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Practical adjudication
for construction professionals
Leslie J. Edwards
BScFICE FCIArbFIRM
and
Richard N. M. Anderson
Barrister
Practical adjudication for construction professionals
Wednesday, May 15, 2002 3:56:54 PM
Published by Thomas Telford Publishing, Thomas Telford Ltd,
1 Heron Quay, London E14 4JD. URL:http://www.thomastelford.com
Distributors for Thomas Telford books are
USA: ASCE Press, 1801 Alexander Bell Drive, Reston, VA 20191-4400, USA
Japan:MaruzenCo. Ltd, Book Department, 3–10Nihonbashi2-chome,Chuo-ku, Tokyo 103
Australia: DA Books and Journals, 648 Whitehorse Road, Mitcham 3132, Victoria
First published 2002
Also available from Thomas Telford Books
The New Engineering Contract: a legal commentary. Arthur T. McInnis. ISBN 0 7277 2961 6
NEC and partnering. John Bennett and Andrew Baird. ISBN 0 7277 2955 1
Adjudication under the NEC. Richard N. M. Anderson. ISBN 0 7277 2997 7
Practical risk management in the construction industry. Leslie Edwards. ISBN 0 7277 2064 3
Civil engineering insurance and bonding. 2nd ed. Leslie Edwards, Geoffrey Lord and Peter Madge.
ISBN 0 7277 2098 8
Professional services agreements. Leslie Edwards and Rachel Barnes. ISBN 0 7277 2884 9
A catalogue record for this book is available from the British Library
ISBN: 0 7277 3109 2
© The authors and Thomas Telford Ltd 2002
Allrights,includingtranslation,reserved.ExceptaspermittedbytheCopyright,DesignsandPatents
Act1988,nopartofthispublicationmaybereproduced,storedinaretrievalsystemortransmitted
inanyformorbyanymeans,electronic,mechanical,photocopyingorotherwise,withouttheprior
writtenpermissionofthePublishingDirector,ThomasTelfordPublishing,ThomasTelfordLtd,1
Heron Quay, London E14 4JD.
Thisbookispublishedontheunderstandingthattheauthors(subjecttothedisclaimerherein)are
solelyresponsibleforthestatementsmadeandopinionsexpressedinitandthatitspublicationdoes
notnecessarilyimplythatsuchstatementsand/oropinionsareorreflecttheviewsoropinionsofthe
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Printed and bound in Great Britain by MPG,Bodmin, Cornwall.
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Disclaimers
Generally
Thepublishersandauthorsexpresslydisclaimallandanyliabilityandresponsi-
bilitytoanyperson,whetherapurchaserofthisworkorotherwise,inrespect
ofanythingdoneoromittedtobedonebyanysuchpersoninreliance,in
whole or in part, upon the contents of this work.
Worldwide
Theabovegeneraldisclaimerappliesbut,inaddition,theattentionofusers
worldwideisspecificallydrawntothefactthateitherthelawofthecontract
and/orthelawofthecountrymayhaveanimpactupontheprocessofadju-
dicationbeingusedthereandreadersadjudicatingthereshouldaccordingly
seek the advice of a competent professional adviser.
United Kingdom
Theabovegeneraldisclaimerappliesbut,inaddition,theattentionofusersin
the United Kingdom is specifically drawn to the fact that the legislation
applyingtoadjudicationisrelativelynew.Ithasyettobefullytested,drawn,
and developed. Accordingly, although references to court decisions of first
instancearemadeinthisbook,someofthosedecisionsmightlaterbechanged
onappealorotherwise.Inrelationtoanyspecifictransactionsreadersshould
seektheadviceofacompetentprofessional.
Practical adjudication for construction professionals
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Copyright acknowledgements
WereproducewithkindpermissionoftheICEandJCTextractsfromtheir
Adjudication Procedures.
WereproducewithkindpermissionoftheConstructionUmbrellaBodies
the most recent edition (May 2002) of their Draft Guidance put out for
consultation.
We reproduce under licence from HMSO certain selected parts of the GC
Adjudication Procedures.
WereproducewithkindpermissionoftheConstructionIndustryCouncil
extractsfromtheirModelAdjudicationProcedures,copiesofwhichcanbe
obtainedfromtheConstructionIndustryCouncil,26StoreStreet,London
WC1E 7BT.
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Dedication
This book is dedicated to Sir Michael Latham, the father of the rebirth of
adjudication.
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Contents
Acknowledgements xiii
About the authors xiv
Preface xv
1. Introduction 1
Part I Legislation and formal adjudication procedures
2. The Construction Act 6
General 6
Section 104 Construction contracts 6
Section 105 Construction operations 7
Section 106 Exclusions from construction contracts 12
Section 107 Contracts in writing 14
Section 108 Minimum adjudication provisions 16
Detailed considerations of some aspects of Section 108 19
The adjudication position if the Construction Act does not apply 27
Summary 28
3. ICE Adjudication Procedure 29
General 29
Clause 66 of the ICE Conditions of Contract 30
The ICE Procedure, Paragraphs 1 to 9 32
Schedule to the Adjudicator’s Agreement 50
4. JCT Adjudication Procedure 52
General 52
Articles 52
The JCT Procedure, Paragraphs 1 to 8 53
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viii CONTENTS
5. GC/Works Adjudication Procedure 66
General 66
Condition 59 (Adjudication)
Paragraphs 59 (1) to 59 (11) 66
Abstract of Particulars and Addendum.
Condition 59 (Adjudication) 76
Model Forms and Commentary. Summary of
Condition 59 76
Model Forms and Commentary. Commentary on
Condition 59 80
Model Forms and Commentary. Supporting documentation 78
Model Form 8 Adjudicator’s Appointment 78
Condition 60 (Arbitration and choice of law) 79
Model Forms and Commentary. Summary of
Condition 60 80
Model Forms and Commentary. Commentary on
Condition 60 80
Arbitration Act 1996. Various sections on an Arbitrator’s powers 82
6. CIC Model Adjudication Procedure 86
General 86
The CIC Procedure, Paragraphs 1 to 35 86
7. The Scheme 101
General 101
The Adjudication Provisions, Paragraphs 1 to 26 102
8. Draft Proposed Possible Scheme Amendments 124
General 124
Currently proposed Draft Scheme Amendments 124
Part II The conduct of an adjudication
9. Adjudicator appointments 128
Introduction 128
Factors to be considered before an Adjudicator agrees to an
appointment 128
Urgency of Appointment 132
Adjudicator Agreements 133
Signatures on Agreements 134
Amendment of standard pro forma Agreements 135
Issues that might be included in an Agreement 136
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CONTENTS ix
10. Jurisdiction 140
Introduction 140
Jurisdictional provisions of contractual adjudication procedures 141
Jurisdictional provisions of the statutory Scheme adjudication
procedures 142
Some typical jurisdictional issues 142
UmbrellaGroupDraftGuidancetoAdjudicatorsusingtheScheme 145
Summary 146
11. Procedural fairness 148
Introduction 148
Human Rights Act 1998 149
Rules of Natural Justice 150
UmbrellaGroupDraftGuidancetoAdjudicatorsusingtheScheme 155
12. Conduct of the adjudication 158
Introduction 158
Adjudication timetable 159
Initial planning 159
Limiting the extent of referral documents 160
‘Ambushing’ 161
Timetable for information submission 162
Frivolous disputes or a non-cooperative Party 162
Putting adjudication on temporary hold 163
Investigations 164
Information 165
Specialist assistance 165
Site visits 165
Meetings 166
Submission of later information to Adjudicator 167
Cross-claims and counter-claims 168
Payment provisions, withholding notices 171
Delays in copying submissions to the other Party 174
Receipt by Adjudicator of without prejudice/confidential
information 176
Late receipt by Adjudicator of details of pertinent new case 177
Disagreements on meaning of Construction Act or adjudication
clauses 177
Immediate responses to Parties 179
UmbrellaGroupDraftGuidancetoAdjudicatorsusingtheScheme 180
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x CONTENTS
13. The Decision 183
Introduction 183
Decision to be readily understandable 184
Reasons 185
Allocation of costs and fees 186
Interest 188
Retention of decision until fees are paid 188
Errors and their correction 189
Peremptory compliance 190
UmbrellaGroupDraftGuidancetoAdjudicatorsusingtheScheme 191
Part III Supplementary matters
14. Miscellaneous issues 196
Introduction 196
What is a ‘dispute’ 196
Delay mechanisms in contractual adjudications
Can an Adjudicator review all certificates and decisions etc.? 200
Interim Adjudicator decisions 203
Mixed Construction Act-compliant and non-compliant disputes 204
Order of precedence for dispute resolution 204
Interim mediation by an Adjudicator 205
Decisions of irreversible effect 206
Potential insolvency of a Party, trustee stakeholder accounts 207
Legal ‘disclosure’ of adjudication documents 209
Health and safety 210
Limitation periods 210
Joining of disputes on related issues 211
Contract (Rights of Third Parties) Act 1999 211
Pre-action protocol 212
15. Appeals and enforcement 213
Introduction 213
Scope for avoidance or appealing 213
Enforcement 216
16. Insurance implications 218
Introduction 218
Problem policies 219
Insurers’ concerns 219
Insurers’ reactions 220
Adjudication Endorsement – PI Insurance Policy 221
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CONTENTS xi
Extent of Insurers’ influence 222
Concerns of Insureds 223
17. Conclusions 224
Appendices
1. Example Agreement 225
2. Example Adjudicator’s first letter 229
3. Example Adjudicator’s first instructions 235
4. Example advice to lay clients 238
5. Example issues to be addressed in a decision 241
6. Non-adjudication cases 243
7. Adjudication cases 245
8. Summaries of adjudication cases 249
Bibliography 281
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