Report on adjudication reveals growing popularity but also demand for change

“I rather cavil at the suggestion that construction adjudication is somehow ‘just a part of ADR’. In my view, that damns it with faint praise,” said Lord Justice Coulson in the case of John Doyle Construction Ltd (In Liquidation) vs Erith Contractors Ltd [2021] EWCA Civ 1452, [2021] Bus LR 1837, [2021] WLR(D) 516.

He continued: “In reality, it is the only system of compulsory dispute resolution of which I am aware which requires a decision by a specialist professional within 28 days, backed up by a specialist court enforcement scheme which (subject to jurisdiction and natural justice issues only) provides a judgment within weeks thereafter. It is not an alternative to anything; for most construction disputes, it is the only game in town.” The “only game in town” notion resonates with many in the building, construction and construction law sectors – it is no surprise, then, that many want to know what is exactly what is happening inside adjudication.

Yesterday the 2023 report Construction Adjudication in the UK: Tracing Trends and Guiding Reform was launched by King’s College London in collaboration with the Adjudication Society. I highlight straightway Mrs Justice O’Farrell’s poignant analysis in her foreword:

“Two issues stand out – adjudicator bias and lack of diversity. Perception of bias on the part of the adjudicator should be capable of remedy through codes of practice and early disclosure to the parties of any potential conflict; transparency is usually sufficient to allay any concerns regarding impartiality. Improved diversity will take more time and effort, through leadership within the industry and the adjudication nomination bodies, diversity training and mentoring.”

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The Adjudication Society has consistently and cautiously sought to obtain, analyse and publish meaningful data on statutory adjudication in the UK, for the benefit of all entities, institutions, practitioners and lay clients involved with statutory adjudication. The 2023 report is an extension to that work and continues the creative collaboration with Professor Nazzini’s excellent team at King’s College London. As chairman of the Adjudication Society, I am delighted that the research project continues to provide data and tangible information which is both informative for the industry and provocative. I say this because not all the data are positive or indicative of user happiness with adjudication – despite the fact it is the “only game in town”.

So-called smash-and-grab adjudications are now the most common category of claim

Some of the analysis and conclusions in the 2023 report will not surprise readers of Building, but some results certainly will. For example:

• So-called smash-and-grab adjudications are now the most common category of claim.
• The number of adjudication referrals reached the second-highest number on record at 2,078. We have seen approximately 2,000 per annum for the last five years, which exceeds the number of claims issued in the Technology and Construction Court and the Commercial Court combined.
• The most common hourly rate of adjudicators is between £301 and £350.
• Most respondents reported that the total cost of an adjudication was between £20,001 and £30,000.
• 55% of respondents supported a pilot scheme to at least trial the publication of redacted adjudication decisions.
• 27% of respondents suspected adjudicator bias in the past year on at least one occasion. The most common reason given was the adjudicator’s relationship with the parties or party representatives, selected by 43% of respondents.

As discussed above, this last data point was picked up by Mrs Justice O’Farrell. The last bullet point is a concern. Given that 88% feel that there should be an obligation on adjudicators to provide a conflicts declaration, the adjudicator nominating bodies and the legal profession ought to explore this notion in more detail and assess whether this problem can now be fixed.

There is very little meaningful data about diversity in the 2023 report. This is odd. The 2022 report identified that women account for just 7.88% of adjudicators. The 2023 report is simply unable to give a figure – this appears to be because not all the adjudicator nominating bodies publish such information or elected to provide such information. Standing back a little, there appears to be a gentle reluctance in the nominating bodies to provide transparent auditable data on diversity and related issues. It is apprehended that this will change in 2024. I must also say that I was also alarmed to see that 46% of respondents had not signed the Equal Representation in Adjudication Pledge launched in February 2023. Clearly, as Mrs Justice O’Farrell comments, more work is needed here too.

My own feeling is that more work is also now needed to encourage people across the world of adjudication to complete the survey. I say this because only 158 individuals completed the 2023 questionnaire – this is significantly lower than in 2022. Adjudication is the only game in town and there are over 2,000 adjudication referrals issued each year, and so there must be more data and information to improve the next report. Professor Nazzini’s team at King’s College London must be congratulated on many levels – the 2023 report is an excellent product produced to a very high standard. I am also delighted with the collaboration between the Adjudication Society and King’s College London, but we should avoid the temptation to be complacent.

Hamish Lal is chairman of the Adjudication Society and adjunct professor of law at Sutherland School of Law, University College Dublin