THE ADJUDICATION PROCESS HAS BECOME SOMEWHAT MIRED
Adjudications have been part of the dispute resolution landscape since the process was introduced in Part II of the Housing Grants Construction & Regeneration Act in 1998. It is a process whereby disputes under the majority of construction contracts (one exception being contracts relating to a property which one of the parties is using as a dwelling) can as of right be referred to a 28-day adjudication procedure.
But, however experienced the adjudicator, it is not easy to rule within four weeks on issues that may have involved the architect in many months of painstaking analysis. Even if the adjudicator's decision could ultimately be revisited through the courts or by arbitration, the architect would then be in the position of trying to recover monies, with, of course, attendant legal costs.
Earlier dispute initiatives attempted as an alternative to lengthy court cases have themselves ended up being costly and time-consuming. Several years' experience of adjudications indicates that this process too has become somewhat mired.
Parties dispute the enforceability of the adjudicator's award and seek to use the process as a direct route after their active involvement in the project has ended, rather than use the process for that which it was intended - fixing a dispute in order to enable the project and the parties to proceed. Architects' involvement in the process has also changed and has enabled a number of conclusions to be drawn for future, practical application.
Because of the remaining concern that an architect may face a premeditated ambush, an architect should not agree in its appointment contract to an adjudication clause providing for the adjudication to be final and binding; consultants and their insurers will want an opportunity to undo any rough justice by way of referral to the courts or to arbitration (whatever the ultimate dispute resolution under the contract is) as soon as possible. With that in mind too, architects should not agree that such court or arbitral referral should be delayed until after practical completion.
By then, the party who has been awarded its money may be unavailable to return it, if the decision is 'reversed'.
Other provisions to avoid include agreeing necessarily to a dispute which arises being joined to an existing adjudication, since the architect may have a genuine objection to that particular adjudicator - or agreeing to have other disputes joined to the architect's adjudication, since this may muddy what would otherwise be clear issues in the architect's favour.
Architects should ensure that there is provision within their appointment terms for them to be remunerated separately for support that they give to their client in any adjudication in which the client may be involved. Traditionally, factual support from the architect in disputes falling short of litigation (or arbitration) was part of the basic service and agreed fee.
Adjudications, however, involve preparation comparable to that required in litigation and a heavy time commitment at very little notice (albeit for a limited period). If adjudication is going to be used as a litigation tool, then the architect, offering support, should be paid accordingly.
Architects will often find themselves involved in 'second generation' adjudications; a developer/client may be dissatisfied with the outcome of an adjudication it has brought against, or received from, its contractor, and then use that as the springboard for adjudication relief against the architect.
(Alternatively, the client may threaten secondary referral as a consequence of its primary adjudication going wrong, in order to persuade the architect to support the process without charging an extra fee. ) The popularity of design and build as a procurement route (with the contractor being the architect's employer) also makes the architect's involvement more likely in contractor/ developer disputes. For all the potential pitfalls, however, an architect need not necessarily fear being dragged into the consequences of a developer/contractor adjudication because, even if the independent assessment arrives at a different conclusion, this will not necessarily render the architect liable.
Furthermore, the possibility of being a direct party to an adjudication can be turned to an architect's commercial advantage. Very often architects' fee claims are frustrated by counterclaims from the client. These in turn bring about the involvement of insurers. If one also adds the time that the architect will need to devote to defending the counterclaim, very often all those involved on the architect's side will wish that they had never embarked upon the fee-reclamation exercise.
A properly worded adjudication referral notice, in conjunction with a suitable agreed adjudication procedure in the appointment contract on the part of the architect, could successfully separate the fee issues and any performance counterclaim issues. This would be likely to discourage a tactical counterclaim, because the opponent would already have had to make payment in respect of the fees - thereby placing the architect in funds and in good odour with its insurers.
Given that architects are now becoming more involved in adjudications - whether directly, or in the slipstream of other parties' adjudications - certain principles help to navigate this treacherous territory.
Attention should be paid at the outset to negotiating proper adjudication provisions in appointment terms so that, should these be triggered, they are as favourable as possible to the architect, both commercially and in terms of the way that the assessment of the architect's performance will be conducted.
If, nevertheless (as could happen with this truncated process) the assessment from the adjudicator does not turn out to have taken all relevant factors into consideration, or is a misleading snapshot, there needs to be the facility to refer these issues on for ultimate determination.
With these basic protections in place, the process may start to appear altogether less daunting and may even be useful in isolating a fee claim or - where an architect's performance has been found wanting - in identifying this in a cost-effective manner.
Mark Klimt is a partner in Fishburns solicitors