This question requires consideration of whether or not the adjudication provided for in the UK by Ss 108 and 114 of the Housing Grants, Construction and Regeneration Act 1996 (“the act”) is a form of arbitration or a form of Alternative Dispute Resolution. This will be achieved by considering the contents of s108 and s114 and then considers what ADR and Arbitration are in order to determine what category these sections fall into. The second part of the paper will then consider if adjudication under the act is a form of arbitration whether or not it would fall within the scope of the Arbitration Act 1996. It will be concluded that adjudication under the act is more akin to arbitration; however it would not necessarily fall within the scope of the Arbitration Act 1996.
Section 108 of the of the Housing Grants Construction and Regeneration Act 1996 confers a right to adjudicate on each party and in the event that a contract fails to provide s 108-compliant procedures for adjudication, then by s 114 the rules set out in the Scheme will apply and take effect as implied terms. Some of the main features of s108 are that it provides a timetable with the object of securing the appointment of the adjudicator and referral of the dispute to him/her within seven days of notice of intention to refer the dispute to adjudication; requires that the adjudicator reach a decision within 28 days of that referral, permits the adjudicator to extend that period for up to 14 days, permit the adjudicator to take the initiative in ascertaining the facts and the law; provides that adjudicator’s decision is binding until the dispute is determined by another means such as proceedings or arbitration and states that the adjudicator will not be liable for anything that he does or omits to do unless this is in bad faith.
A good starting point for the discussion as to whether or not adjudication is ADR or Arbitration is to consider the case of Cape Durasteel Ltd v Rosser and Russell Building Services in which the the court considered the issue of the cross over between arbitration and adjudication and held that use of word adjudication would not be decisive as to whether a binding agreement would be created and that the test to be used was whether or not the agreement to refer the dispute had essential features of an arbitration agreement. This therefore raises the question as to whether or not s108 of the Act contains the essential features of an arbitration agreement.
Arbitration can be understood to be the settlement of dispute by an independent third party, the arbitrator, rather than by a court of law. This is similar of course to adjudication as we have discussed above. In addition the term, “other than by the court of law” would seem to suggest that it stands apart from litigation, as does adjudication. Arbitration has also been described as “the resolution of a dispute between two parties through a voluntary or contractually required hearing and determination by an impartial third party. ” This definition sets adjudication apart from arbitration, this is because as discussed adjudication is not voluntary. Both arbitration and adjudication share features of litigation such as the filing of processes; taking of evidence; use of laid down laws and procedures; and the delivery of (temporarily) final decision by the panel. Arbitration has been described as “the litigation of a dispute before an arbitrator rather than a judge”, could this not equally be the case with adjudication but with an adjudicator rather than a judge.
The main distinction that can be made between adjudication and arbitration is that arbitration will lead to a binding and enforceable award whereas, as we have seen above, adjudication only leads to a decision which is temporarily final, although it is immediately enforceable. Another difference between arbitration and adjudication is that parties have to agree to arbitrate whereas under adjudication this is not the case, and one party can effectively force another party to go to adjudication. Despite these distinctions it would appear that arbitration much more similar to adjudication than other informal processes of ADR as will be seen from the discussion below.
There are many ADR processes and therefore it is difficult to define exactly what the ADR process is. Alternative Dispute Resolution (ADR) has been described by CEDER as “a body of dispute resolution techniques which avoid the inflexibility of litigation and focus instead on enabling the parties to achieve a better or similar result, with the minimum of direct and indirect cost.”Under this definition CEDR include adjudication as a form of ADR. Equally NADR describe adjudication as a type of ADR: stating that the “principle forms of ADR are adjudication, arbitration, conciliation and mediation”. That said both definitions encompass arbitration as a form of ADR as well.
This next section of the paper will now consider some of the elements of the Arbitration Act 1996. The Arbitration Act 1996 sets out the rules and procedures that are to be followed in arbitrations. and whether or not the key features outlined would mean that adjudication under the act could fall to be considered under the Arbitration Act 1996. The Arbitration Act 1996 contains three distinctive sets of rules there are those that are mandatory, those that are default and those that are optional. Mandatory rules include rules on the immunity of the arbitrator, appeals provisions, and duties of the parties, enforcement and the liability of parties for the arbitrators and other associated fees. Default provisions include security for costs, directions in relation to inspection of documents and witnesses, default provisions will apply in the absence of the parties agreeing provisions. Finally optional provisions include provisions relating to interim measures including payments. In determining whether or not adjudication would fall to be considered under the act, consideration should be given to the mandatory provisions of the Act.
One of the main differences under the act, as described above, is the final nature of the awards. The Arbitration Act 1996 provides at section 68 allows awards to be challenged, however there are very few challenges to arbitral awards as the only basis on which decisions can be challenged is either substantial injustice and serious irregularity. However there exists a number of similarities for example both procedures require that a notice should be given for either the intention to arbitrate and the intention to adjudicate respectively. Both procedures allow for the adjudicator or the arbitrator to make decisions on facts and law and both require the adjudicator/arbitrator to act impartially. In addition both procedures permit the parties to chose the decision maker or to appoint them from a recognised body. Both adjudicators and arbitrators have a number of powers in common and these include the power to require the parties to provide documentation, to appoint experts and to set the timetable. In addition the Courts in adjudication, as with arbitration are required to uphold the adjudicator’s decisions and will generally not go beyond that decision even if it is wrong or there is an obvious error. The courts are required to be satisfied that the adjudicator did not act outside of his jurisdiction. This said it is still very different from arbitration is that the decision can be challenged and it is not a final decision and thus an issue can be re determined by the court. Like arbitration if the adjudicator’s decision is not complied with then it is necessary to issue court proceedings and there is an expedited court process that provides for a speedy judgment without a need for a trial. Judgment is usually granted provided the adjudicator has acted within his jurisdiction, this is a very similar process to the Arbitration Act 1996. Also in common with arbitration the adjudicators fee is generally shared as between the parties, and the issue of legal costs, although normally explicitly stated in the contract, are generally borne by the individuals, unlike court costs where the loser pays.
Therefore in can be concluded that adjudication under the act is more similar to arbitration than it is the informal processes that make up ADR. However the question of whether or not adjudication could be considered to be within the scope of the Arbitration Act 1996 has to be answered negatively. Despite the fact that there are a number of similarities such as the process and decision-makers powers, there are some key differences which separate the two procedures. The first of these is that Arbitration under the Arbitration Act 1996 is entirely voluntary and requires the consent of both the parties, as we have discussed this is not the case with adjudication under the act. These are namely that adjudication decisions can be fairly easily reviewed by the court whereas under the Arbitration Act 1996 this is much more difficult, and requires detailed consideration by the court. Akin to this the other main difference is that adjudication decisions are not final whereas Arbitration decisions almost certainly are.
Cape Durasteel Ltd v Rosser and Russell Building Services (1995) 46 Con LR 75
Arbitration Act 1996
Housing Grants, Construction and Regeneration Act 1996
J Purdie, ‘Challenging an Arbitration Award’ (2009) New Law Journal 159 27
K Salmon, ‘The Enforcement of Adjudicators Awards Under the Housing Grant Construction and Regeneration Act 1996: Part 26’ (2008) Arbitration 74(1) 87-94
W Fox “ International Commercial Agreements: A premier on Drafting, Negotiating and Resolving Disputes (1998)The Hague: Kluwer Law International
E Hinkelman ,Dictionary of International Trade, (2000) 4th edition, World Trade Press,
The Oxford Dictionary for International Business, Oxford University Press
 K Salmon, ‘The Enforcement of Adjudicators Awards Under the Housing Grant Construction and Regeneration Act 1996: Part 26’ (2008) Arbitration 74(1) 87-94
 Cape Durasteel Ltd v Rosser and Russell Building Services (1995) 46 Con LR 75
 The Oxford Dictionary for International Business, Oxford University Press,
 E Hinkelman ,Dictionary of International Trade, (2000) 4th edition, World Trade Press,
 W Fox “ International Commercial Agreements: A premier on Drafting, Negotiating and Resolving Disputes (1998)The Hague: Kluwer Law International at p.91
 J Purdie, ‘Challenging an Arbitration Award’ (2009) New Law Journal 159 27