Law firm Gordons sees adjudications for construction contract disputes more than triple
Lawyers at Leeds and Bradford Law firm Gordons have reported a huge increase in the number of adjudications for construction contract disputes in the first half of 2009 as compared to the whole of 2008.
With adjudication proceedings being one of the fastest way of dealing with construction disputes, companies are finding the adjudication option an attractive proposition in the current economic climate – particularly as adjudication presents a means of quickly obtaining cash owed. Gordons have represented clients in three times as many adjudications in the last 6 months as it would normally expect to deal with over a full year.
Anjon Mallik, construction law partner at Gordons, believes this trend is directly linked to the current economic conditions and the downturn in the construction industry in particular. “Adjudication was introduced in 1998 in an attempt to improve cash flow in the construction industry and quickly became a popular form of dispute resolution,” he said. “So, with many construction companies now facing quiet order books, adjudication claims are being utilised even more as a means to generate as much extra revenue as possible from past contracts.
“Also, during the growth years, contractors and sub contractors might have been more prepared to take more of a hit on a particular job safe in the knowledge that there would be further work in the pipeline. That is no longer the case and, so whilst the economic outlook remains uncertain, adjudication is likely to remain a tempting option.”
In adjudications the claimant – called the referring party – has two main advantages in that it is able to spend as much time as it likes preparing its case before starting the action and it will also have been able to start the adjudication at a time of its own choosing. In contrast, the responding party only has a very limited time to respond to the case – usually seven days – made against them.
Anjon continued: “As we are now in the middle of the summer holiday season, I would advise construction industry companies to be vigilant about claims that could potentially be brought against them at this time. In particular, if a company is expecting a claim it should ensure that key personnel are properly briefed to cover for any holiday absences.”
Although the majority of adjudications are, statistically, won by the referring party, a skilled defence team such can undermine claims by ensuring that the fundamental contractual provisions are properly highlighted to the adjudicator making it as easy as possible for them to return a result which is more in the responding party’s favour.