Challenging an Adjudication Award in a Commercial Dispute 

Before proceeding to the courts, you may consider resolving a commercial dispute via alternative dispute resolution (ADR). There are various types of ADR, including adjudication, which is often useful in construction disputes. An adjudication award or decision will be awarded to the successful party against the losing party. However, if you are the unsuccessful party, it may be possible for you to challenge the award. This article will explain how you can challenge an adjudication award in a commercial dispute.

What is Adjudication?

Adjudication is a form of ADR that is available for all commercial disputes but is used primarily by the construction industry. Adjudication is more time-efficient compared to other ADR methods, such as arbitration. This is because it can take place entirely on paper, resulting in the whole adjudication process usually taking around 28 days. However, you can extend this timeframe under an agreement with the other party. 

Adjudication may be enforced by parliament-made laws. An example of this law in the construction industry is the Housing Grants, Construction and Regeneration Act 1996, which outlines when parties to a construction contract have a legal right to use adjudication to resolve disputes.

The adjudication process itself is fairly informal. Notably, the parties to the dispute decide the adjudication rules and procedure, with the adjudicator making a temporarily binding decision at the end. This decision is called an adjudication award, and it can include a: 

• monetary award; or 
• remedy where the adjudicator tells the unsuccessful party what they should do within a specific time frame.

Should I Challenge an Adjudication Award?

The adjudication award is only temporarily binding. This means that it will only be legally enforceable until another dispute procedure changes the decision. Alternatively, it will stay the same if another procedure affirms it. These other commercial dispute procedures include:

• arbitration; 
• litigation; or
• agreement between you and the other party. 

In general, it is unusual for parties to a commercial dispute to challenge a decision made. Notably, adjudication awards are still enforceable in the courts when they stand, making a successful challenge potentially difficult. As a result, you should consider seeking legal advice and expertise before proceeding to challenge an award. 

When Can I Challenge an Adjudication Award?

You cannot challenge an adjudication award on the basis that you disagree with it. Instead, to have a reason to challenge, the adjudicator must have:

• lacked the legal authority to make the award they made; or
• breached the rules of natural justice by not giving you a chance to explain your side or being biased in the adjudication process. 

There are various situations during an adjudication where you will see these reasons arise. Some examples of when it may be appropriate for you to challenge an award are when:

• there no contract;
• there is no real dispute that requires an adjudication;
• the appointment of the adjudicator was not through the right procedures; or
• the adjudicator only discussed the case with one party to the dispute.

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Key Takeaways

A way to resolve a commercial dispute is through the ADR method of adjudication, which is quick and relatively informal. The decision made at the end of an adjudication includes an adjudication award, which can be monetary or an order to take action in a specified time. These awards are temporarily binding as they could change or become permanently binding through arbitration, litigation or agreement. If you are unsuccessful in an adjudication, you can challenge the award if the adjudicator:

• did not have authority to make the award; or
• was biassed or did not give you a chance to explain your view. 

If you need help understanding and challenging an adjudication award in a commercial dispute in the UK, LegalVision’s experienced disputes and litigation solicitors 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 for a low monthly fee. So call us today on 0808 196 8584 or visit our membership page.