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Sat July 20 2024

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Festive adjudications

21 Dec 23 Tim Seal, head of construction law at Ridgemont, a specialist construction and real estate law firm, has a warning for us about the pre-Christmas adjudication trend

‘Tis the season once again to tempt a party to launch a festive adjudication, especially a contractor angry about non-payment in a tough financial climate.

That is because, having prepared its claim at leisure, it knows that if it presses the adjudication button later on next week, the other party will be forced to scramble to prepare its response in a short period of time (as it always must), but with the added disruption of having to do so over Christmas and New Year. What better way to get some immediate revenge for non-payment?!

An adjudicator starts with 28 days within which to reach a decision. From that 28 days a responding party routinely gets 7-10 days for the response. Under the Construction Act bank holidays are excluded when calculating time periods and so Christmas Day, Boxing Day and New Year’s Day are excluded. But even so, having to prepare a response in one or two weeks at this festive time of year, is likely to be difficult.

Invariably, therefore, the responding party will ask the adjudicator for more time and may get say 10 or 12 days. This does of course depend on how big the task of preparing the Response will likely be from the adjudicator’s perspective and that depends on the nature of the dispute in question, e.g. its complexity and how long before the adjudication the parties have been discussing the dispute (and hence how much time the responding party has had to prepare its case already).

Ultimately the adjudicator must do what it thinks is fair to both parties, bearing in mind that the right to adjudicate is a statutory right to adjudicate at any time, and so parliament envisaged that the responding party would always have its work cut out to do a decent response. Doing what is fair is shorthand for not falling foul of the rules of natural justice. It is a material failure in that regard, plus an adjudicator acting in excess of its jurisdiction, which are the two principal bases that any disgruntled losing responding party will argue for, if it decides to resist enforcement of an award against it.

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However, resisting enforcement today is increasingly difficult to achieve, because the court approaches enforcement with the strong presumption that it should take place. So a breach of natural justice argument based on insufficient time to file a response, is highly likely to fail, absent some pretty extreme facts. Therefore however long it gets for its response, a responding party must just make the best of it and reserve its position as to fairness for a later date (i.e. for court).

The adjudicator might seek more time for its decision if it wants to be more generous to a responding party and hence ask the referring party to extend the 28 days, but that is not common.

So what, pre-adjudication, can a party do to try to avoid receiving a festive adjudication in the first place? Well frankly, not much. If the other party wants to tee up an adjudication for Christmas, all it needs to do is ”crystallise” it. It does that by just putting the dispute (it wishes to adjudicate) to the other party in sufficient detail and once it is not then accepted shortly afterwards, it is likely to have crystallised. Again adjudicators and courts on enforcement, usually have little sympathy for arguments that the dispute was not crystallised.

Of course the responding party can always settle the claim or give the other party the appearance of taking ongoing settlement dialogue seriously, in an attempt to dissuade it from a festive scuffle. Or if the responding party has a decent claim of its own, it might say to the other party, that if they start an adjudication one will just come straight back at them, and the end result will be a highly reduced award in one party’s favour, that it would have been far more sensible to achieve by discussion now, not by proceedings.

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