Adjudication

Section 108 of the Housing Grants, Construction and Regeneration Act 1996 gives a party to a construction contract "the right to refer a dispute arising under the contract for adjudication under a procedure complying with this section". A compliant contractual procedure must enable a party to give notice of intention to refer a dispute at any time, secure the appointment of an adjudicator and referral of the dispute within 7 days of that notice, require the adjudicator to reach a decision within 28 days of referral (extendable by up to 14 days with the referring party's consent, or longer if all parties agree), impose a duty on the adjudicator to act impartially, and allow the adjudicator to take the initiative in ascertaining the facts and the law.

Critically, the contract must provide that the adjudicator's decision is binding until the dispute is finally determined by litigation, arbitration (where the contract provides for it), or agreement between the parties — meaning adjudication produces a temporarily binding, 'pay now, argue later' outcome rather than a final resolution, unless the parties separately agree to treat it as final. Where a construction contract does not comply with section 108, the statutory Scheme for Construction Contracts applies in its place. The adjudicator is protected from liability for anything done or omitted in the discharge of the adjudicator's functions, unless done in bad faith.

The provisions apply to England, Wales and Scotland (with Scotland having additional provision for court enforcement powers), and the Act underpins the widely used industry Scheme for construction disputes.