Statutory adjudication is the most popular form of dispute resolution for construction disputes in the UK and is one of the reasons the UK resolves construction disputes more quickly overall than most other jurisdictions.

Lord Justice Coulson recently challenged the perception that adjudication is just another form of dispute resolution, expressing the view that for most construction disputes “it is not an alternative to anything; it is the only game in town”.

In the UK, statutory adjudication is mandatory for disputes arising under construction contracts where performance takes place in England and Wales or Scotland, regardless of the applicable law of the contract (subject to limited exceptions primarily in the energy sector). The construction industry and legal practitioners in the field are therefore familiar with the process.

Where the mandatory regime does not apply, the dispute resolution clause in the contract may nonetheless provide that the parties shall refer disputes, or certain categories of disputes, to adjudication.

The process is much faster than most forms of dispute resolution and the adjudicator is required to reach a decision within 28 days from the date of referral of the dispute, although this can be extended by the parties by agreement.

The quick timeframe is a significant advantage for construction disputes as interruptions to workflow can lead to significant delays resulting in liquidated damages and, in the worst-case scenario, termination of the contract. The impact of even a relatively minor dispute could therefore be devastating in the context of a large-scale construction project if not resolved quickly.

Adjudication decisions can be appealed on two grounds only: the adjudicator had no jurisdiction to make the decision or there was a material breach of the rules of natural justice. Anecdotal evidence suggests that it is uncommon to challenge adjudication decisions and even less common for them to be set aside. Adjudication decisions are enforceable in the English courts, although in practice enforcement is rarely required. The usual position, therefore, is that the parties get a final and binding decision in a very short timeframe at a relatively low cost, at least in comparison to litigation or arbitration.

The abundance of industry professionals and specialist construction lawyers in London, as well as its position as an internationally renowned and well-established legal system, adds to the appeal of adjudicating in London. The parties have access to highly qualified adjudicators, most of whom are industry professionals rather than lawyers, so the parties can ensure the person making the decision has the relevant technical expertise.

Adjudication does have its limits, particularly for high value and complex disputes. Arbitration is a good alternative in such cases as it allows for more detailed evaluation of the evidence with the opportunity for the parties to make detailed submissions, adduce factual and expert witness evidence and for the evidence to be tested at an oral hearing. Such procedures are generally more appropriate in complex and high value disputes. However, the arbitral process is inevitably slower than adjudication, although it has the same attraction of a specialist pool of arbitrators.

To get the most out of arbitration in the context of construction disputes, parties should pay careful attention to the availability of the tribunal when making their nominations or appointments as that will inevitably impact the overall length of proceedings, both in terms of availability for the hearing but also time for drafting the Award. In terms of the procedural timetable more generally, expedited procedures can be put in place in appropriate cases and it is possible to conclude arbitrations in a matter of months if conducted in a streamlined and efficient manner.

For example, some disputes may be capable of determination on the papers without a hearing, or it may be possible to limit the documents each party is required to produce to the other side. Page limits on submissions can also be used to ensure the parties focus on the key issues in dispute. Parties should consider these issues at the time of drafting their arbitration agreement. For example, they may agree to opt out of disclosure entirely for disputes that do not meet a certain threshold (and expressly exclude any rules of the relevant arbitral institution).

Cooperation between the parties as regards the procedural timetable will be key to creating a process that is appropriate to the nature and value of the dispute and the parties are much more likely to cooperate before a dispute is in contemplation.