ALTERNATIVE DISPUTE RESOLUTION

Adjudication

PROCESS:

NB this description is simplified for the sake of brevity. For a complete description please see the relevant state act, e.g. Building Construction Industry Security of Payment Act 1999 No 46 (NSW).

• A process to resolve progress payment disputes in the Building & Construction Industries. Currently enacted by statute in New South Wales, Queensland, Western Australia and Victoria.
• The party requiring payment (Claimant) lodges a Payment Claim with the alleged debtor (the Respondent).
• If the Respondent does not agree to pay in full within a short specified period (typically 10 business days) the Claimant may make an Adjudication Application for payment to an Authorised Nominating Authority (eg the Institute of Arbitrators & Mediators Australia).
• The Application may be accompanied by supporting submissions and must be copied to the Respondent.
• The Respondent, if he chooses, must lodge an Adjudication Response to the Application within 5 days of receiving a copy of it.
• The Authorised Nominating Authority must nominate an Adjudicator to hear the application without delay.
• The Adjudicator must accept the case within 4 days of the Claimant's application.
• The Adjudicator must then produce his or her report within 10 business days, deciding how much the Respondent must pay the Claimant.

ADVANTAGES:

• "Construction work" is very broadly defined (ie almost any work involving construction or installation of services in buildings).
• Fast access to payment.
• Relatively low cost.
• There is a degree of finality in the result - the intention of the legislation is to severely limit the avenues of appeal (but some have been appealed !).
• If the Respondent defaults on paying the Adjudicated Amount this can be directly enforced as a debt on application to the relevant court.

DISADVANTAGES:

• The Adjudicator makes his or her decision relying effectively only on the contents of the Adjudication Application and the Adjudication Response, normally without further submissions.
• The time limits for the various submissions and subsequent actions are extremely short.
• The case law for appeals against Adjudications is still very fluid.

OTHER COMMENTS:

• Adjudication has proved popular in New South Wales and the tight time limits (just) workable. Hopefully subsequent legislation will allow an extension of the time limits for larger payment claims. The process may appear as rough justice but is designed to deliver appropriate interim payments. The final payment for work completed may still (in theory) utilise the more conventional dispute resolution mechanisms.

DISCLAIMER: Information on this website is offered as general information only; it explicitly does not comprise legal advice

 

 

 

 

 

 

 

 

 

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