There are many moving parts in construction projects. The construction industry itself has become an equally complex web. There are stakeholders, contractors, subcontractors, clients and suppliers that all have a stake in a project’s success or downfall. That is why, when disputes arise, the most effective and efficient resolution is often the one desired by all.
The roadblock here is that for a dispute to occur, there must be parties on either side of this dispute. Therefore the desired resolution will often differ and make reaching that resolution yet another complex task. For this reason not all alternative dispute resolution (ADR) methods are suited to resolve construction disputes.
Choosing the right ADR process is essential to preventing any further stress, delays or monetary costs caused by the initial dispute. In my experience, adjudication has proven to be one of most effective for construction disputes and in this article, I will explain why.
Causes for disputes in construction
First, let me make it clear the sort of disputes ADR is best suited to:
- Contract disagreements: Construction contracts are at the centre of every project, acting as a blueprint for the project itself and any legal action that may need to be taken. Disputes that come from construct disagreements can relate to differing goals, incomplete contracts or design problems.
- Communication breakdowns: Miscommunication puts the fate of the project and those involved at risk. Disputes that come from communication breakdowns can relate to risk management, site conditions or trade disputes.
- Financial conflicts: Late payments, unforeseen costs and inaccurate budget allocations are all conflicts that can lead to disputes. Disputes that come from financial conflicts can relate to payment disputes, delays or fluctuating material costs.
While most disputes will fall under one of those three subjects, do not hesitate in seeking legal advice before pursuing a certain ADR process. It is vital the resolution matches the dispute to avoid escalated tensions.
Adjudication as dispute resolution
Adjudication is an ADR method that is quicker, less formal and more cost-effective than traditional commercial litigation. For those reasons alone, it has become a favoured method for dispute resolution. For construction disputes specifically, it has proven to be an effective and efficient method to get projects back on track.
The process requires the parties on either side of the dispute to appoint a third, neutral party to review both sides of the argument. This third party will then make a legally binding decision based on the evidence and arguments provided.
Adjudication is used most often in construction disputes relating to:
- Interim payments
- Defects in the works
- Delay and disruption of works
- Extensions of time for completion of works
Once again, do seek advice before committing to adjudication to ensure your dispute is best suited to this process.
The process of adjudication works as follows:
- One party must present the other with a written notice that includes the nature of the dispute, details and when and where the dispute arose, the resolution being sought and the names and addresses of the parties to contract (including addresses where documents may be served).
- Once the notice of adjudication has been served, an adjudicator must be secured within seven days. Both parties must consent to the chosen adjudicator.
- Next, a referral notice, that details the case of the party who raised the matter (and supporting documentation of the claim) is required.
- The adjudicator will then have 28 days to make their decision (from the time of the referral notice). The decision will be final and binding, providing that it is not challenged in subsequent arbitration or litigation. The issue cannot be referred to a second adjudicator.
Will adjudication resolve your case?
While adjudication is often a quicker and cost-effective route of ADR for construction disputes, the complexities of the process can complicate these matters if legal assistance is not sought at the right time.
Mercantile Barristers are experts in all aspects of adjudication law as it applies to construction contracts between employers, professional consultants, contractors and sub-contractors. We can offer advice on if adjudication is the best dispute resolution method for you and help you prepare accordingly.
