In this final article of the adjudication series, we look at the future of adjudication under the Construction Contracts Act 2002 (CCA). We comment on why we consider adjudication that remains a valuable tool for dispute resolution, where we see it being used, and where we see scope for change in the statutory framework.

Adjudication remains a valuable tool for dispute resolution in the construction industry

Since its introduction in 2002, adjudication has been a useful and popular form of dispute resolution for construction disputes. We see adjudication continuing in this way, as it is usually cost-effective, efficient and relatively quick. It is a useful strategic tool for parties that have been unable to resolve a dispute between themselves, or when a party is not engaging in a dispute and adopting an unjustified position. The ease of initiating a claim and tight timeframes means that any deadlock between the parties is promptly resolved (at least on an interim basis), which is particularly useful for mid-project disputes. 

As we noted earlier in our series, there has been increasing criticism that adjudication has become a process that is too expensive and protracted, and has moved away from the original intent of the process. However, adjudication remains an effective option, particularly as the costs of litigation and arbitration increase. An adjudication that is conducted over a period of a few months is still generally much faster than arbitration or litigation. A key advantage is also being able to agree an adjudicator with relevant expertise (see article 1).

Adjudication, while a statutory process, has some flexibility and is less formal than litigation/arbitration. In particular, there is no prescription as to the form or content of the adjudication documents (beyond prescription as to, for example, what must be included in the notice of adjudication). This flexibility allows parties to tailor their approach (including the level of evidence and expert support) to the particular dispute, bearing in mind the complexity of the issues and the interests at stake. Lawyers can work through the appropriate approach with the client to suit the client’s needs both from a delivery and a cost arrangement perspective (see article 4).

Where we see adjudication being used

In a tight economic cycle, we anticipate that adjudications will continue to be used, particularly by subcontractors and contractors looking to maintain cashflow. And, as projects increase in the construction and infrastructure sector over the next few years, we anticipate that parties will opt to use adjudication to determine more complex and technical disputes. Whether adjudication is suitable for very complex disputes needs to be assessed on a case-by-case basis, but it can be an effective means to get cash flowing, to get an interim decision, and/or to assist in negotiating settlement.

Arguably, there is potential for adjudication to be used more often for design disputes. Although the definition of construction work was extended to include design in 2016, we have not seen many adjudications under consultancy agreements. Historically, there has been a perception that complex design disputes are not suited for adjudication. But, in the same way that complex extension of time or variation disputes are routinely adjudicated, there is no reason why design issues could not also be adjudicated, in appropriate cases. The fact the parties can agree on an adjudicator with the relevant experience necessary to understand and determine the dispute is a relevant factor when parties are considering whether to adjudicate these disputes.

Where we see scope for change

The CCA largely remains fit for purpose. However, it was enacted in 2002 and could benefit from some modernising. It should, by default, confirm that service by email is an acceptable means of service, rather than providing that the parties may agree to service by email. Given the volume/size of documents and use of electronic files (such as programming files) on construction projects, email service as a default is both pragmatic and reflects the use of technology in the industry. In practice, email service is usually agreed, but there are examples where this has been contested (sometimes for strategic reasons), which adds unnecessary time and cost to the process. 

Clarity around amendments to, and extensions of, the statutory timeframes would also be useful. There are differing approaches that parties and adjudicators adopt as to whether the timeframes for the claim, reply and rejoinder can be extended (with the CCA already providing for extension for the response). Parties may, for example, wish to agree an extension to allow settlement negotiations to take place without incurring further costs. We think the CCA should reflect that parties and the adjudicator may agree to extensions for all the timeframes (not just the response), or otherwise make clear that extension even by agreement is not permitted.

In our experience, adjudicators adopt differing approaches when determining the allocation of adjudication costs and fees but overall costs are rarely awarded. As mentioned in our earlier article, the costs regime is different to arbitration/litigation and the default position is that parties will bear their own costs of adjudicating. This is consistent with the interim nature of an adjudication determination and objective of being a quick and cost-efficient means of resolving dispute. However, given the increasing costs of adjudicating complex disputes, it is timely to consider whether the costs regime is still fit for purpose.

Streamlining the enforcement process would also support the purposes of the Act — to provide for the speedy resolution of disputes arising under a construction contract. As it stands, if enforcement is contested, this process can take many months, as parties have to wait for a fixture to become available before they can enforce their adjudication determination as a judgment and/or have their charging order approved. It would be beneficial to see courts develop bespoke procedures to deal with enforcement of adjudication determinations in good time so that this process can occur more quickly.

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