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When you run a business, you will try to avoid getting into commercial disputes with other businesses. Despite this, a dispute may still occur, such as if parties cannot agree to obligations within a business contract. In this case, it is always in both parties’ interests to resolve the dispute amicably. However, if this is not possible, there are various options available, such as going to court or proceeding with alternative dispute resolution. One method of alternative dispute resolution is adjudication proceedings. This can result in the adjudicator’s decision, known as an adjudication award. This article will explain adjudication awards.
This guide outlines how to resolve commercial disputes.
What is Adjudication?
Adjudication is how you, as a business, can resolve disputes with another company. It is a method businesses that work in the construction industry often use. This is because, under the Housing Grants, Construction and Regeneration Act 1996, it is the legal right of a business owner in this industry to seek adjudication. This Act also details a specific timetable for adjudication in the construction industry.
Adjudication is not as formal as other dispute resolution methods, such as arbitration. This is because the parties to the commercial dispute using adjudication can agree to the rules. These rules typically govern the manner in which the parties provide evidence, specifying the type of evidence each party wants the other to disclose. Although adjudication is not as formal as arbitration, adjudicators are legally required to carry out their procedures in accordance with each individual situation.
As adjudication is a relatively quick process, it does not always look at all the issues within a commercial dispute. Instead, it will examine the main points of contention.
What is an Adjudication Award?
When an adjudicator decides on a commercial dispute, they may issue an adjudication award. An award is often monetary. However, it can also be an award instructing a party to fulfil a contractual obligation within a designated time frame.
A decision made by an adjudicator is not conclusive unless the disputing parties agree it should be. Adjudication decisions are also not usually public in the way that court judgements generally are.
When an adjudicator issues you or the other commercial entity with an adjudication award, it must be abided by as a binding decision. The court can enforce the award if a party does not abide by it. However, an adjudication award will no longer be binding if overridden by a decision through:
- arbitration;
- litigation; or
- an agreement.
Once an adjudicator has decided the award, the losing business may want to dispute it. It is often difficult to challenge it as there are only two grounds for challenging an adjudication award. These are:
- proving that the adjudicator did not have the jurisdiction to make the award; or
- arguing there has been a material breach of the rules of natural justice.
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Key Takeaways
If you find yourself in a commercial dispute with another business, you may decide to go through adjudication. Depending on what industry you operate in, it may be compulsory or preferred for your business to undergo adjudication when resolving a dispute. For instance, the Housing Grants, Construction and Regeneration Act 1996 gives those in the construction industry the legal right to seek adjudication.
Adjudication is where an adjudicator gives one business an award to resolve a commercial dispute. There are many advantages to adjudication to resolve a dispute, such as being cost-effective. Adjudication is not as strict as arbitration but still has rules that apply. An adjudication award is binding on the losing party, and a court can enforce this if necessary. Where the losing party disagrees with an arbitration award applied, they can challenge it but only through limited reasons.
If you need help understanding adjudication awards in the UK, our experienced disputes and litigation lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
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