Adjudication Framework

Adjudication is a privately supplied service. The Construction Contracts Act 2002 and Arbitration Act 1996 rely on market-driven pricing. If no agreement has been made between the parties, the Construction Contracts Act 2002 specifies that fees must be reasonable having regard to the work done and expenses incurred.

In the construction industry, the privately operated Building Disputes Tribunal noted in its 2023 report that 80% of the time parties pay the adjudicator in equal proportions. However, an adjudicator can change the proportions each party is liable to pay if they consider a claim or response was made without substantial merit, i.e. that the argument had no basis in fact or applicable law. They can also amend the fees if a party acts in an improper manner during the adjudication.

The framework could also seek to ensure an adjudicator delivers the service – for example, if an adjudicator fails to issue a determination within the required timeframe, they may not receive payment. In cases where the adjudication claim is withdrawn by the parties, adjudicators may also still receive partial compensation for their time and effort.

Parties will generally be expected to meet their own costs in adjudication, such as any legal fees, however, we propose an adjudicator should be able to determine that costs and expenses must be met by one of the parties (regardless of which party is successful). The adjudicator could do this if they consider that a party has caused costs and expenses to be incurred unnecessarily by acting in bad faith, or because a party made allegations or objections without substantial merit.