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Mouchel Infrastructure Services

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Is Adjudication Too Expensive?

The right to adjudicate a dispute under a “Construction Contract” came into force in 1998 when the Housing Grants Construction and Regeneration Act 1996 (the Act) became statute.

One of the primary objectives of the Act was to assist with ensuring that cash flowed down the supply chain. The adjudication provisions were amongst other things intended to assist in this process by providing a relatively quick and inexpensive means of settling disputes about payment issues as they arise.

Reading trade journals, twitter and speaking to fellow professionals at networking and technical briefings the current consensus appears to be that the Adjudication procedure is too expensive. It also appears that the finger of blame is pointed at the lawyers.

This is done by lodging challenges to the appointed adjudicator’s jurisdiction and by seeking to establish a similar level of case presentation as is produced for arbitration or litigation. This can lead to expensive legal fees which make all but substantial monetary claims commercially unviable to pursue given that the parties bear their own costs.

This raises a number of questions:

Large final account disputes often include extension of time and loss and/or expense claims and large variation accounts involving numerous items in dispute, all requiring substantial evidence in support.

What can be done to make adjudication more affordable? Are the costs of adjudication to become even higher to the Referring Party?

We will share our views on this matter in our summer edition.

Ian Brant, April 2011