Adjudication Agreement (B136)

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Who can use this contract?

When there is a dispute between two parties to a contract, and they want to resolve it by adjudication, this Appointment of an Adjudicator provides a suitable template.

What is this contract for?

Adjudication is a way of resolving disputes without going through the cost and lengthy formalities of court proceedings.

Under a law passed in 1996, any party to a construction contract has the right to require that a dispute is referred to adjudication before being dealt with by the courts or arbitration. The adjudication procedure for construction disputes is laid down in the law and the basic rule is that an independent adjudicator will reach a decision within 28 days from the date the cases referred to him/her.

But adjudication can be used for disputes other than construction.

Other ways of avoiding court proceedings can include mediation where the parties will try to reach agreement with the help of the mediator rather than having a decision imposed on them. We have a form of appointment of a mediator, document A130.  We also have free guidance on alternative dispute resolution

What are the main issues?

 Scope of appointment.   Our template appointment of an adjudicator assumes that the adjudicator appointed under this agreement will deal with any disputes that the parties to the contract referred to him/her.  It is perhaps more common for an adjudicator to be appointed for a single dispute. In that case, the scope of the dispute needs to be identified.

Adjudication procedure.  This will set out the basic rules for the adjudication – documentation to be supplied and timing including the time within which the adjudicator will issue a decision.  The adjudicator will usually be given some discretion on how to run the adjudication. Also, the adjudicator may or may not be required to give reasons for the decision.

Adjudicator’s fees and expenses. These will be specified in the appointment as well the responsibility of the parties for payment.  Usually they will share the costs equally but the adjudicator may be empowered to say, in their decision, whether the costs will be apportioned in a different way.

What detailed terms does the contract contain?

The main points cover:

  • appointment
  • adjudication procedure
  • fees and payment
  • liability
  • confidentiality
  • termination
  • notices
  • law and language

A schedule is included, allowing parties to detail the adjudicator’s fees and expenses.

You need this document if you are a party to a disputed contract, and want to appoint an adjudicator to address disputes.

For more information on each of these sections, see our Explanatory Notes below which you will also receive when you download the document from our website.

For information on signing documents see our Contract Signing page

When I download the document, can I change it and/or use it more than once?

Yes, all ContractStore’s templates are in MS Word and you can use the contract on more than one project. For more information, watch the video on this page of our website or see our FAQs

Legal support

ContractStore supplies templates and is not a law firm.  But experienced lawyers write all our templates, so we can arrange legal assistance for customers who need special terms in one of our documents or a bespoke template. . For more information see our Legal Services page.  For more information see our Legal Services page.

Contract Author – Giles Dixon

And if you want to contact us see our Contacts page.

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Explanatory Notes

This Agreement is intended for use where two Parties, A and B, have entered into a contract which contains a provision that any dispute between them will be referred to adjudication and they have decided to appoint an adjudicator for the life of the contract, before any dispute between them has arisen.  The Adjudicator will usually be appointed after the contract to which it refers has been signed.

Adjudication is a process where a dispute between two Parties to a contract is referred to an independent third party, the Adjudicator, for a decision.  That decision will be binding on the Parties but if either of them is not satisfied with the Adjudicator’s decision, the contract will usually provide for the dispute to be finally settled either by arbitration or by the courts.  Adjudication is not a procedure which has any precise legal definition.  However, adjudication is distinguished from arbitration in that it is a summary procedure and usually, as with this Agreement, the Adjudicator is required to issue his decision within a short period.   In this Agreement, we have provided for 28 days.

The process of adjudication has some statutory force in England in relation to construction contracts: since 1998, parties to a construction contract in England have had a statutory right to require that any dispute is referred to adjudication.  The underlying objective is to enable a rapid interim decision on any dispute to be obtained during the course of the contract: court procedures and arbitration tend to involve months, if not years, of process before a decision is reached.  Adjudication therefore offers an interim solution as the project progresses.  The Adjudicator’s decision will usually be open to challenge unless the contract expressly states that after a specified period, if neither Party has given notice of dissatisfaction, the decision will be final and binding.

Turning to the specific clauses of this Agreement:

1. APPOINTMENT

This clause establishes the appointment of the Adjudicator and its duration.  If the contract is for a fixed period, the clause appointing the Adjudicator should specify when his appointment comes to an end.  If the contract does not clarify this point, then so long as either Party may have a liability to the other under the contract – under English law this could be as long as 6 or 12 years – any disputes might still be subject to the adjudication agreement.
2. ADJUDICATION PROCEDURE

This clause, in 2.1, allows either Party to refer any dispute to the Adjudicator.  The reference must contain details of the dispute and the matters on which the Adjudicator’s decision is requested.   The reference is sent both to the Adjudicator and to the other Party and the other Party then has time in which to respond.

The Adjudicator is given freedom as to how to handle the adjudication, provided that he issues his decision within the time specified in this clause – 28 days, unless this is varied either by the Party making the reference, or by agreement between the two Parties.  These time periods are compatible with English law on adjudication relation to construction contracts.

Since adjudication is a short process, the Adjudicator may issue his decision based on the information given to him or, if he so decides, he may want a meeting with the Parties to give each of them an opportunity to present its case.

When issuing his decision, the clause states that the Adjudicator need not give reasons unless one of the Parties requires him to do so.

3. FEES & PAYMENT

The basis upon which the Adjudicator’s fees are to be calculated are to be contained in a Schedule.  This will usually involve either a daily or an hourly rate for the time which he spends on the adjudication.  Since the Adjudicator is being retained to handle all disputes arising out of the contract between A and B, he may require a retainer in addition to fees for time spent on each adjudication which is referred to him.   See commentary under the Schedule below.

The clause provides for the Adjudicator to issue his invoices after his decision but in a case where the decision period is extended beyond 28 days there is scope for him to issue interim invoices.

This clause makes it clear that A and B will be responsible for paying the Adjudicator’s fees and expenses in equal shares.  If either of them fails to do so, then the other will have this responsibility and can then recover the amount which he pays from the Party in default.

4. LIABILITY

It is usual for an Adjudicator to be exempted from any liability and to be protected from any third party claims and the wording is designed to achieve this.
5. TERMINATION

This clause allows both Parties, together, to terminate the Adjudicator’s appointment at any time.  Similarly, the Adjudicator has the right to terminate his appointment.

6. NOTICES

It is usual to specify that notices must be in writing.  This clause also emphasises the fact that documents being sent by a Party to the Adjudicator or by the Adjudicator to one of the Parties, will be copied to the other Party at the same time.

7. LAW & LANGUAGE

The law governing the adjudication will normally be the same as the law governing the contract to which the adjudication relates.  The language will also usually be the same as the language of that contract.

SCHEDULE

The Schedule sets out the basis upon which the Adjudicator’s fees will be calculated. The opening paragraph contemplates the possibility of a retainer being paid, either a ‘one-off’ fee or a periodic payment for the duration of the appointment.  For each dispute referred to him, whether or not there is a retainer, the hourly basis is provided for here.  The Schedule also deals with travelling time which may or may not be paid for at the full hourly rate.

The Schedule also refers to some of the expenses which will be reimbursable.  It is unlikely that the adjudication process will involve substantial travel, but if this is a possibility, it is sensible to agree in advance on such matters of detail as the class of air travel which the Parties are prepared to reimburse.