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Limitation period, how does it relate to adjudication?

Limitation period, how does it relate to adjudication.

Adjudication is the legal process adopted to resolve disputes without having to go through an expensive and lengthy Court procedure. Introduced in 1998 by the Housing Grants, Construction and Regeneration Act 1996 adjudication offers a quick and straightforward way of resolving disputes arising out of construction contracts. Adjudication is an attractive option to many parties as decisions are made within 28 days and there is no limit to the value of the dispute. The decision made in adjudication proceedings is binding on the parties unless and until challenged in Court or arbitration.

Limitation periods are the amount of time that a party has to challenge the decision made by the Adjudicator upon completion of the adjudication. Akenhead J decided that these limitation periods would apply in the recent case of Aspect Contracts (Asbestos) Ltd v Higgins Construction Plc [2013] EWHC 1322 (TCC).  In 2004 Aspect Contracts did not report the full extent of asbestos in a building, this was discovered by Higgins Construction in 2005 when additional asbestos containing materials were discovered which had not been referred to in the report.  It was the 4½ years later in 2009 when Higgins issued adjudication proceedings.  The adjudication concluded that Aspect were to pay damages to Higgins in the sum of £658,017.

In 2012 Aspect started proceedings for “a final and binding resolution of a dispute which was referred to adjudication” and a declaration that it was not liable to pay damages to Higgins. Aspect stated that there was an implied term in the contract that an unsuccessful party in adjudication is entitled to have the dispute resolved by litigation and, if successful, recover any monies paid out. The issue the Court was faced with was does the original limitation period apply (6 years) or does it start again once the monies had been paid to Higgins.

It was decided in this case that the limitation period does not restart upon payment.  The main point to note is if you are unhappy with an adjudication decision to issue proceedings or raise a counter claim to challenge and overturn the decision as quickly as possible. Aspect could have made a claim for negative declaration at any point not just when a decision had been decided.

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