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No business wants to find itself in a commercial dispute, but unfortunately, business disagreements do occur. If your company has a business dispute, you should resolve it as soon as possible. One way to do so is to choose Alternative Dispute Resolution (ADR), particularly for construction disputes over a construction contract. This is a way to resolve your commercial dispute without the need to carry out commercial litigation. This article explains why you should select adjudication for your commercial dispute, particularly if you are in the construction industry.
What is Adjudication for Commercial Disputes?
Adjudication for commercial disputes is a method of alternative dispute resolution (ADR). There are other forms of ADR for commercial disputes, and these include:
- mediation;
- conciliation; and
- arbitration
When a business like yours chooses adjudication for its commercial disputes, it and the other party ask an adjudicator to resolve the disagreement. The adjudicator will hear your side of the commercial dispute and the other party’s view. They then form a temporarily- binding decision from this.
Why Should I Choose Adjudication for My Commercial Dispute?
There are several reasons why your business should choose adjudication for your commercial dispute. We will explore several below.
1. To Avoid Commercial Litigation
It is crucial when you get into a business dispute that you try to resolve it without going to court. Court is the most formal way to solve your commercial disagreement and is likely to be the most costly for your business in terms of the following:
- money;
- resources;
- time; and
- potentially your reputation.
However, whilst you should choose adjudication for your commercial dispute to avoid litigation, it could potentially reach litigation. This is because the decision is only temporarily binding. If the losing party does not accept it, they may move to the litigation process. However, in the construction industry, this rarely happens.
One reason is that the losing party often faces payment of an award to the winning party. If so, they will likely need more funds to start commercial litigation or even for the arbitration process.
2. You Have a Legal Right to
You may choose adjudication if you are in the construction industry because you have a legal right to this recourse when in a commercial dispute. This is your statutory right in the Housing Grants Construction and Regeneration Act 1966, and you can do this at any point in the business dispute.
3. For Speed
Commercial adjudication is a reasonably quick method of ADR compared to others, such as arbitration. This is because the adjudicator has to decide how you proceed within 28 days of the referral for the adjudication process. However, the 28 days could be longer if all parties agree.
4. Expert Decision Maker
A further reason you may choose adjudication to resolve your commercial dispute is because the adjudicator is an expert. This will either be in terms of industry knowledge or legal knowledge.
5. Cost-Effective
Commercial adjudication is a relatively low-cost type of ADR for resolving commercial disputes. This is one reason for choosing the adjudication process to decide on your business disagreement. Adjudication is low-cost because the overall process is faster than commercial litigation, and you cannot recover the costs from the opposing party. However, you should note that it is within the adjudicator’s power to decide which party pays their costs unless an agreement exists.
6. Ahead of the Game
If you choose adjudication for your commercial dispute as the referring party, you may do so to be ahead of the game. This is because the referring party to an arbitration case decides the timing and scope of the commercial dispute.
This fact sheet outlines how your business can manage a dispute.
This means that by the time you choose to take the adjudication process, you may already have been able to prepare your case.
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Key Takeaways
If you face a commercial dispute, adjudication is an attractive option. Adjudication is a form of alternative dispute resolution (ADR) for businesses, particularly in the construction industry. An adjudicator will listen to both sides of the discussion and make a temporarily binding decision. There are many reasons you may choose adjudication for your commercial dispute. For example, to avoid costly litigation because adjudication costs are relatively low.
Other reasons are that it is a speedy process, and you have access to an expert decision-maker. If you are in the construction industry, you should choose arbitration for your business dispute, as you have a legal right to do so. Also, choosing arbitration for a commercial dispute places you ahead of the game as you get to dictate timing and scope as the referring party.
If you need help understanding why you should choose adjudication for your commercial dispute, 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. Call us today on 0808 196 8584 or visit our membership page.
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