The question is, “Is adjudication a collaborative tool that can be used to avoid disputes?”.
Crossing collaboration with adjudication is a bit like crossing a labrador with a poodle. Some people will like the results, others will not.
One of the risks in writing a blog is that anything you write will be used against you in evidence when you raise a related issue on behalf of a client. I’ll take that risk and share some thoughts on my experience of a (possibly) more sophisticated way of using adjudication.
Pros and cons of adjudication
Adjudication is clearly a popular success. It is certainly faster and cheaper than court or arbitration and, in the overwhelming majority of cases, it seems to provide the parties with a final answer without them taking any further action.
It is not, however, a perfect system and it has its critics. The main issues seem to be:
- The risk of ambush and parties being caught unprepared.
- The question of whether the nominated adjudicator has the skills for the particular dispute.
- Arguments about jurisdiction and natural justice.
- The ability to properly present a case in the limited time available.
- The impact on the parties’ working and long-term relationship.
Not all of the above will apply in every case. After all, disputes and adjudications come in different shapes and sizes. However, research from the Adjudication Reporting Centre at the Glasgow Caledonian University suggests that the majority of adjudications have a value of £10,000 to £50,000. I suspect that many of these low-value adjudications are usually decided fairly quickly with limited, if any, involvement from lawyers.
But there are also more substantial disputes on projects, ones that often raise factual and legal issues, and with both parties having legal representation. My experience is that in such cases, adjudication is being used in a more sophisticated way.
A bit of collaboration goes a long way
This is because with a bit of collaboration, it is possible to avoid the five risk areas identified above. What I find is that some people are beginning to recognise that it is better to get a quick answer and move on, rather than allowing an issue to fester for a long period and then being forced into an inevitable adjudication.
For example, say the parties have a bit of an argument over the meaning of a specific clause or whether an instruction did in fact cause critical delay. Rather than letting it drag on with all the uncertainty that involves, the parties should be able to agree to appoint as the adjudicator a person who they both trust. There are construction experts and lawyers out there who can be trusted to do a good job.
Adjudication by agreement
Adjudicating by agreement also allows the parties more freedom in agreeing a process they are both comfortable with. Indeed, they can agree longer time periods for exchange of submissions if they think it is necessary. Adjudication by agreement should also get rid of any jurisdiction or natural justice arguments.
I have seen agreed adjudications being carried out. They can be quite effective as the parties:
- Avoid much of the hostility often associated with adjudication.
- Are more likely to maintain their relationship.
- Can leave the dispute behind them and carry on with the job, feeling they had a fair opportunity to present their case and accept the adjudicator’s decision. If not, court or arbitration remain an option.
You could say such an approach is consistent with the NEC form of contract, which makes adjudication a mandatory step before court or arbitration. It encourages parties to solve any differences as they arise and then continue with the benefit of having an answer instead of ongoing uncertainty.
In order to protect my position (for when I next act in an adjudication), I will of course add that whether such a process is suitable will depend on the facts and, sometimes, it will be clear that there is no prospect of agreement or such process being successful. However, when there is a looming dispute, do consider whether a sensible discussion can be had with the other side on agreeing a process that works for everyone. It may well be a lot less painful than sitting on a dispute and waiting to see who will adjudicate first.