Shock of the new

Have you ever tried to explain adjudication to someone who has not heard of it before? I recently did my best to outline the procedure to a commercial litigation lawyer from Milan. This was a little beyond my rudimentary Italian, but he spoke excellent English. Nevertheless he was quite sure that he had misunderstood me. He thought I had suggested that a complex construction dispute involving more than £1m was resolved in four weeks, with a decision enforceable by the courts. Clearly this was impossible, so would I please repeat my description.

After repeating myself several times, he realised that I meant what he thought I did. His faith in his linguistic skill was restored, as was his certainty that the British are mad.

British lawyers who do not work with construction are just as astonished when they hear about adjudication for the first time. Three years ago many dismissed rumours of what was about to happen in construction as absurd. It would never work, and anyway it was quite irrelevant to anything outside the world of Scott Schedules and official referees.

They have heard that the first comment was wrong – anyone who reads law reports knows adjudication is working. Increasingly, they are also hearing that it is of real importance in all sorts of contracts.

It is of course true that the Construction Act 1996 only requires construction contracts to provide for adjudication. To be a construction contract, the contract must be for the carrying out of construction operations, or the provision of designs or advice relating to construction operations. Construction operations are defined in a somewhat complex way, and contracts with residential occupiers are excluded.

British lawyers who do not regularly work with construction are astonished when they first hear about adjudication

When the act came into force, many construction lawyers set about trying to find clever tricks to avoid the need to allow adjudication or make it unattractive for one of the parties. Most failed. But some lawyers were travelling in the opposite direction. They wondered if they could extend this new idea to areas outside the scope of the legislation.

The first of these extensions came with the JCT Form of Building Contract for a Home Owner/ Occupier. Adjudication under that standard form is not quite the same as adjudication under the act and scheme, but it is similar. After all, why should the advantages of adjudication be denied to a private individual with a dispute about their loft extension?

The next stage came as lawyers and their clients confronted the contract that involved several types of obligation, some construction and some not. The act provides that if there is an agreement that relates to construction operations and other matters, adjudication is only required for the construction operations. If the contract provides for the supply and laying of carpet tiles, and for the supply of a few boxes of tiles, the scheme would enable the contractor to take his claim for payment for "supply and lay" to adjudication but not a claim for payment for the boxes. This confusion is usually overcome by agreeing to apply adjudication to all aspects.

But many contracts are less simple. A facilities management contract may provide for a complex list of works and services that are to be carried out over a period. They may include painting and decorating (construction) and regular window cleaning (not construction). When most of the work is construction-related it will usually seem common sense to apply the adjudication clause to everything, but some FM contracts only have a small amount of construction work.

The draftsman then has three choices: he can draft a complex disputes clause applying adjudication to specific aspects only, he can split the contract into two, or he can say adjudication should apply to it all.