Inside Adjudication – The Referral – What not to do?

In this episode, David Owens, Aanya Gujral, and Peter Jansen discuss the Referral of Adjudication. They identify areas where parties regularly fall short, and why getting early expert input is vital. The episode concludes with a recent case study and we advise on managing multiple disputes under the same contract.

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Episode Transcript:

[Music]

David Owens:

Hello and welcome to this edition of Inside Adjudication. I am David Owens, a Partner in the Construction team at Sharpe Pritchard – a leading UK law firm with expertise in public law, infrastructure, and construction disputes – and I will be your host this today.

In this series we’re talking about how to successfully use adjudication to resolve construction disputes. I’m joined by my colleagues Aanya Gujral and Peter Jansen.

In this episode we’re discussing what to include in you adjudication Referral, and importantly, what not to include.

So over to you Aanya and Peter.

Aanya Gujral:

Thanks David. So, from a practical perspective, the Referral can make or break an adjudication. It must be served within seven days of the Notice, and it should include everything the referring party wants to say. So, that includes the facts, the legal basis of claim, and all relevant supporting material. Remember there are no second chances with this, so if something essential is left out or unclear, it may present a big problem in the future. Although you will be given the opportunity to serve a reply, although that mustn’t contain anything new by way of argument.

We’re so often instructed at Sharpe Pritchard to prepare Referral Notices for clients and also help them respond when they’ve received one. It’s surprising how often some of the Referrals that we see lack structure, leave out key evidence, or raise new issues that were not included in the original Notice of adjudication. That opens the door to jurisdictional challenges and procedural disputes that distract from the substance of the case.

And that lack of alignment between the Notice and the Referral is probably the most common pitfall that we come across when we guide our clients responding to adjudication proceedings brought against them. Now the Referral has to stick to the dispute outlined in the Notice. If it tries to expand the scope or bring in new issues, then the responding party can argue that the adjudicator doesn’t have jurisdiction. And in some cases, they might be right.

Peter Jansen:

That’s right Aanya and expanding on what you said about what the Referral must include, in fact paragraph 7(2) of the Scheme for Construction Contracts, sets these requirements out. It provides that a referral notice shall be accompanied by copies of, or relevant extracts from the specific construction contract to which the adjudication relates, and any other such documents, as the referring party intends to rely upon.

So, including all of the relevant information, in support of your claim or argument within or as an accompaniment to the Referral is paramount, and if you do not, paragraph 13 of the scheme, provides that the adjudicator may take the initiative in ascertaining the facts and the law, necessary to determine the dispute.

It specifically provides the adjudicator may request any party to the contract to supply him or her with such documents as he or she may recently require, including any written statement from any party to the contract, supporting or supplementing a referral notice or any other documents sent to the adjudicator alongside the referral notice.

So, remember that the referral notice is the referring party’s only chance to substantively set out its case. So, make sure to include everything that is relevant to the claim or argument being made in the Referral, to avoid the embarrassment of possibly being asked to do so at a later stage by the adjudicator – which may lead to delays which could easily have been avoided, had you provided the this evidence or information in the first place.

Aanya:

Yeah, that’s really good advice Peter, and it should be mentioned also, that in adjudication, the burden of proof generally rests with the referring party who are initiating the adjudication process. And this burden of proof refers to the obligation of the referring party to provide sufficient evidence to support their claim.

This means that it is for the referring party to not only provide the relevant documentation alongside the Referral, as Peter has already mentioned, it is also for the Referral, as well as the supporting documentation, to be presented in an as convincing way as possible, in order to successfully convince the adjudicator of the validity of their claim. And such evidence must be sufficient to establish the facts that are needed to satisfy the legal elements of the dispute.

Peter:

And whilst, as you say the initial burden of proof lies with the referring party, this burden can shift throughout the adjudication process to the responding party, for example, if the responding party raises specific defences or counterclaims in their response. As an example, if the responding party seeks to argue that the referring party’s claims is time-barred, the burden of proof will then shift to the responding party to demonstrate to the adjudicator, sufficient evidence that this is in fact the case.

Another recurring problem is volume over clarity. We have seen referrals sent with hundreds of pages of appendices, most of which are unexplained or irrelevant. This does not help your case. A clear, logical explanation with well-chosen documents is far more effective.

The aim is to help the adjudicator understand your position, and to signpost them to any relevant evidence which supports your case.

Aanya:

And while the content of the Referral has to be carefully considered, as we’ve mentioned in previous episodes and as we will continue to stress in future episodes, the presentation of your Referral and of subsequent submissions is equally important, if not more at times.

If the Referral does not have a clear timeline, if the calculations do not stack up, or if the contract provisions being relied on are not properly identified, it becomes very difficult for the adjudicator to understand the arguments being put forward.

Even if the underlying position is strong, poor presentation can reduce your chances of success. And that’s why, if you’re involved in a dispute that’s heading towards adjudication, we strongly recommend speaking to a legal advisor at an early stage, such as Sharpe Pritchard. Whether you are bringing the claim or responding to one, we support clients in preparing and reviewing referrals to ensure that they are legally sound and practically effective

Peter:

Absolutely. And getting the right advice early can make a huge difference. At Sharpe Pricthard, we regularly work with public sector clients to support them through the adjudication process. Whether it’s drafting a Referral, responding to one, or advising on strategy behind the scenes, we help to ensure that your position is clearly and effectively presented form the outset.

Timing and service are also critical. The Referral must be served within seven calendar days of the Notice. It needs to be served correctly to the right party by the right method and with clear proof of service. These are technical details, but if something goes wrong here the adjudication might not proceed.

So, Aanya from a practical point of view, what would you recommend parties do when it comes to preparing the Referral?

Aanya:

Well firstly, if you’re considering referring a dispute to adjudication, as I said earlier, seek legal advice early. Getting this legal support from the outset will help to avoid procedural mistakes that can be difficult or impossible to fix later, and which can seriously weaken your case.

Secondly, focus on clarity and relevance. The Referral should clearly explain what the dispute is, what outcome you want, and why the adjudicator should decide in your favour. And that needs to be back up by sound evidence that supports your position and is easy to follow.

If you’re preparing for adjudication, it is also helpful to gather and organise some key materials in advance to enable your lawyer or legal adviser to work effectively. And that might include the contract and any relevant clauses, payment notices, correspondence, meeting notes, programme updates, valuation documents, and any expert reports or site diaries that are already in your possession. By presenting these clearly, you make it a lot easier for your lawyer to draft a focused and robust Referral on your behalf.

Peter:

That groundwork is vital. While adjudication isn’t governed by formal disclosure rules, such as in the High Court, adjudicators expect the Referral and the Response to contain enough evidence to support the party’s respective claims and to allow them to reach a decision based on the balance of probabilities. It is important to strike the right balance: irrelevant material can obscure the argument, while too little supporting evidence may lead to the adjudicator making requests for additional documents or, worse, the adjudicator making adverse inferences in this decision.

Practically, that usually means compiling a paginated bundle including the contract, correspondence, progress reports, payment documentation, expert reports (if applicable), and any witness statements that directly support your case. Your referral should clearly signpost to the adjudicator and the other parties to the contract the relevant parts of the bundle.

Independent expert reports in particular, can be very persuasive and can carry a lot of weight to the referring party’s argument. It is likely that these may have been shared between the parties on a prejudice basis beforehand as part of crystalising the dispute. It will be fact specific in terms of whether the dispute needs an independent expert. The types of disputes you see experts involved in are technical defects disputes, or where there is a complex delay claim and a delay expert helps to identify the causes of delay

Aanya:

That’s all really helpful and important advice Peter. And the other thing to consider and remember is that the adjudicator only has potentially 28 days to come to his written decision. And I say potentially, as under the Scheme there is an ability for the time period to be extended slightly. But this 28-day timescale includes the time required for him or her, as the adjudicator, to digest all of the information and documentation received from both the referring and responding parties.

So, whilst it is important to include all of the information and relevant documentation when serving your Referral, the party should also be careful this does not become too excessive. We’ve seen some examples where the referring party throws everything but the kitchen sink into their Referral and lots and lots of supporting evidence. But often, all this does is make their case overcomplicated, unstructured, and unnecessarily long. Usually, much of the supporting evidence is entirely unrelated to the actual dispute that’s being referred to the adjudicator. This might even have the impact of delaying the date that the decision is made, and if this leads to both the responding party and the adjudicator requiring more time to digest and make sense of the information, this is a high likelihood. It may also prejudice the referring party’s decision.

So, this provides another important reminder that being organised and prepared before, during, and after a construction project is essential. Keeping accurate records from the outset, puts you in a much stronger position if a dispute arises. Because adjudication moves so quickly, having clear documentation ready to go can make the difference between putting together a strong response and struggling to meet tight deadlines.

David:

Thanks Aanya. Okay, so now we are going to turn to our case law update, and this week we’re talking about a recent decision that reinforces how important it is to understand the scope and sequencing of reports, especially when you’ve had more than one adjudication on a project.

This case explores what happens when you have multiple adjudications on the same contract, and how the courts deal with arguments around overlap and natural justice.

Peter, can you talk us through what this case is?

Peter:

Thanks David. The case in question is Wordsworth Construction Management Ltd. v Inivos Ltd [2024], in which TCC enforced two adjudicators’ decisions and allowed them to be set off against each other. Each party had initiated an adjudication under the same contract, with the second dispute not being the same or substantially the same as the first.

The court emphasised that what matters is what the first adjudicator actually decided, not just how the Referral or evidence was framed. What it really came down to was whether the second adjudicator was deciding something materially new.

With that in mind, Aanya, what would your advice be for parties managing multiple disputes under the same contract?

Aanya:

Well Peter, the takeaway here is to always check what’s already been decided in any earlier adjudications under the same contract, if there has been one. If the new dispute overlaps with one that’s already been resolved, you risk jurisdictional problems or challenges at the enforcement stage.

But if it’s genuinely a separate issue, even under the same contract, it can still go ahead. The key is being clear about what the earlier decision covered, and making sure your new referral is focused and distinct. Keep a record of what’s already been decided and explain why this is something different.

David:

That brings us to the end of this episode of Inside Adjudication by Sharpe Pritchard.

Thank you to our speakers today for joining this session and sharing their insights.

Thank you for listening. We hope this podcast has helped you to build your understanding of what adjudication is, why it exists, and how it works.

If you enjoyed the podcast, please subscribe on Apple podcasts/Spotify or wherever you get your podcasts. And be sure to come back for our next discussion to help you get Inside Adjudication.

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Until then, this is David Owens from Sharpe Pritchard – have a great rest of your day.