Taken From: http://www.legalrss.uk/

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The latest position on adjudication cost awards in construction disputes

Most disputes in construction are resolved through adjudication. Disputes are referred to an independent adjudicator, who makes a binding decision within a period of 28 days unless this short time is extended.

Even though the disputes can range in value from the tens of thousands to the millions of pounds, the legal costs of pursuing an adjudication are not normally recoverable from the losing party.
Recently there has been a flurry of interest in amendments made to the Late Payment of Commercial Debts (Interest) Act 1998. A new section 5A(2A) created an entitlement to recover the costs of recovering a debt where the contract does not provide for a ‘substantial remedy’ for late payment already. This has resulted in some adjudicators starting to award the costs of the adjudication.  In the TCC case of Lulu Construction Ltd v Mulalley & Co Ltd [2016] EWHC 1852 (TCC) such an adjudication decision was enforced.
This development is unlikely to affect all cases: for example, where standard form contracts have used the normal debt interest rate, which has already been held to be a ‘substantial remedy’. Additionally, the TCC has endorsed the traditional approach to adjudication costs in a subsequent case, albeit in a different context. 
In other words, plenty of grey areas and potential for legal argument remain and will do so until further guidance is published.


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