KING’S COLLEGE, LONDON AND THE ADJUDICATION SOCIETY’S ANNUAL REPORT ON CONSTRUCTION ADJUDICATION

Last week saw the publication of the 2022 Construction Adjudication Annual Report by King’s College, London in collaboration with the Adjudication Society.

It has been prepared following a considerable amount of work in collecting data on UK statutory adjudication from Adjudicator Nominating Bodies (ANBs) and individuals involved in statutory adjudication.  That data considers core issues regarding adjudication including costs/fees, types of disputes that are referred, typical timetables, issues regarding diversity of adjudicators and, significantly, adjudicators’ perceived bias and failure to disclose circumstances that might give rise to a conflict of interest.

The report was presented at the Adjudication Society’s annual conference where the key takeaways were highlighted.

Key issues for parties in adjudication

The most common types of claims adjudicated are extension of time claims (although due to the way the questions were asked, is likely to include claims for loss and/or expense and liquidated damages), final account and interim payment disputes and variations.  Professional liability claims remain uncommon but are still advanced.

Interestingly, the survey also sought information on the leading cause of disputes.  The data showed that the four most common causes are: inadequate contract administration, changes by the client, exaggerated claims and lack of competence of the project particulars.

On fees of adjudicators and the timetable, the data shows that:

• The median hourly rate is between £251 and £300 although some who responded to the survey had experienced hourly rates at between £100 to £150 as well as above £600.
• Most adjudications last between 29 and 42 days, with the majority going no longer than 72 days.
• Although dependent on the complexity of each adjudication, most fee levels were between £8,000 and £30,000, although fees above that level are not uncommon.

The position on adjudicators’ fees is interesting, particularly as parties have no real control over the hourly rate and the time the adjudicator will spent reaching their decision.  Coupled with this, adjudicators most frequently order their fees to be paid by the ‘loser’ although apportionment based on degrees of success is also a frequent order.

Key issues for adjudication practitioners

The major issue identified by the report is that of perceived bias and failure to disclose. 40% of those who responded suspected that on at least one occasion an adjudicator was biased towards one party and that 44% of respondents replied that adjudicators either never or rarely disclose information that may give rise to an appearance of bias.

Of the grounds for these findings, 63% of respondents identified that an adjudicator’s relationship with a party or their representatives was the basis for the suspicion of bias and 28% identified that the adjudicator had carried out previous services for a party or member of their team (e.g. working with or for an expert).

These findings will need to be addressed by adjudicators and ANBs in nominations without compromising on the tight statutory timetable for securing an adjudicator and serving the Referral. As ever, more effective disclosure at the start will allow the parties to consider whether there is the risk of perceived bias but parties can also assist by ensuring that details of their ‘team’ are made known at the outset so issues do not arise after the Referral is served.

COVID undoubtedly brought an increase in adjudications – the data from ANBs showed that May 2020 to April 2021 saw a record number of referrals. However, since April 2021 the number of referrals has returned to pre-COVID levels.  That said, adjudication remains a popular and effective form of dispute resolution in the construction industry as highlighted by Lord Justice Coulson’s comment in John Doyle Construction Ltd (in liquidation) v Erith Contractors Ltd [2021] referenced in the report.

Summary

The report makes for interesting reading and will be a useful benchmark to consider future reforms to adjudication and the development of the process, as well as how practitioners and ANBs look to address the major concern of perceived bias.

If you have any questions on the Report or our adjudication services, please contact the below.

James Vernon – j.vernon@beale-law.com – +44 (0) 20 7469 0424

Sheena Sood – s.sood@beale-law.com – +44 (0) 20 7469 0402