IN theory, construction adjudication should be a relatively low-cost method of dispute resolution. However, unlike in litigation or arbitration, it generally requires the disputing parties to bear their own legal costs. Therefore, it can turn out to be an expensive option.
Whatever the outcome of the award, a party may be left with a relatively large legal bill which is not in proportion to the amount of money in dispute. This legal bill must be paid even if it is higher than the amount of claim which is recovered.
The reason for a bill potentially exceeding the claim, according to barrister, arbitrator and adjudicator Tony Bingham, is simply due to representatives, lawyers and consultants spending too much time and charging too much money.
Adjudication was not intended to be used in the way it is today. It was introduced to be the ambulance that stopped the bleed, therefore, keeping the relationship alive until arrival at the arbitration or litigation hospital. Adjudication was not intended to be a last chance saloon.
It has been said that adjudication was intended to involve a third party quantity surveyor (QS) presiding over matters submitted by two other QSs generating a rough and ready decision to help the project along. The adjudicator's decision is intended to be binding upon the parties until the substantive matter is, if required, finally decided by lawyers advancing claims in arbitration or court.
No matter how much money is spent on unrecoverable legal costs in adjudication, the matters in that process can always be subject to further arbitration or litigation proceedings after the project has been, hopefully, successfully completed.
Being that party legal costs are unrecoverable and the adjudicator's decision is only temporarily binding, it may be sensible for disputing parties to allow their quantity surveyors the opportunity to make their case to a construction adjudicator.
A good situation may be made better and a bad situation mitigated by avoiding unrecoverable legal costs of construction adjudication. In these times of austerity, our cash has never been less disposable.
Pete Tighe is partner at the Geneva Group. For more information on Constructing Excellence in the North East, please contact chief executive, Catriona Lingwood, on 0191 374 0233 or catriona@cene.org.uk