Construction Dispute Resolution

Binding and Final Construction Dispute Resolution Procedures

Litigation and arbitration are similar in that both involve resolving construction disputes before a tribunal whose decision is binding (and final, unless successfully appealed to a higher court).  Adjudication – under the Housing Grants, Construction and Regeneration Act – has similarities but is subject typically to severe time constraints and the extent to which the findings of the adjudicator are binding are more limited. 

Where the parties to a construction dispute cannot settle their differences, litigation is the only available option unless there is an agreed alternative or one is imposed by statute.

Adjudication will be implied into a construction contract under certain circumstances.  This is a consequence of the Housing Grants, Construction and Regeneration Act (commonly abbreviated to ‘the Construction Act’).  In November 2009 the Local Democracy, Economic Development and Construction Act 2009 received Royal Assent. Part 8 contains amendments to the Construction Act. The key changes outlined are:

Changes to adjudication rules:

  • Construction contracts are no longer required to be ‘in writing’
  • Introduction of a statutory slip rule to England, Wales and Scotland
  • Parties can no longer agree who pays the costs of the adjudication before Notice of Adjudication is given.

Changes to payments:

  • Elimination of ‘pay when certified’ clauses that link to other contracts
  • New payment notices and the replacement of withholding notices
  • Improvements to the statutory right to suspend for non-payment
  • Outlawing a contractual provision whereby a payment notice triggers the due date.

There are also two important changes made relating to the Government’s power to make exclusion orders and to adjudication costs.

Ordinarily in England and Wales, adjudication will be implied into a contract under the Construction Act if:    

· it is a construction contract,

· the project is not restricted to domestic building.

The Construction Act, and hence the implied terms relating to adjudication, are as likely to apply to professional contracts as they are to building work itself.  Architects finding themselves in dispute with their employer regarding an architectural commission may be forced to resolve the dispute through adjudication if amicable settlement is unattainable.

Adjudication, at least as it is practiced under the Construction Act, differs from arbitration as a consequence of the time restrictions imposed. The adjudicator is appointed in much the same way as an arbitrator and often by the same nominating bodies.

An adjudicator, as an arbitrator, is likely to be appointed on the basis of their knowledge of the type of work in dispute.  Experience shows that both are likely to interpret the evidence placed before them in the light of their experience and knowledge of the matters that are in dispute.

In contrast, where litigation is adopted and the matter comes before the judiciary in courts of law, judges are selected not for their knowledge of building but for their knowledge of law.  More firmly than for other tribunals, courts of law are required to judge the matter on the basis of the evidence presented to them, avoiding any reliance on the judges’ personal knowledge or prior experience of the matter being tried.

Ordinarily a tribunal – whether judicial, arbitral or adjudicatory – may obtain technical advice at need through the appointment of experts.  In this way, the tribunal need not contain members who are personally familiar with all aspects of the type of construction which is in dispute.  Expert witnesses may assist the tribunal properly to understand the technical matters they are asked to decide.  Expert witnesses are distinct from witnesses of fact in that they are allowed to provide evidence of opinion. This may involve interpretation and reliance on hearsay.

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