Janey Milligan: Adjudication has revolutionised disputes in the construction industry

Janey Milligan: Adjudication has revolutionised disputes in the construction industry

Janey Milligan

Janey Milligan, managing director of Construction Dispute Resolution, discusses the rise in construction adjudication cases being witnessed at the Chartered Institute of Arbitrators (Ciarb).

Since statutory adjudication was introduced in 1998, construction adjudication has steadily become the absolute ‘go to’ for resolution of construction disputes regardless of nature, value or complexity. It is suitable for construction disputes throughout the supply chain from sub-contractors at all levels to the client at the top of the chain, including professional advisers’ contracts.

With the construction industry being very fragmented and everyone wanting a “slice of the pie” in a construction project, it is almost inevitable that there will be differences of opinion, particularly in the current climate, when finances and resources are tight.

Adjudication is the result of the Housing Grants, Construction and Regeneration Act 1996 which aims to improve cash flow across the construction industry, and provide access to a quick and cost effective means of resolving disputes.

In compliance with the Act, all construction contracts must provide for a dispute to be referred to adjudication “at any time”. This allows a disgruntled party to request an adjudicator to decide the dispute as soon as necessary. Too often we witness paying parties trying to have some hold over the party lower down the chain and not making fair and regular payments or coming up with spurious arguments of defective work. The Act and adjudication can quickly circumvent this unacceptable behaviour often called “subbie bashing”.

If your contract does not provide for adjudication, it is automatically implied into it. This provides certainty for parties engaged in more informal arrangements - even oral contracts - or where contracts are simply not up to the date with the legislative requirements. Adjudication is accessible to all!

A dispute can be referred to an adjudicator immediately after issuing a Notice of Adjudication to the other party. An adjudicator can be agreed upon by the parties but in the vast majority of cases they are appointed swiftly by an Adjudicating Nominating Body (ANB) such as the Chartered Institute of Arbitrators (Ciarb), for which there is a small fee. The adjudicator is obliged to conduct the adjudication in a fair, independent and impartial manner.

Ciarb holds a panel of experienced and qualified adjudicators from technical and legal backgrounds, so you are sure to find the right person for your dispute be it an architect, surveyor, engineer, solicitor or particular specialist. Ciarb will also, in the near future, be the only body where you can find Chartered Adjudicators who are experienced to manage and decide disputes of high complexity.

What happens when the adjudicator is appointed?

Speed is one of the prime advantages of adjudication. Within 7 days of issuing the Notice of Adjudication, the claiming party, known as the Referring Party, must submit to the adjudicator its Referral Notice with all supporting documents. The adjudicator then sets out a procedure for the opposing party to make a submission, and other submissions as necessary to decide the right answer, with the objective of reaching a decision within 28 days of the Referral Notice. The adjudicator is master of procedure and often disputes are decided on written submissions only but sometimes a meeting will take place depending on the issues and complexity. That period can be extended by 14 days but only with the Referring Party’s agreement.

The written decision of the adjudicator is binding until final determination by litigation, arbitration, or agreement by the parties. It is a measure of the success of adjudication that very few disputes are revisited in court or before an arbitrator. The decision is effectively the final decision.

To put the popularity of adjudication into context, according to the King’s College London Report ‘2023 Construction Adjudication in the United Kingdom: Tracing trends and guiding reform’, “the number of referrals received by ANBs in the past five years has oscillated around 2,000 per year”. Ciarb has seen an increase of 255% in adjudication cases in Q1 2024 compared to the previous year, and it looks like the rest of the year will follow suit.
In tandem with the benefit of accessibility, the risk of having to pay the other party’s costs if you lose, as in court or arbitration, is eliminated. Each party pays its own costs only, win or lose, but it can control how much it spends.

The adjudicator does however have discretion to decide which party pays the adjudicator’s fees. Adjudicators generally charge an hourly rate and allocate the fee against the parties in whatever proportion is considered appropriate. Normally the losing party pays the adjudicator’s fees.

The industry has considered the costs in relation to low value disputes and there are some further options available. Ciarb supports the CIC Low Value Disputes Model Adjudication Procedure where disputes up to £100,000 in value have the adjudicator’s fees capped at bands ranging from £2,000 to £5,000 exclusive of VAT.

The adjudication process has established itself in the industry, in no small part to the Courts being very supportive of adjudicators’ decisions. The popularity and efficiency of adjudication should not be understated. It has caused a ‘revolution’ in how construction disputes are resolved and continues to be a popular method of resolving construction disputes 26 years after it was first introduced.

Janey L Milligan LL.M FRICS FCIArb has worked in the construction industry for 40 years, initially qualifying as a Chartered Quantity Surveyor in 1985. She worked in various organisations in private practice and lectured at Glasgow Caledonian University in building contracts and construction law for surveying students. She is managing director of Construction Dispute Resolution which she founded in 1997 and since then has specialised in construction dispute consultancy. Janey is a qualified Arbitrator, Adjudicator and accredited Expert Witness; with an impressive track record in all areas.

Janey is regularly appointed or agreed as Adjudicator and is a member of several panels of adjudicators. Since the introduction of statutory adjudication, she has issued hundreds of Decisions. She is also on the Ciarb Adjudication Panel and RICS Panel of Arbitrators and has issued several Awards on construction issues.

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