A victim of its own success?

The Construction Industry Council has recently reported an upsurge in adjudication. It attributes this – correctly, I believe – to the fact that most current contracts were entered into after the operative date for the legislation, May 1998. It acknowledges the fact that the courts have so far supported and enforced adjudicator's awards – although this has, of course, yet to be finally tested in the appeal courts.

The CIC – as an adjudicator-appointing body – also suggests the upsurge is the result of growing confidence in the capabilities of adjudicators, and the growing awareness in the industry and its disputes advisers, particularly its legal advisers, as to the potential of adjudication.

It is this acknowledgement that the industry and its disputes advisers are increasingly aware of the potential of adjudication that sends a shiver down the spine. A number of concerns were expressed about statutory adjudication in its gestation period. One of them was enforcement, and so far, this concern appears to have been misplaced. Another was the potential for the adversarial elements of the industry to exploit and discredit adjudication. There was speculation that, in sophisticated hands, it could be a charter for mischief-making. There could be hundreds of references to adjudication on a large project where relations had soured.

Opponents argued that this was not possible because there must be a "dispute" before a reference can arise. In Building (29 January, pages 54-55) I discussed the risk of "ambush" under JCT forms. I argued that architects/QSs should act inquisitorially at an earlier stage than they were presently inclined to do, in order to protect employers against ambush.

I received a letter in response suggesting that ambush and, hence, abuse of the adjudication process, was not possible under JCT forms because of the procedural provisions in them. The letter argued that until 12 weeks had passed from receipt of notice and of reasonably sufficient particulars and estimates from the contractor in relation to extensions of time, there could not be a dispute in relation to the extension. The architect does not have to give his decision until that time has elapsed, so no dispute could arise before then.

Similarly, in relation to loss and/or expense, amounts are included in interim certificates only when they have been "ascertained". My correspondent argued that the latest time by which this has to be done was at final account stage. So, again, there could not be a "dispute" until that had happened.

I doubt that adjudicators will be constrained by such provisions. More likely, they will not treat the contractual requirements to give notices, particulars and so on as preconditions to their jurisdiction to deal with the claim. In other words, they are not likely to penalise contractors that fail to comply with the small print.

• Abuse of adjudication is not prevented by the need to establish a “dispute”

• Contractors can generate disputes under JCT98

• Adjudicators are unlikely to find there is no dispute

It must always be remembered that loss and/or expense under clause 26 is without prejudice to claims for damages for breach of contract. The procedures anticipated by clause 26 will not apply to such damages claims. Contractors can formulate their claims in the alternative and bypass the procedures, giving the adjudicator jurisdiction. The preconditions laid down by clause 26 are of a minimal nature, as the contractual notices we all see prove.

If the contractor wishes to generate a dispute in relation to valuation, it can issue an application for payment under the new provisions of clause 30.1.2.2, triggering an obligation on the QS to identify areas where it disagrees with it. The sole purpose of this new provision of JCT98 must be to enable the contractor to precipitate a dispute.

Adjudicators, by definition, will be reluctant to find that there is no dispute once a reference has been made to them. Employers will have to invoke the courts for a declaration that the notice of adjudication was premature and therefore ineffective. This does not look likely to succeed.

Whatever procedures are built into JCT98 requiring information to be submitted in relation to applications for extension and loss and/or expense, there is nothing at all to stop the contractor submitting further details to an adjudicator, even if this information was not made available to the architect. And the adjudicator is obliged to consider it.

Any attempt to redraft the JCT procedures to comply with the notices and information requirements for extensions of time and loss and/or expense are likely to be challenged. The argument would be that they could cut across the parties' statutory right to refer to adjudication "at any time".

If the procedural requirements of JCT98 are insufficient to prevent a dispute arising until the procedures have been fully complied with, then the risk of ambush and of numerous references remains. A dispute can be generated very quickly indeed.