Adjudication and Administration: Do they mix?

The Housing Grants, Construction and Regeneration Act 1996 confers a right to adjudicate a construction dispute "at any time", a very valuable right which has led to our clients recovering money which, prior to the Act, they would have been unlikely to have done, largely because of the duration, time and cost of legal proceedings.

An issue which has arisen for consideration by the Courts is whether this right persists when the client company is in administration: an all too common occurrence at the moment. The difficulty is that the Insolvency Act provides that no legal proceedings "or other legal process" can be commenced against a company in administration without the leave of the administrator or the court. Such leave is rarely given.

The question for decision in the case was whether adjudication came within the definition of "other legal process" or whether it was a process equivalent to a valuer giving a certificate. The court concluded that adjudication was caught by the definition of "other legal process", which is disappointing as it limits a valuable and effective right.

For more information, please contact Mark Jones in Construction & Engineering.