Adjudication under the microscope: a summary of the 19th Report by CDR

Summarising the findings of the 19th Report by CDR, which covers the period between 1 May 2019 and 30 April 2020.

8 December 2020

Construction Dispute Resolution recently released their 19th Report studying the development of adjudication between 1 May 2019 and 30 April 2020. The report was written with the support of the Adjudication Society, and the full version can be found here:

The report is written on the basis of information received from Adjudicator Nominating Bodies (ANBs) over the course of the year. For the last 22 years, CDR and the Adjudication Society have gathered data on the development of adjudication, and their reports have provided a valuable insight into the use and extent of adjudication in the construction industry. Adjudication as it is applied in current practice differs in some aspects from what was intended under the Housing Grants, Construction and Regeneration Act 1996, and the findings of these reports help to track incremental stages in its continual evolution.

It should also be borne in mind that adjudicators can be appointed by way of private agreement, in which case they would not be captured by this data; however, around 90% of appointments are reportedly made by way of an ANB.

The uptake in adjudication referrals has tended to increase year on year, but this year’s results indicate that this trend might be slowing. This year saw only a 2% increase in adjudication referrals, whereas the increase in each of the previous two years has been higher. Wider economic factors can have a bearing on this, as was seen from the economic downturn in 2008, and Brexit-related uncertainty was predicted to have a similar effect, although this year’s results do not particularly reflect this. We may see more of an impact when the UK officially leaves the EU in January 2021. Of course, the figures only show correlation rather than causation, but they can still be considered a useful indicator of how macro-economic conditions can influence uptake of adjudication.

This report captured the first two months of lockdown, which saw the highest number of monthly referrals. March and April both saw over 190 referrals, which is a significant increase on the comparable period from the previous year. While the longer-term impact of the COVID-19 pandemic is yet to be determined, this uptake seems to chime with the widely held belief it will lead to an increase in disputes as delays increase and funding issues grow.

December 2019 saw the lowest number of referrals, at 106, a 42% decrease on the previous month. This suggests that the ‘Christmas ambush’ tactic of taking advantage of the Christmas holidays to increase the pressure on the other side is losing in popularity. This possibly reflects an increased drive by adjudicators to address timetabling imbalances between parties.

This year saw a wider distribution of adjudicators among ANBs. This is an encouraging trend; participants will be glad of a diversified range of ANBs, as it offers alternatives where there is dissatisfaction with a particular ANB, and also encourages specialisation within the market, allowing ANBs to tailor their services to suit particular types of dispute.

This increase in diversity has not been reflected in the backgrounds of the various adjudicators. The two most popular disciplines remain lawyers and quantity surveyors, accounting for 43% and 35% respectively. The rise to prominence of lawyer-adjudicators is illustrative of the evolution of adjudication into its current quasi-judicial form. The recent decline in quantity surveyors acting as adjudicators appears to have levelled out.

Of the 18 ANBs surveyed, 14 required that their adjudicators keep a formal training log, which tracks the Continuing Professional Development (CPD) activity that the adjudicator undertakes over the course of the year. This is an increase on the previous year, which may reflect a recognition of the importance of adjudicator training and monitoring of standards.

This year’s figures for complaints continue to indicate that the vast majority are dismissed. In all, 22 complaints were made to ANBs with only two of these upheld. This remains consistent with last year, when only one of 32 complaints was upheld. These figures could suggest complaints were spurious; or that they were concerned with the result rather than the adjudicator’s conduct; or that the ANB complaints processes are not robust. Some ANBs refused to provide information as to the subject matter of the complaints they received. From the information that was provided, it appears that complaints often relate to the jurisdiction of the adjudicator, and to fees.

The findings of this report demonstrate that adjudication continues to be a popular and reliable method of dispute resolution in the construction industry. It seems now to be at a settled point in its evolution and continues to enjoy the support of the courts. This will be important in the months to come, given the likelihood of an increase in the number of construction disputes in 2021. Equally, it is important that ANBs focus on enhancing their vetting and training of panel adjudicators, to ensure that confidence in the process is maintained.