ADJUDICATION

Introduction
Adjudication is widely gaining recognition as a construction disputes resolution mechanism
and a lot of success has been recorded. Adjudication was first introduced in UK in 1996 by
the Housing Grant, (construction & Regeneration Act (Construction Act) to serve the
construction industry and this has contributed positively towards projects’ success and
improved the working relationship amongst the team players in the industry. This has also
been extended to Singapore, Australia, South Africa, Malaysia and Sri Lanka to mention but
a few. Parties are obliged to comply with the decision of the adjudicator(s) because such
decision is final and binding unlike Mediation, mini-trial, conciliation which are only built
upon good faith of the parties. The failure of mediation and its other siblings has led to the
introduction of adjudication (Harmon, 2003).

What Is Adjudication?
Adjudication is a legal ruling or judgment, usually final, but it can also refer to the process of
settling a legal case or claim through the court or justice system. It usually refers to the final
judgment or pronouncement in a case that will determine the course of action taken regarding
the issue presented.

Normally, adjudication represents the final judgment or pronouncement in a case.

Adjudication can also refer to the process of validating an insurance claim and a decree in
the bankruptcy process between the defendant and the creditors.

Understanding Adjudication
Adjudication describes the legal process that helps expedite and deliver a court's resolution
regarding an issue between two parties. The result of the process is a judgment and court
opinion that is legally binding. Most adjudication hearings center on disputes that involve
money or nonviolent infractions and result in the distribution of rights and obligations for all
parties involved.

This legal process differs from other justice-seeking or evidence-based court cases. It is
instead used to settle disputes between private parties, political officials and a private party,
public bodies and public officials. In the healthcare industry, for example,
adjudication can determine a carrier's liability for monetary claims submitted by an insured
person.

Adjudication Process Disputes

Types of disputes handled or resolved through adjudication include the following:

 Disagreements between private parties, such as single-persons, individual entities or

corporations
 Disagreements between private parties and public officials
 Disagreements between public officials and/or public bodies

Requirements for full adjudication include requisite notice to all interested parties (all legally-
interested parties or those with a legal right affected by the disagreements) and an opportunity
for all parties to have their evidence and arguments heard.

The Adjudication Process

Formal rules of evidence and procedure govern the process where the initiating party, or trier,
gives a notice establishing the facts in controversy and defines any applicable laws. The
notice also sometimes outlines the nature of the dispute between the parties and recounts
where and when the dispute occurred, and the desired result based on law. However, there are
no specific requirements regarding the notice of adjudication.

An adjudicator is then appointed and a notice is sent to the defending party. The responding
party or defendant submits a defense to the claim of adjudication by the plaintiff. The
adjudicator gives the plaintiff and defendant a chance to present their arguments at a
hearing and makes a final ruling. This is not too dissimilar from an arbitrator in
an arbitration hearing settling a business dispute.

Three types of disputes are resolved through adjudication

 Disputes between private parties, such as individuals or corporations

 Disputes between private parties and public officials

 Disputes between public officials or public bodies. 
TYPES OF ADJUDICATION

Paper only Adjudication

The parties submit written claims, defences, counterclaims and legal submissions to the
adjudicator along with expert reports and supporting evidence, having engaged in the usual
exchanges of documentation. At an appointed time, the adjudicator goes through all the
paperwork, makes a decision and publishes it. Whilst there is no opportunity at a paper only
adjudication to make oral pleading and to engage in cross-questioning, the low cost of such
adjudication proceedings is attractive. It is an ideal process for the settlement of disputes
involving technical issues and straight forward differences of opinion between the parties.

Adjudication proceedings with hearings

The process is very similar to a fast track arbitral hearing with strict time limits imposed on
submissions and cross questioning.

Immediately enforceable

The adjudicator is given the authority by the parties to a dispute (or by Statute if applicable)
to make a determination which is immediately enforceable, subject to the terms of the award.
Typically the losing party is ordered to pay the winning party a sum of money within a
specific period of time. The settlement of the dispute at an early stage enables the parties to
get on with business.

Non-binding.

The decision is non-binding in that having complied with the order, the losing party is free to
commence arbitration or litigation. Judging from the UK experience so far, it is rare for the
parties to so dissatisfied with the adjudication decision that they decide to continue the
dispute. Assuming that both parties are completely satisfied with the decision the dispute is at
an end. Even if one of the parties is dissatisfied with the decision award the parties are able to
continue their business relationship, on the basis of the decision, pending arbitration or
litigation.

How do I start the process?

To begin with, you need a “dispute”. That is not always as easy as it sounds. The dispute
must have crystallised: the process of discussion or negotiation must have ended without a
solution being found and, most likely, monies claimed not being paid. A dispute is not the
same thing as having a claim. Merely notifying the other party of a claim does not instantly
mean there is a dispute. In those circumstances, the dispute will not emerge until it is
apparent that the claim is not admitted. Whether there is a dispute will depend on the facts in
your particular case.

How do I start the Adjudication?

Given the speed of the process, tactics are clearly important in the adjudication procedure.
The referring party has time to prepare his case and should only kick the process off once he
is ready. While, for the reasons set out below, the referring party should not seek to ambush
his opponent, he will be fully aware that the responding party will only have a limited time in
which to respond. As the referring party, you need to prepare a Notice of Intention. This
Notice can be given “at any time”, including after the contract works have been completed,
and even if the contract has been determined. It is important that the Notice sets out a brief
description of all the relevant matters which you want the Adjudicator to decide. It is this
document which gives the Adjudicator jurisdiction and defines the scope of the adjudication.
You will not be able to include anything later in the adjudication which is not referred to in
this document.

How do I appoint an Adjudicator?

The contract may actually name the individual to be appointed as the Adjudicator.
Alternatively, the contract may state that one of a number of so called appointing bodies shall
appoint the Adjudicator. Alternatively, you may be able to agree the identity of the
Adjudicator with the other party. While this means you know what (or who) you are getting,
it also gives the other party advance notice of the adjudication.

Are there any rules which the Adjudicator must observe?

Yes. In addition to any specific rules governing the adjudication, the Adjudicator must
observe certain rules relating to natural justice. This basically allows you an opportunity to
state your case and comment on anything the other side says, and vice versa. However, while
the rules of natural justice must be adhered to, time is short and the adjudication must be
conducted in the time available. Accordingly, the cloth must be cut to suit. The Adjudicator
must also act impartially and, as a matter of good practice, ought not to have dealings with
one party in the absence of or without the knowledge of the other.

When must the Adjudicator reach a Decision?

The basic rule is that the Adjudicator must reach his Decision within 28 days of the date of
the Referral. The Referring Party, can agree to extend this by 14 days. After that, both parties
must agree to any further extension. Depending on the nature of the Adjudication, you may
want to give some thought to allowing the Adjudicator more time to reach his Decision. 28
days passes very quickly indeed.

Practical Tips

 Is your dispute suitable for adjudication? Not all are. If it is not, do not adjudicate.
 Are you sure you have a dispute? While ambush sounds a good idea, it may rebound
on you. Make sure your dispute has crystallised.
 Does your Notice of Intention cover all of the issues? It must. Although it is a short
document, it is very important.
 Is your house in order and the Referral completely ready? If it is not, do not serve
your Notice of Intention. Only start when you are ready. When the clock starts, it ticks
fast.
 Are all the relevant people from your team going to be around for the next month or
so? They need to be. They will need to comment on the Response and be available to
help prepare a Reply and the Adjudicator may want to meet them if they are
witnesses.
 Consider extending the timetable if necessary. At some point during the process, you
may also want a day or two extra to be able to respond. Remember 28 days passes
very quickly.
 Have you asked the Adjudicator for reasons? You should do so, otherwise you may
get a one word answer.