The statutory process of construction adjudication was established by The Housing Grants, Construction and Regeneration Act 1996 and gave parties to a construction contract the right to refer disputes to adjudication in order to obtain a quick enforceable interim decision.
Construction adjudication has further evolved under Part 8 of the Local Democracy, Economic Development and Construction Act 2009 (which did not come into force until 1st October 2011).
The original intention of the legislation establishing statutory adjudication was to provide the construction industry with a quick, effective and inexpensive method of resolving disputes. The process was, in large part, created as a response to the criticisms of litigation and arbitration as being overly expensive, time consuming and ineffective; often forcing construction businesses with legitimate claims to accept derisory settlements or face the risk of financial oblivion.
The increases in the numbers of construction adjudication referrals during the first years after inception were impressive; rising significantly from only 187 referrals in 1999 to a peak of 2027 in 2002. Take up has generally declined from that time to 1093 in 2012 (although this figure was up slightly on the previous year). This may reflect the general state of the construction industry; however, it may also relate specifically to problems concerning the consistency and perceived quality of adjudication decisions and the intensive nature and potentially high (and often irrecoverable) costs of the process.
There is no doubt that the original goal of construction adjudication to operate as a speedy, effective dispute resolution mechanism can be achieved. Great care must be taken however, in choosing the right adjudicator and, most importantly, ensuring the quality of adjudication referral notices and responses.
Our view of construction adjudication remains very positive, provided that the process is properly understood, respected and utilised in conjunction with both litigation and arbitration.
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