The following is part of a discussion paper given by Roger to a group of Contractors.

The Housing Grants, Construction and Regeneration Act 1996 will make it compulsory for many construction contracts to be subject to adjudication. The Act covers construction contracts for work in England, Wales and Scotland, and includes all contracts for the construction alteration, repair, maintenance, extension, or demolition of buildings, structures and other works forming part of the land (such as roads, railways, canals, walls, docks, power lines, pipelines, sewers, reservoirs, industrial plant and coastal defences).

Contracts for the extraction of oil, gas and minerals are excluded. So too are contracts for the construction, installation or demolition of plant, machinery or associated steelwork on sites where the primary activity is nuclear processing, power generation, water or efficient treatment or the production, transmission, processing or bulk storage (other than warehousing) of chemicals, pharmaceuticals, oil, gas, steel or food and drinks. (The engineering industry obviously had stronger lobbying powers than the general construction industry!).

In the following notes, I offer some challenging points on the Act:-
1. The Effect of the Entitlement to Adjudicate
Will the Act speed up or reduce the process of settlement of financial disputes or will it have detrimental effect upon the progress of the works?
In the comfortable scenario of a single dispute properly and fairly pursued in the spirit of the Act, then yes, it may well be the answer to many a Contractor’s or Sub-contractor’s prayer. In other words, we appoint an Adjudicator and prepare the submission and within 28 or 42 days (if the referral party agrees to the 14 day extension), we have a decision which the parties abide by.

But what happens if the Adjudication concerns the monthly valuation of Sub-contractors works and each month several (or many) Sub-contractors individually instigate the adjudication process? An enormous administration burden will arise and this will surely have a detrimental effect upon the progress of the works (for the parties will be pre-occupied with the Adjudication processes).

2. The Adjudication Period
The timescale seems extraordinarily tight, although the Act (2c) requires the Adjudicator to reach a decision within 28 days or such longer period "as is agreed by the parties after the dispute has been referred". In my view, it is unlikely that the claiming party will agree to any extension.
The Act also "allows" the Adjudicator to extend the 28 day period by up to 14 days "with the consent of the party by whom the dispute was referred". Again, this consent is unlikely to be given.

I assume that the 28 day period commences with the receipt of one parties submission (this may have taken many days or weeks to prepare). Within 28 days, the Adjudicator will be required to receive and review a response and to possibly:-
• Meet and question the parties and their representatives either together or separately.
• To visit the site (if appropriate)
• Request the production of documents or the attendance of people whom the
Adjudicator considers could assist.
• Issue such other directions as the Adjudicator consider to be appropriate.
• Appoint experts, assessors or legal advisors.
• Order inspections, tests, samplings or experiments.
In many instances, in order for the Adjudication to work, it will be absolutely necessary, in my view, for the timescales to be extended.

3. The Submission
The scheme contemplates that a written submission will be made with a limit of 5,000 words i.e. approx. 10 pages, accompanied by drawings if necessary but it must be accompanied by copies of all relevant documentation.

The submission will require the input of site personnel and in view of the tight timescales and the implications if the submission is not issued quickly or inadequately (ie possible wrong decision by Adjudicator), will need to take priority over other, more productive work, ie the project may suffer.
What happens when the 5,000 words are supported by a contract programme, a complex network analyses and activity listing together with a detailed delay analysis? Will the other party have sufficient time to undertake a proper analysis of a complete programme within the period allowed?

4. The Decision
The Adjudicator is required to give his decision within 28 days or 42 days or whatever period the parties agree. This decision has to be communicated in writing, signed and dated.

The decision must indicate what actions must occur and who must implement them. The Adjudicator may specify when such action should take place (including payments) otherwise they must take place immediately.

The Adjudicator is not required to provide reasons for his decision but may do so under a separate agreement with one or more parties.
The decision can be referred to Arbitration or the Courts, whichever is appropriate, to provide an award or ruling which would override the Adjudicator’s decision. The timing of referral will depend upon the restrictions in the contract. In the meantime, the parties have to fulfil the obligations created by the Adjudicator’s decision.

If a party refuses to comply with a monetary decision, an action for Summary Judgement would have been a preferred route but the 1996 Arbitration Act seems to have removed that possibility. If the decision is other than a monetary one, it seems that the next step, if it is not honoured, is to give notice of Adjudication and the same procedure takes place again. This time, however, it would be prudent to put a monetary value on the dispute.

The only other remedy that is available is to exercise the right to suspend the works in accordance with section 112 of the Act. This can only apply where the decision consisted of a monetary award, but the procedure under section 112 will have to be followed i.e. 7 days notice to the defaulter will have to be given.

5. Conclusion
Will the Act work? Will it improve the amount of ‘fair play’ between Contractor/Sub-contractor relationships, which is said to be the main intention. Many commentators praise the intentions of the Act, but in my view, we need to wait and see what happens in 4 key areas:-
• how frequently the Adjudication process is used (abused) on a project.
• how the Adjudicator’s decision is enforced.
• what happens to Contractor/Sub-contractor relationships, and most importunately,
• it’s impact upon project performance.