Adjudication is a quick, rough and ready way of resolving construction disputes. It was introduced to the construction industry over ten years ago by the Housing Grants Construction and Regeneration Act 1996. It applies to almost all construction contracts, including most construction contracts in the local authority sector, provided that they are in writing.
There are changes afoot for adjudication. The Local Democracy Economic Development and Construction Bill, which has been introduced into the House of Lords proposes amendments to the adjudication process. The most important of those changes is that adjudication will apply to most construction contracts whether they are in writing or not. At the moment it only applies to contracts in writing.
At present it is usual for each party to pay their own costs of adjudication, but it is possible for the construction contract to specify that one party will pay the costs of the adjudication whatever the outcome. The bill proposes that it will no longer be possible for such a clause to be included in a construction contract. Instead, what it will provide is that the parties can agree who should pay the costs of an adjudication, but not until an adjudication has been commenced.