Adjudication – so what is it really all about?

The Construction Contracts Act 2013 (the “2013 Act”) has applied to construction contracts and professional appointment entered into since 26 July 2016, and parties to those contracts are entitled to refer any disputes relating to payment to adjudication ‘at any time’.

While there does not yet appear to have been any significant rush to avail of this new forum for dispute resolution (anecdotally, there have been perhaps no more than even a handful of adjudications), it is not clear what the reason for this is. It may, of course, simply be a matter of timing! The industry is currently in the upward cycle, with cranes abounding the horizon, with the focus set more on the next project, than on recouping what may be perceived as a shortfall in true entitlement. That may begin to change now, as projects which are being delivered under contracts which are subject to the Act are coming to completion, with the usual disputes over final accounts and entitlements in respect of claims which have remained unresolved satisfactorily.  The fact that your order remains full may militate against embarking upon a dispute resolution procedure, but you may also consider that the gap in terms of what you consider to be your entitlements and what you are being offered is too wide to breach by simply proceeding to the next job and hoping it will go better! The slow take up in adjudication as offering an alternative means of resolving payment disputes may also be due, in part, to uncertainty as to how the process will operate.

Niav O’Higgins, Partner Infrastructure, Construction & Utilities Group Arthur Cox

So what is adjudication all about? How do you start an adjudication? How do you find and appoint an adjudicator? Where do you look for guidance on what you need to do?  There is certainly no shortage of lawyers, claims consultants and construction professionals, notably dispute resolution specialists, who will all have a view which they will be pleased to share!  Given that the process has not yet been fully tested, however, there is, inevitably, much speculation as to how adjudication will operate in practice, how the Code of Practice Governing the Conduct of Adjudication (“Code of Practice”)  will be applied and perhaps most importantly, what approach will be taken by the courts to upholding the process of adjudication. Will we have “rough justice”, where the ‘right’ answer may be subordinated to a quick answer or will the courts be more concerned to see that parties are only paid what they are legally entitled to? All this is up for grabs and whilst we may all have a view, and indeed, some of us may be right, if you are in the midst of a dispute over payment, where do you turn to find answers to some of the more practical questions.

If adjudication is to be a process that parties can avail of without external professional assistance, which for some disputes, may be a key attraction, how do you go about this adjudication business? The first place to start is your contract.  If you have not already studied your contract from back to front before starting work, you will need now to understand what, if anything, your contract says about adjudication, and how it will co-habit with other dispute resolution procedures, say.   Whilst your contract cannot, legally, prevent or impede you from referring a dispute relating to payment to adjudication at any time, it may, include provisions which, for example, direct “payment disputes” to adjudication and other disputes to conciliation, say (which may not always be helpful), or it may include a list of possible adjudicators for the parties to choose from, in the event of one of them wanting to initiate this process.

The Act and the Code of Practice together set out the framework for what adjudication is, and the timelines and procedures which will be followed and how the adjudicator may conduct an adjudication. The Code also provides broad guidance on the level of fees which an adjudicator may charge. This is a good starting point. The Construction Contracts Adjudication Service (“CCAS”), which operates under the auspices of the Department of Business, Enterprise and Innovation, and is responsible for assisting the Chair of the Ministerial Panel in appointing adjudicators, has some further guidance on its website, although the development of template forms by the CCAS may create some confusion as to what the underlying Act says and how it is to be applied (or rather, an alternative view on this). Whilst the CCAS make clear that “[t]he Act and the Code of Practice Governing the Conduct of Adjudications does not prescribe the mandatory use of [these] forms”, parties may not necessarily appreciate this, as claims develop into disputes.

For robust practical guidance on each step of the process, a new guide produced by the Construction Industry Council (“CIC”) earlier this year may assist in getting to grips with what adjudication is all about. The CIC is a UK body, described as “the representative forum for the professional bodies, research organisations and specialist business associations in the construction industry.”   For many years, it has published guidance across a range of topics relevant to those working in construction, and has had, for many years, a Users’ Guide to Adjudication, following the introduction of adjudication into the UK construction sector almost two decades ago. Earlier this year, the initiative was taken to develop similar guidance here in Ireland application to the Act and in July, to mark the anniversary of the commencement in operation of the Act, the Users’ Guide to Adjudication: Ireland was published. Building on the success of its sister publication in the UK, the Users’ Guide helps “novice users to understand how adjudication works” and adjudicators in the UK have often referred parties to the CIC Guide, where they do not have external advisors or are unfamiliar with the process. The Users’ Guide to Adjudication: Ireland provides a step by step walk through the entire adjudication process, responding to a series of questions which are likely to arise in simple, clear language. For example, does adjudication apply to my contract? Do I have a payment dispute? How can I challenge an adjudicator’s appointment? Will there be a hearing? What if there is an error in the adjudicator’s s decision?  These are exactly the types of questions which can and will arise as parties navigate through this new procedure, and the Users’ Guide to Adjudication: Ireland provides a non-partisan response to these questions, enabling parties also to decide whether adjudication may be the preferred forum for resolving the particular dispute which has arisen.

In addition to the Users’ Guide to Adjudication: Ireland, we also now have our own book on adjudication: Construction Adjudication in Ireland by highly regarded construction lawyer, Anthony Hussey.   This also provides a very useful source, notably, perhaps, by drawing upon case law from other common law jurisdictions where adjudication applies, to provide guidance on how the Irish construction industry and the Irish courts may apply adjudication here and make it our own.

We all have our views as to what adjudication will mean for the Irish construction sector and whether and to what extent things will change in how disputes relating to payment are resolved. Only time will tell whether any of us are right! In the meantime, however, there is help at hand for those who wish to avail of this alternative forum for securing their contractual entitlements to payment (or indeed, to refuse payment).  Adjudication will not necessarily replace the other tried and tested dispute resolution procedures, such as conciliation, which has served the industry very well, and which may still be your preferred option. However, adjudication does offer an alternative that may provide you with a quicker and cheaper resolution of your dispute, freeing you and your resources up to take on the next building challenge!

1. Published by the Department of Jobs, Enterprise and Innovation on 25 July 2016

2. Published by Routledge, 2017.