Factors Which Affect Adjudication within the Construction Industry after the Introduction of New Legislation to the Construction Act
The Housing Grants Regeneration and Construction Act (1996) introduced statutory adjudication within construction contracts as a cheap and less expensive process of settling disputes which can occur during the lifespan of a project, particularly with regards to monetary disputes. The main aim of adjudication, amongst others, was to create a fairer payment system and improve the cash flow of contractors. This enabled works to continue on-site without time delays to the contract. If a dispute occurs during the life of a project either party has the right to adjudication, where the result is final, pending both parties agreement. The adjudicator’s decision is enforceable and the courts have shown their support in cases of appeal where the judge has honored the adjudicator’s original award, even if the adjudicator’s decision was wrong or there is an obvious clerical error the decision.
This can lead to injustices in adjudication cases, injustices can also be seen in the adjudication process through ambush tactics, which the referring party can use as a tactical advantage against the responding party. The parties have the option to escalate the dispute to arbitration or litigation if they not agree with the adjudicator nevertheless these are expensive and lengthy process. Adjudication is not without its critics especially as there seems to be controversy surrounding the legislation between adjudication and the Insolvency Act.
As a solvent party does not have the right to adjudication against an insolvent party without the permission of the courts, thus contradicting the aims set out by statutory adjudication. The credit crunch has had a devastating impact on the construction industry resulting in a mass amount of business failures and insolvencies. The main aim and purpose of carrying out this research study is to identify the factors which affect adjudication with a view of highlighting the recent introduction of new legislation to The Construction Act and effect the changes have had on the construction industry. The study will also aim to identify if the current economic climate has impacted the number of construction disputes which have been referred to adjudication. The five fundamental objectives to be achieved by conducting this research are:
- To discover the underlying factors which contribute to the occurrence of a dispute in construction contracts?
- To discuss the Alternative Dispute Resolution mechanisms with particular reference to adjudication
- To find out the implications which the construction Act and LDEDCA 2009 has had on adjudication and especially if the changes achieved their expectations in the construction industry
- To assess the criticisms’ of adjudication with particular reference to insolvency and the grounds which the adjudicator’s decision can be challenged
- To assess the impact that the credit crunch has had on both insolvency and adjudication and gauge the options of the professionals’ in the industry
In conducting this research study the author wished to ascertain whether or not the changes made to The Construction Act have had a negative or positive effect on the construction industry and secondly how the recent financial crisis has effect the industry as a whole as well as on adjudication.
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