The Construction Contracts Act 2002 (Act) enables parties to a construction contract to resolve disputes by way of adjudication. This is a process where an independent third party (the adjudicator) is engaged to determine the dispute quickly, usually on the basis of written submissions only.
Adjudication is initiated by a claimant serving a notice of adjudication on the respondent. If you are served with a notice of adjudication it is important to act promptly. The claimant is required to serve its adjudication claim shortly after the adjudicator accepts the appointment (section 36(1)). Unless an extension is granted, a written response to that claim must be served on the adjudicator within five working days after receiving the claim. An adjudicator is prohibited from taking into account any response that is received late (section 46(1)(b)).
Below are some key issues to consider if you are served with an adjudication claim.
Extension of time
A respondent who requires an extension of time should seek that extension as soon as possible, certainly before the expiry of the default five working day period. The purpose of the adjudication process under the Act is to enable fast resolution of disputes, so you will need a compelling reason for the extension to be granted. An extension can either be sought by way of agreement with the other party to the adjudication, or by application to the adjudicator (section 37).
Counterclaims
Counterclaims cannot be raised as part of a response to a notice of adjudication. Instead, the respondent must commence a separate adjudication in relation to any counterclaim. If that second adjudication is commenced promptly, the parties may be able to seek that the claim and the counterclaim be determined by the same adjudicator, at the same time (section 40).
Evidence
The response to the notice of adjudication may be accompanied by any other documents (evidence, legal authorities or other material) on which the respondent wishes to rely. A respondent should therefore carefully consider the key points it intends to make, and the materials it will need to provide to the adjudicator to prove them. Because adjudications do not usually involve hearings, the written submissions and accompanying materials are of critical importance.
A respondent should give early thought to witnesses. Are the individuals who have the best, and first-hand knowledge of the relevant facts available to write and sign statements attesting to those facts? If there is a need for expert evidence on any matter, an expert should be engaged and instructed immediately.
Next steps
Following provision of the adjudication response, the claimant may serve a reply (section 37A), and the adjudicator may permit the respondent to serve a rejoinder to that reply (section 37A). The reply and then rejoinder are to respond only to new points raised, not to reiterate or recast points already made. At least in theory, this should mean that each document submitted will be shorter and more focused than the one before.
The adjudicator will then make his or her decision. A decision will usually be released within 20 working days of the adjudicator's receipt of the response (section 46).
An adjudication determination will not necessarily be the end of the matter. The dispute may still be referred to arbitration or litigation, or the parties may reach agreement that a different outcome is preferable. However, regardless of whether either party intends to pursue such avenues, it will be necessary to comply with the adjudication determination in the meantime.
Our team are highly experienced at navigating the adjudication process on behalf of clients. Please get in touch with one of our experts below to discuss how we may be able to assist you.
This article is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice. If you require any advice or further information on the subject matter of this newsletter, please contact the partner/solicitor in the firm who normally advises you, or alternatively contact one of the partners listed below.