Practical Law

Here’s one way to simplify adjudication: get the adjudicator to act as an expert, let him do what he does best, avoid a mini arbitration and many of the legal challenges to adjudication…

Some people complain that adjudication was ruined once lawyers got involved. One easy way to avoid some of the more technical legal issues is to consider using expert determination.

What is the problem?

Adjudication is “a one size fits all” solution. In my view, large complex adjudications do benefit from a more structured process and from lawyers being involved. On the other hand, a large number of low value adjudications on simple payment disputes carry on very well, without any lawyers involved.

Why is that a problem?

The rules that the courts create for big complex adjudications also apply to the small ones. For very good reasons, adjudicators are mindful of those rules. In many cases this mean you end up with an adjudication that is, in effect, a mini arbitration. Expert determination, which is what adjudication looked like when it was first introduced, can overcome some of these problems.

Why might expert determination work?

Expert determination is much less tied to legal process and it does exactly what adjudication was intended to do. That is, get someone who has expertise and enough practical industry knowledge to make a quick decision, which will be generally correct. Because experts are less tied by legal procedure it is more difficult to challenge their decisions. For example, they can ask for just one set of submissions from each party and then give an answer based on what they think is right.

Last year’s case of Owen Pell Limited v Bindi (London) Limited, 19 May 2008 (TCC) is a good example. The parties agreed to use expert determination to value the works of the contractor, who had left the site. The Court rejected all the challenges to the decision and confirmed that an expert’s determination was binding, as the parties agreed, even if he had made errors in his conclusions. It was also not possible to imply a term that the expert’s decision could be a nullity or set aside if there was a breach of natural justice, bias, gross error or perversity in the conclusions.

Not the end of adjudication

This is not about getting rid of adjudication (or lawyers). Expert determination is not the answer for all disputes. Nonetheless, if you appoint a good adjudicator and ask him to act as an expert, he is likely to do what he would usually do, but better. He will feel less restricted by the usual threats of legal challenge and could do what he thought was best and fair. (For example, ignore some of the endless exchanges of submissions that often add very little, if anything.)

Construction Act and how to use expert determination

There is no reason why expert determination cannot be made to comply with section 108 of the Housing Grants, Construction and Regeneration Act 1996 (Construction Act 1996).

Essentially, there are two ways of putting that in place:

• Agree in the construction contract that the adjudicator will act as an expert (which I have seen in one case); or
• Agree on expert determination once it is clear that there is a dispute that needs to be resolved by some form of adjudication.

A better way?

So, whether drafting a contract or trying to resolve a dispute, spend 10 minutes thinking about whether expert determination is the way to go.

It might not eliminate the need for legal advice altogether, but could limit the potential for lengthy legal arguments and challenges.

I am sure most adjudicators would be happy to act on this basis and have more freedom to do what they think is right.