Practical Law

I sometimes wonder if anyone ever gives thought to when the clock starts ticking and an adjudicator’s fees start accruing. It came up in conversation recently, particularly the question of what happens immediately after an adjudicator receives the papers in an adjudication.

I had a look at the Construction Act 1996 and the Scheme for Construction Contracts 1998 to see what they say about fees. The Act is silent, but the Scheme says:

“The adjudicator [is] entitled to the payment of such reasonable amount as he may determine by way of fees and expenses reasonably incurred by him.”

It seems to me that, assuming the Scheme applies to the adjudication, we are allowed to start incurring fees the moment we are appointed. Arguably, before that, the time spent dealing with the ANB, conflict checks and the like are just the incidental costs of being a professional. It’s no different for any other professional who is considering whether to accept an appointment or not.

However, once the notice of adjudication is in, I think an adjudicator may properly start to read in and start drafting preambles to suit his other diary commitments. After all, we only get 28 days to deal with the dispute and that soon flies by. The referral should follow within seven days, and the response is usually not far behind. Those 28 days are quickly eaten away and it is arguable that it is never too soon to start work.

What about waiting until close of submissions?

I have heard it suggested that an adjudicator should wait until close of submissions before reading the papers and considering the issues. Perhaps, in an ideal world, that would be fine. However, when did an adjudicator ever receive all of the parties’ submissions with enough clear days to do that? Equally, how could an adjudicator properly deal with a dispute if he hadn’t read the papers until part way through the process? Surely there would be shouts that the adjudicator had breached the rules of natural justice for that sort of behaviour.

What if the parties settle their dispute?

What happens when the parties settle their dispute and the adjudicator has got “stuck in” to the papers and incurred considerable fees but not issued his decision?

In my view, an adjudicator is entitled to his reasonable fees as they will have been reasonably incurred in the adjudication. If the parties do not want that to happen (because, for example, they want to talk or negotiate) they should expressly say so and seek a short stay. Nothing less should stop the adjudicator from carrying out his functions as an adjudicator. The parties can have no complaint if they settle before the decision is reached otherwise.

Is it any different if the fees accrue from an ANB appointment?

While one school of thought is that liability for an adjudicator’s fees does not accrue until after the referral is served, I am not so sure. My view is that the process is initiated by the notice of adjudication and the application to the ANB. Therefore, liability will accrue for any fees incurred as a result of work undertaken by an adjudicator following a nomination and before the referral is served. However, it all comes back to what it is reasonable for the adjudicator to incur.

What about fees if the adjudicator resigns after he is appointed?

Again, I see no reason why an adjudicator should be out of pocket if he accepts an appointment, starts work and then subsequently resigns after a successful challenge to his jurisdiction. Although I understand the view that, if there is no right to adjudicate, a responding party cannot be held joint and severally liable for fees incurred by an adjudicator, this will depend on the particular facts. For example, whether the responding party has asked the adjudicator to do something, such as investigate the matter and resign, or not participated at all.