Adjudication is the act of making a judicial ruling such as a judgment or decree. The term is used particularly in bankruptcy proceedings, in which the order declaring a debtor bankrupt is called an adjudication.The giving or pronouncing a judgment in a cause. To readjudicate means to retry an issue in court.
Adjudication within the construction industry has taken off with many disputes now being resolved using the Adjudication process as set out in the Housing Grants, Construction and Regeneration Act 1996 as well as the rules contained in many of the standard forms of contract, sub-contract and consultant agreements.
- Adjudication is a statutory procedure by which any party to a construction contract has a right to have a dispute decided by an adjudicator.
- It is intended to be quicker and more cost effective than litigation or arbitration.
- It is normally used to ensure payment (although most types of dispute can be adjudicated).
- The Adjudicator must generally decide the dispute in less than 42 days.
- The decision is binding and is usually upheld by the Courts.
The scope of adjudication is set out in the provisions of the Housing Grants, Construction and Regeneration Act 1996. It applies to contracts concerning:
- The Construction Industry
- The Telecommunications Industry
- Installation of Security Systems
It also includes contracts for professional services within the above.
The Adjudicator's Decision is binding on the parties until the dispute is finally decided by arbitration (if provided for in the contract or agreed to), litigation or agreement. Because it is binding the Courts will enforce the decision in summary proceedings. Generally the only defence to such proceedings is that the Adjudicator's decision was made outside his jurisdiction.
The unsuccessful party is required by law to pay a sum of money awarded by an adjudicator. A period of grace is often provided for when the Decision is made so as to allow the paying party to obtain the money. However, if the unsuccessful party does not pay when required, the successful party may make an application in court to have the adjudicator’s Decision turned into a court order by means of summary judgment. Thereafter, continued refusal to pay will mean that, upon further application to the court, the money may be directly recovered from bank accounts or a charge levied against certain assets such as property and shares.