The first thing that must be made clear here is that “wrong” is a subjective description. It usually relates to an individual’s feelings or opinions when they believe an injustice or mistake has been committed. However, it is also the first thing many of us think about when entering into a serious matter: “What could go wrong?” We want to be prepared for all outcomes, and that is the aim of this article. I want to help you understand the pitfalls of adjudication, not to put you off the whole process but to help you prepare thoroughly.
The adjudication process is best fitted for matters that relate to construction disputes. The reason for this is because it is favourable in both time and costs compared with the traditionally lengthy court process. However, time and money can both still be issues during the adjudication process if any of the following roadblocks occur.
Notice errors
There are two key notices that must be issued during the adjudication process. First, the Notice of Adjudication informs the other party, the respondent, of the intention to refer a dispute to an adjudicator. It must identify the parties, briefly describe the dispute, and provide details of the contract, including the relevant terms, and the redress sought. This notice is necessary for the adjudication process to begin.
The other notice is the Referral Notice. This must be served within 7 days of the Notice of Adjudication. It is sent to the adjudicator and copied to the other party, and it presents the case including arguments and evidence. If either of these notices contains serious errors, this can invalidate the adjudication. Should this happen, the whole process may need to begin again, adding significant time and delay to a resolution. In other cases, it may provide an opportunity for the responding party to challenge the adjudicator’s decision in court.
Adjudicator bias
The role of an adjudicator is to review both sides of the dispute and make an impartial decision based on the case and the evidence presented. However, the potential for adjudicator bias does exist. This is when an adjudicator reaches a decision influenced by personal feelings or connections rather than the facts of the case.
Bias cannot be claimed simply because one party feels the decision was unfair. It can occur when an adjudicator fails to disclose any prior relationship with a party, when communication happens with one side that the other is not aware of, or when there is a lack of transparency in the process. The legal test is whether a fair minded and informed observer would see a real possibility of bias. Challenges must be brought promptly and in the correct legal forum.
Time constraints
Something that makes adjudication such a favourable process can also work against the parties: time. The adjudicator must reach a decision within 28 days of the Referral Notice. This period may be extended by 14 days with the referring party’s consent, or for a longer period if both parties agree. If the process is extended, the risk is further project delay.
In cases where a decision is made within the 28 day period, difficulties can still arise. Because of the rapid timetable, decisions may be based on incomplete submissions or limited detail. The expectation to prepare everything within a short period can put both parties under pressure to prioritise speed over thoroughness, especially if they did not have strong knowledge of the process before it began.
What can be done if adjudication goes wrong?
If things go wrong, the referring party can often withdraw and begin again, provided no decision has yet been issued. However, any adjudicator’s fees already incurred will usually still need to be paid. A court may also restrain withdrawal if it is considered abusive or oppressive. Each side’s legal costs are normally not recoverable in adjudication unless both parties agree otherwise after the notice has been served. This means that withdrawal is rarely an attractive option, as time and cost will usually be lost.
Conclusion
Adjudication is not a process to fear, but nor should it be one entered into lightly. Proper preparation and the right information at the outset are essential to avoid these potential pitfalls. On Tuesday 21 October, you can join me for my webinar where we will further explore the adjudication process, including what support is available to ensure a smoother experience.
