Episode 6: The Adjudicator – What is their role and how to appoint one

Who is the adjudicator? What powers do they have, and how do you appoint one? We unravel common misunderstandings surrounding this stage of the process. Our concluding case study highlights what ‘pay now, argue later’ means and touches on what happens when a decision is later reversed by the court and if that affects who pays the adjudicator?

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Episode Transcript:

[Music]

David Owens:

Hello everybody and welcome again to another episode of our adjudication podcast series, Inside Adjudication. My name is David Owens, and I am joined again by my colleagues, Peter Jansen and Aanya Gujral.

If you have been following along, you will know we have covered everything from identifying a dispute to preparing the Referral and dealing with the Response and even looked at whether you can challenge the adjudicator’s decision.

So, in this episode, we are going to take a step back and focus on the central figure in all of this, who is the adjudicator. Who is the adjudicator, what powers do they have, and what do you have to do to go about appointing one? There is a lot of misunderstanding around this stage of the process, so let’s break it down.

Peter, can you get us started?

Peter Jansen:
Of course. The adjudicator is essentially the decision maker. You can think of them as a temporary judge for the specific dispute being referred. They are either agreed between the parties in the contract or, more commonly, appointed by a nominating body such as the RICS, the Chartered Institute of Arbitrators, or TeCSA.

The adjudicator’s powers are limited to the dispute that is referred to them, and that is defined by the Notice of Adjudication. This is why getting the notice right is so important.

Aanya Gujral:
And within those limits, the adjudicator’s powers are fairly broad. Under the Scheme for Construction Contracts, which kicks in when the construction contract does not have compliant adjudication provisions, the adjudicator can do things such as take the initiative in finding out the facts and the law, and that might be by asking the parties to provide them with certain documents or further information.

They can also order parties to produce further documentation, beyond what I’ve just mentioned. They can also decide their own jurisdiction, and they can also issue directions about how the adjudication should proceed, and quite often we do see this when there are further submissions beyond just the Referral and the Response documents such as replies and adjoinders when there are further agreed timescales as to when these need to be served.

The adjudicator also has the authority to open up, review, and revise payment certificates or valuations, which gives them considerable influence in resolving payment-related disputes, which we quite often see.

Peter:
And with that authority comes responsibility. Adjudicators must act impartially and give both parties a fair chance to put their case forward. They are also working under considerable real-time pressure. They typically have to reach a decision within 28 days of the date of the Notice of adjudication unless an extension is agreed.

So, the quality and the clarity of the Referral and Response make a considerable difference. If the documents are clear and well structured, the adjudicator is more likely to get to grips with the issues quickly and fairly. Let’s look now at how adjudicators are appointed. Aanya, are you able to shed some light?

Aanya:
Yes, of course. So, helpfully but unfortunately not that common, in some cases some contracts do name a specific adjudicator at the outset, which makes the job of appointing one quite simple. But, more commonly, what’s seen is the contract will instead name an adjudicator nominating body instead. In that case, the referring party would then apply to that body to nominate someone from its panel.

It’s important to remember that the referring party must first serve the Notice of Adjudication before applying for a nomination to appoint an adjudicator. Serving the Notice starts the clock on the adjudication process, and only then can the referring party apply to a nominating body. And by following this order of events, it ensures the adjudicator is appointed in line with the statutory process.

If the contract is silent on adjudication or if it contains provisions that are not legally compliant with the Construction Act, then the Scheme for Construction Contracts will apply by default. Under the Scheme, the referring party can apply directly to any adjudicator nominating body for a nomination.

And some of these common nominating bodies include the Royal Institution of Chartered Surveyors (RICS), the Chartered Institute of Arbitrators (CIArb), the Technology and Construction Solicitors’ Association (TeCSA), and the Royal Institute of British Architects (RIBA). It is these bodies maintain panels of experienced adjudicators.

So, that’s the process of appointing one, but Peter, what happens if the process goes wrong?

Peter:
Here is where it can get tricky. You have to follow the contract and apply to the right body. If you do not, that can open the door to a jurisdictional challenge – i.e. the responding party arguing that the adjudicator lacks the jurisdiction to be able to make a decision. Once you apply, the adjudicator is only officially appointed when they accept the role, usually in writing.

If the application is made too early before the Notice is served, or to the wrong nominating body, the entire process can be challenged. In some cases, the referring party may have to withdraw and start again, which can be time-consuming and costly.

Aanya:

We also get a lot of questions about adjudicator’s fees. Most adjudicators charge by the hour, though some agree a fixed rate. Unless the contract says otherwise, the adjudicator decides who pays following their decision. Under the Scheme for Construction Contracts, the default position is that the parties are jointly and severally liable for the adjudicator’s fees, regardless of the outcome.

However, the adjudicator has discretion to allocate those costs depending on who succeeded and the conduct of the parties throughout the adjudication process. So, if you’re the referring party and you lose quite considerably, don’t assume costs will be split down the middle. You may end up incurring the full whack.The type of adjudicator matters too. For example, if your dispute is about delay and programming, you may want someone who has a background in project management or construction planning who is deciding your dispute. However, if it is a complex payment dispute with trickier legal issues, an adjudicator who has a barrister or might be construction solicitor might be more appropriate.

Some nominating bodies allow you to express a preference, so it is worth considering what kind of expertise would be most useful in your specific case if that choice is given if you are the party considering referring a dispute to adjudication.

Peter:
We should also mention what happens if the adjudicator steps down after they have been appointed. That might happen if they become unwell, discover a conflict of interest, or believe that they do not have jurisdiction. If that happens, the referring party can start again and, if appropriate to do so, appoint another adjudicator, bearing in mind that they will need to also issue a fresh Notice on the other side if they do so, but depending on timing and the nature of the dispute, that can be disruptive and even strategically risky. So, it is important to get the appointment process right the first time.

Aanya:
Another issue we often see crop up and we have seen crop up in some recent court cases is where a party thinks that the adjudicator has behaved unfairly in providing his decision. In some instances, parties have accused adjudicators of acting in a biased manner or extending their decision beyond their remit. Case law shows that parties have been able to successfully raise those concerns during the adjudication, but it is important to note that the threshold for intervention is high. Courts are usually reluctant to interfere unless there is actual bias or a serious breach of natural justice which we covered in our last episode.

David:
Thank you both. That was a really good look at what the adjudicator does and how to go about appointing one. As we have heard, the adjudicator plays a central role in the adjudication process. Although their powers are broad, they are bound by strict limits and short deadlines. Making sure that you’re following the right appointment process it essential, and it really helps to understand the practical legal boundaries of the adjudicator’s role so that you can understand how the adjudication should progress.

Okay, moving on to the case law section of the podcast. We often say that adjudication is a “pay now, argue later” regime and this case, the case of A&V Building Solution Ltd v J&B Hopkins Ltd [2024] EWHC 2295 (TCC) highlights exactly what “pay now, argue later” means. It also touches on what happens when a decision is later reversed by the court and if that affects who pays the adjudicator?

This one also touches on the importance of reserving rights at every stage, as Aanya has said. Peter, walk us through it.

Peter:

In this dispute, the court eventually overturned the substantive adjudicator’s decision in follow-up litigation. However, the court refused to revisit liability for adjudicator fees even though the initial ruling was wrong. It made clear that adjudicator fee decisions are binding, even if later judicial proceedings reverse the outcome. Aanya, how can parties best protect themselves when it comes to adjudicator fees and post-award challenges?

Aanya:
Practically, that means pay attention from the start if you challenge a decision later. Be sure to reserve your rights explicitly when paying fees, or else you accept the adjudicator’s fee decision irrevocably. Even unmeritorious decisions can result in fee liability. If you think the decision might be reversed later, document your objections and preserve them in writing. Otherwise, you could end up paying for both an award and a losing challenge.

David:

Thanks Aanya, thanks Peter. That brings us to the end of another episode of Inside Adjudication by Sharpe Pritchard. Thank you for listening.

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We look forward to joining you for the next episode of Inside Adjudication. Thanks very much!