Many architects may not have thought about dispute mechanisms until a dispute actually arises. It would be well worth their while to pre-arm themselves with an understanding of all the options.
Court proceedings is one of them of course, but for less complex disputes and relatively modest projects the alternatives of arbitration and adjudication are probably more suitable and far less costly.
RIBA specialist adviser and adjudicator David Chappell describes arbitration as being rather like a court referral, but one in which everything is done in private. Like court proceedings, the process can take many months and so still tends to be used only for relatively high-value disputes.
To give both parties access to a quicker and less costly dispute-resolution route, and to avoid using the courts, adjudication was born, and its use promoted by government through legislation.
Originally intended for use in dealing with commercial contracts, a statutory right to adjudication now applies to any contract falling within the definition of a construction contract in the 1996 Construction Act, while the ‘Scheme for Construction Contracts’ was issued in 1998, setting out procedures for any contracts which did not comply with the Act.
The Act excluded contracts in which one of the parties is, or intends to be, an occupier of a dwelling subject to the dispute. However, that has not stopped adjudication becoming commonplace in domestic disputes. It can be used where a provision for adjudication has been specifically added to the contract, or whenever both parties have agreed to adjudication. RIBA Consumer Contracts and standard JCT domestic building contracts for home owners/occupiers both make provision for adjudication.
The RIBA maintains a panel of around 70 expert adjudicators, drawn from different professions within construction, and many contracts for architects’ services name the RIBA as an adjudicator-nominating body. The panel allows for every type of dispute to be dealt with by a specialist in the field; however, all panel members are expected to be capable of handling any adjudication process.
Following a recent review, a refreshed adjudication panel has been assembled with the addition of 18 new adjudicators. There are a number of aspects of the adjudication process with which architects may not be familiar. For example:
Adjudicators’ decisions are binding on both parties but can still be subsequently challenged through arbitration or the courts, although in most cases this will not happen.
Unlike an arbitrator, an adjudicator generally has no power to order one party to pay the other’s costs, but can decide who should pay the adjudicator’s fees and expenses – generally the losing party.
Clauses providing for adjudication are not universally favoured. David Chappell says that he has heard of architects choosing to strike out adjudication clauses in domestic contracts to make it harder for contractors to make casual claims for additional costs. It seems to be a matter of ‘know your client and know your contractor’ when deciding whether to keep the clause.
Chappell also points out that if the winning party has been assisted by consultants or expensive solicitors in presenting their case, their costs may be more than the amount of the claim. If the winning party has caused unnecessary work for the adjudicator, they may be ordered to pay a large proportion of the adjudicator’s fees.
Fellow RIBA adjudicator panel member and arbitrator Robin Orme recommends that unless the dispute is simple and you have been through adjudications before, then it still pays to get professional help from someone experienced in adjudication: ‘You cannot usually recover your costs, but you need your case presented as well as possible. Once the adjudication has started, the time for arguing with the other side is over. Your task is to persuade the adjudicator that you are in the right.’
Orme says architects should always consider the pros and cons. ‘It is quick but can be rough justice. There is limited time to clarify the issues, particularly in a complex dispute. Because it‘s quick, costs should be less but, unless the contract says so, you cannot recover them even if you win. The decision has to be implemented, but is not final. You can’t appeal the decision and most are accepted, but you can have a second bite at the cherry by going to court or arbitration. Or just by negotiating with your opponent.’
Whatever the outcome, however, adjudication is a process that minimizes time spent away from practice and projects. ‘Adjudication is always intensive and time-consuming,’ Orme acknowledges, ‘but the tight timetables mean that any disruption to your business is relatively short-lived.’
Guidance on the adjudication process for construction contracts subject to the Construction Act or Scheme is set out in detail in the CIC’s free Users’ Guide to Adjudication. The RIBA has set out its own rules for adjudication under the RIBA Consumer Contracts Adjudication Scheme.
Application forms to appoint an adjudicator are available from the RIBA Professional Standards Office or by email at adjudication@riba.org
Thanks to David Chappell, Director, David Chappell Consultancy; Robin Orme, Director, Ashcliffe Consultancy.
By Neal Morris. This is a Professional Feature edited by the RIBA Practice team. Send us your feedback and ideas
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