK, the TCC judiciary have, on occasion, been openly critical of some of the adjudicators' decisions which they are obliged to enforce.

Extended time periods

The possibility of an extended time period for adjudication can also lead to the incurring of significant costs, and can mean that what was intended to be a quick and cheap process becomes increasingly drawn-out and expensive. Overall, the adjudication process is expected to have widespread consequences for the construction industry in Hong Kong, causing a major shift in the balance of power between contractors and employers, and replacing arbitration and litigation as the mechanisms of choice for resolving construction disputes.

As Hong Kong awaits the coming into effect of the proposed legislation, it is interesting to speculate which jurisdictions might next look to introduce some form of security of payment legislation to regulate their domestic construction industry. Whilst the continuing growth of the construction industry in the Middle East might suggest that it would be the next region to adopt adjudication for payment disputes, adjudication is not recognised as a form of dispute resolution in the underlying Civil Code of, for example, the UAE, and would not give rise to a binding award.

In that it would still be necessary to pursue a matter through arbitration or the local courts, and re-litigate the substance of the dispute, adjudication to some extent would only add another layer of bureaucracy and expense to a process that in any event would have to proceed to arbitration or the courts. Other common law jurisdictions, though, may yet adopt adjudication.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.