Construction disputes: your options

When a disagreement becomes a dispute

A dispute can arise when a claim is rejected, expressly or by conduct. Silence may support that conclusion after a reasonable opportunity to consider and respond; it does not always establish a dispute immediately. That matters, because adjudication can only decide a dispute that already exists.

So put your claim in writing, with the sum and how you worked it out. Give the other party a fair time to reply, and keep every letter, email and notice.

Payment is a common source of construction disputes.

A payment may have been reduced by a pay less notice or withheld altogether. Other disputes concern undervalued or refused variations, contra-charges, delay damages, a final account assessed below your valuation or retention held beyond its release date.

For a practical way to assess the issues and evidence, see assessing and responding to a claim.

Negotiation: the first step

Negotiation can keep costs proportionate and give both sides control over a settlement. It may help preserve a relationship, but it does not guarantee agreement or stop separate deadlines running.

It works best when your claim is clear, priced and backed by records. Set out each item, the sum, the reason and the evidence. A Scott schedule, a table with both sides' figures side by side, keeps the talks on the items that matter.

Put any settlement in writing and check exactly what it releases before you sign. A full and final settlement can release more than the item being discussed, depending on its wording and context.

Adjudication: a binding decision in weeks

Section 108 of the Housing Grants, Construction and Regeneration Act 1996 provides a right to adjudicate disputes arising under construction contracts within its scope. Check the operations, parties and exclusions first; a contractual adjudication right may also be relevant. That Act is usually called the Construction Act.

An independent adjudicator decides the dispute, usually within 28 days of the referral. The adjudicator can take 14 more days if the party who referred it agrees, or longer if both sides agree.

The decision is generally binding until final resolution by agreement, arbitration or court. Enforcement and any challenge need advice on the decision and circumstances.

The adjudication follows a defined sequence.

The process starts with the notice of adjudication, which tells the other side what the dispute is and what you want. An adjudicator is then appointed, often by a nominating body named in the contract. Your referral notice, setting out the full case and evidence, follows within 7 days of the notice. The other side responds by the date the adjudicator sets, before the adjudicator issues the decision.

Each side usually pays its own costs, and the adjudicator decides who pays the adjudicator's fees.

Two kinds of payment adjudication

Payment disputes often go to adjudication in one of two ways. A notified-sum adjudication asks only whether the notified sum was paid. It does not ask what the work is worth.

A true-value adjudication asks what the work was actually worth. The Court of Appeal ruled on the order of the two in S&T (UK) Ltd v Grove Developments Ltd [2018] EWCA Civ 2448. The paying party must pay the notified sum first. Only then can it start a true value adjudication for the same payment.

Mediation: a helped negotiation

In mediation, an independent mediator helps both sides reach their own agreement. The mediator decides nothing.

Mediation is generally confidential, and a settlement requires agreement. Courts in England and Wales can require participation in mediation; agreeing a settlement remains your decision.

It suits disputes where both sides want a deal but cannot reach one alone, such as a large final account. If it fails, you can still adjudicate or go to court.

Arbitration: a private hearing

Arbitration is a private hearing before an arbitrator, whose award is final and binding. It applies only if your contract provides for it, or if both sides agree to it.

Its aim is set out in section 1 of the Arbitration Act 1996: a fair decision by an impartial tribunal, without unnecessary delay or cost. The courts can overturn an award only in narrow cases.

It usually takes longer and costs more than adjudication. Some JCT and NEC contracts offer it in place of court, so check which one your contract names.

Court: the last resort

Larger construction disputes that go to court in England and Wales are usually heard in the Technology and Construction Court. It is a specialist part of the High Court.

The Pre-Action Protocol for Construction and Engineering Disputes generally expects an exchange of positions and a meeting before proceedings. Exceptions include some adjudication enforcement proceedings. Court costs and timescales depend on the claim and procedure; a judgment may be subject to appeal.

This is the stage to have your solicitor act for you, if one is not already involved.

Which route to take

Start with a clear written claim and a reasonable opportunity to reply. Check urgent deadlines before choosing a route. Adjudication may offer a prompt decision where available; mediation may help parties reach a settlement. The contract, evidence, cost and outcome needed should guide the choice.

Above all, act before a time limit runs. Your contract may set deadlines for notices, and the law limits how long you have to start a claim at all.

The glossary explains the terms you will meet along the way.

Check residential-occupier applicability before assuming statutory adjudication is available. A solicitor should advise on disputed legal rights and proceedings.

A Claim viability review can help assess the evidence and proportionate next steps before committing to a formal process.