Intercontinental comparisons

Debate on adjudication in the UK continues to rage. On one side there are those who refuse to challenge the status quo and on the other those who think adjudication in its present form does more harm than good.

So what, if anything, is wrong with the present system? How should we change it and what can we learn from our colleagues abroad?

Many complain that the Construction Act allows insufficient time for adjudicators to consider complex claims. This leads to poor quality decisions that are difficult to challenge.

In New Zealand an adjudication scheme is anticipated shortly for disputes concerning leaky houses. This will give the adjudicator 60 days from the receipt of a claim to make a decision. Surely 60 days provides a more helpful balance between the need for speed and the need for sufficient time to allow the parties to present their claims adequately? In the UK we rush things through in 28 days.

The use of dispute review boards is prevalent on construction projects in the USA. "Neutrals", who are called on to make decisions on disputes, are appointed for the life of a project and are encouraged to become familiar with it as it progresses. An adjudicator who is named at the date of the contract and who is kept apprised of the issues as they arise will surely provide more value for money and reach a better decision than one who is suddenly presented with a tower of paperwork all at once.

My firm regularly deals with cases concerning latent defects where the claimant, having had years to prepare its case, and after commissioning detailed and lengthy technical reports, starts an adjudication at very short notice.

The opportunity for ambush on large and technically complex claims, long after the event, is inconsistent with the simple cash flow principle the Construction Act was intended to underpin.

The dispute review board procedure in the USA is restricted to dealing with disputes prior to completion. By restricting the statutory right to adjudication in the UK to the date when the project is complete, we might avoid ambush. An alternative to this could be the situation in the Australian state of New South Wales, where adjudications are restricted to payment issues.

Many commentators complain that the Construction Act is inflexible when it comes to enforcing an adjudicator's decision. When interpreting the act, courts are not very sympathetic to victims of "bad" adjudicators' decisions, particularly where payment has to be made to a party that could cease trading before the matter is finally determined in arbitration or litigation. In New South Wales, the court's powers upon summary enforcement of an adjudicator's decision are not confined to ordering payments in cash. The courts can require a paying party to provide alternative security – for example, by way of a letter of credit.

The UK courts have zealously upheld the right to adjudicate at any time. For example, in RG Carter vs Edmund Nuttall a mandatory mediation clause was held to be unenforceable because it purported to defer commencement of adjudication. Although adjudication in the UK is certainly quicker and cheaper than litigation or arbitration, must it be the only approach to alternative dispute resolution that the courts will enforce?

New Zealand's proposed scheme is likely to incorporate a statutory right to mediation as well as adjudication. Why shouldn't parties to construction contracts in the UK be given the same opportunity to opt for a binding mediation process? After all, the nasty taste left by a swift and merciless adjudication can often discourage parties from using it in the first place. Mediation can provide a more conciliatory environment that is potentially less damaging to business relationships in the longer term.

Some of the solutions discussed here do not necessarily require amendment to the Construction Act. For example, an adjudicator on "standby", similar to the US dispute review board, could be incorporated into UK standard terms, with some careful drafting. However, measures to combat abuses such as trial by ambush will require legislative change. In this respect, those of us who influence adjudication in the UK might learn lessons from our colleagues abroad.