Knowsley Chamber of Industry and Commerce

Adjudication Update

Posted on: 27^th April 2010

5 years after the consultation period began, amendments to the Housing, Grants, Construction and Regeneration Act 1996 (“Construction Act”) are finally due to come into force this year. These are designed to broaden the use of adjudication procedures and to make payment and suspension provisions in a construction contract fairer to all parties. We predict that these provisions are likely to lead to an increase in construction disputes, and it is particularly important to be aware of the evolving legal requirements. Briefly, the amendments are as follows:

Adjudication provisions will also apply to oral and partly oral contracts (whereas previously it was applicable to written contracts).
Adjudicator’s have the power to correct clerical errors in their decision.
Adjudicator’s costs – “costs penalty” provisions which provide that the referring party must pay all of the costs, including the legal costs of the other side are to be outlawed.
Payment regime – Sections 110 to 111 of the Construction Act, the subject of so many disputes are to be completely overhauled. The range of conditional payments which are illegal has been extended, and the content of payment and withholding notices has been changed.
Suspension of works – parties to a contract who suspend work for non payment of their fees will be entitled to be paid reasonable costs incurred as a result of the suspension.

Contractors, developers, subcontractors and other construction professionals need to be make sure that they are aware of when their agreements become a “contract” that their payment certificates comply with the legal requirements and when to use the right to suspend work as a tool to ensure speedy recovery of fees.

Early legal involvement can assist with all of these issues and avoid a costly and time consuming legal battle further down the line.

If you require any further information in relation to the impact of these amendments on your business please do not hesitate to contact Sarah Duncan of JST Lawyers on 0151 282 2872 or email sduncan@jstlaw.co.uk.