Adjudication of payment disputes under construction contracts has the advantage of being relatively quick and cost effective, with a determination (usually) guaranteed within 28 days of the application being made under the Construction Contracts Act. Also, experience shows that, right or wrong, once a payment award is made in favour of a subcontractor, head contractors tend not to dispute the claim in court or arbitration even though they retain the right to. They usually just accept the adjudicator’s payment award and move on.
An adjudication award has the further advantage of being an interim determination only, which neither side can use in evidence and which does not finally determine the rights and interests of the parties. So the risk of an adjudicator getting it wrong is mitigated, and an adjudicator cannot permanently jeopardise a party’s rights under the contract.
The down side is that, respectfully, some adjudicators misunderstand that their role is simply to enforce the contractual payment regime, not to arbitrate or determine the facts of any underlying dispute. This creates a risk that what is designed to be a “rough and ready”, pay now, argue later way of getting contractors paid can become unnecessarily complicated in the hands of some adjudicators. One way to deal with this, for example, may be for a party to refuse an adjudicator’s inappropriate request for further evidence and submissions that will only complicate and increase the costs of the statutory process unnecessarily, and insist that they make a determination on the papers in front of them, according to the contract. The worst that can happen is, they wrongly dismiss the application and the party then proceeds to take the dispute to a court or an arbitrator without any real loss except time, and without wasting the cost of litigating a dispute in a forum that was never designed for litigation. The other answer of course is better and more unified education of adjudicators as to their unique, non-curial role, and its limitations.
Generally, parties should only adjudicate over relatively large amounts; if a contractor can survive without the money until the end of the project, it is sometimes commercially and strategically better to include the payment claim in the mix with any other issues that might arise by the time of practical completion (delays, EOTs, defects, etc.). Remember: if a party decides not to adjudicate a pay dispute within the 28 day deadline, this will not cause that party to lose the right to payment. It just means the party is limited to the other legal means for recovery of payment claims including arbitration, or it may be better to wait until practical completion. Often it is the case that these methods are more appropriate that adjudication. That judgement is best informed by specialist legal advice.
This is general information only, and does not constitute specific legal advice. If you would like further information in relation to this matter or other legal matters please contact our office on Freecall 1800 609 945 or email us now.