SOP adjudication

Adjudication is a process created by the SOP Act to resolve a disputed claim for payment or release of performance security under a construction contract. It can help resolve disputes quickly, fairly and at a lower cost than going to court.

An independent adjudicator receives written submissions from both sides of the dispute, conducts inspections or conferences where necessary, and decides the amount, if any, due in respect of a progress payment claim or performance security claim made under the SOP Act.

The adjudicator has 10 business days after accepting a nomination or after the date the respondent may lodge an adjudication response to determine what amount (if any) the respondent should pay or release, and when. The adjudicator’s deadline can be extended by a further time, not exceeding 20 business days after that period. The decision is interim and does not affect the parties' rights and obligations under their contract.

Selecting an Authorised Nominating Authority

An adjudicator must be nominated by an Authorised Nominating Authority (ANA) – an organisation that is authorised by the BPC to nominate adjudicators under the SOP Act.

ANAs receive adjudication applications, nominate adjudicators and administer the adjudication process. They are required to ensure that the adjudicators they nominate are properly trained and qualified, and comply with professional standards of conduct.

The relevant construction contract may include a list of ANAs that may be used in the event of a payment dispute. If the contract lists three or more ANAs, the claimant must choose one of them. If it specifies fewer than three, or none at all, the claimant may select any ANA listed on Authorised Nominating Authorities (ANAs).

Adjudication standards

The adjudicator must have relevant educational qualifications and substantial experience in the administration, management and supervision of construction contracts or in dispute resolution relating to construction contracts.

In conducting the adjudication, the adjudicator must be fair and act independently. An adjudicator cannot accept an adjudication application if doing so would create any actual or likely conflict of interest, or any perception of conflict of interest or bias on their part.

The Adjudicator Standards of Conduct and Adjudicator Core Competencies that apply to all adjudicators nominated under the SOP Act are included in the Authorised Nominating Authorities Conditions of Authorisation.

Any complaints about an adjudicator should be referred to the ANA.

The adjudication process

The claimant lodges an adjudication application with the ANA, which refers it to an adjudicator as soon as possible. The adjudicator notifies the parties that the application has been accepted. If the adjudicator does not notify them within 4 business days after the application was received by the adjudicator, the claimant can withdraw the application by giving the adjudicator and the ANA a notice. The claimant can make a new application within 5 business days after becoming entitled to withdraw the application.

The claimant must serve a copy of the application on the respondent within 3 business days after it is lodged with the ANA. The respondent has up to 5 business days after receiving the application to serve on the adjudicator a written response (or 2 business days after the adjudicator accepts the application – whichever is later). However, the respondent can only do so if they have given the claimant a payment schedule or performance security schedule. The respondent must serve a copy of the adjudication response on the claimant within 3 business days of lodging it with the adjudicator.

The adjudicator has 10 business days after accepting a nomination or after the date the respondent may lodge an adjudication response to determine what amount (if any) the respondent should pay or release, and when. The adjudicator’s deadline can be extended by a further time, not exceeding 20 business days after that period. In conducting the adjudication, the adjudicator may do any of the following things:

• request further written submissions from either party, in which case the other party must be given an opportunity to comment on those submissions
• set deadlines for further submissions and comments by the parties
• call a conference, which must be conducted informally – legal representation is not allowed unless the adjudicator permits it
• carry out an inspection of any matter to which the payment claim relates.

The adjudicator must notify any relevant principal, and any other person identified as having a financial or contractual interest, about the adjudication application.

At the completion of the process, the adjudicator determines the amount (if any) that the respondent must pay or release to the claimant, when it is to be paid or released, and the rate of interest payable. The determination is given to the ANA, which gives a copy to the parties as soon as practicable.

For adjudications of performance security claims, the adjudicator must be satisfied that all or the relevant part of the obligations secured by the performance security have been performed by the claimant or the performance security is due for release in accordance with the construction contract.

An adjudicator may require the full payment of their fee before releasing their determination.

Applying for adjudication

When to apply

Claimants may apply for adjudication when they have served a payment claim or performance security claim on a respondent and, as a result, one of the following circumstances has arisen:

1. The respondent provides a payment schedule or performance security schedule showing that the amount they propose to pay or release is less than the amount claimed on the payment claim or performance security claim.
   • The claimant can apply for adjudication under section 18(1)(a)(i) or section 18A(1)(a)(i) of the SOP Act.
   • The claimant has 10 business days after receiving the schedule to apply.
2. The respondent provides a payment schedule or performance security schedule but does not pay or release any or all of the amount it proposes to pay or release when it is due.
   • The claimant can apply for adjudication under section 18(1)(a)(ii) or section 18A(1)(a)(ii) of the SOP Act.
   • The claimant has 10 business days after the due date for payment or release to apply.
3. The respondent fails to provide a payment schedule or performance security schedule and fails to pay or release any or all of the amount claimed by the claimant when it is due.
   • The claimant can apply for adjudication under section 18(1)(b) or section 18A(1)(b) of the SOP Act.
   • The claimant has 10 business days after the due date for payment or release to notify the respondent that they intend to apply.
   • A claimant can only apply under section 18(1)(b) or section 18A(1)(b) if they provide the respondent with a section 18(2) notice or section 18A(2) notice (as applicable).

Resource material

How to apply

The claimant applies for adjudication by lodging an application with an Authorised Nominating Authority (ANA). Applications are managed by ANAs and each ANA has an application form available on its website. Claimant’s should contact an ANA for assistance with the application process.

Both the claimant and the respondent will be notified within 4 business days of an adjudicator receiving the application. If they have not been notified by then, the claimant may withdraw the application (by giving the ANA and adjudicator a notice in writing) and make a new one. Any new application must be made within 5 business days of the missed deadline.

Required information

The application must:

• be in writing
• identify the payment claim and the payment schedule (if any) to which it relates, or the performance security claim and performance security schedule (if any) to which it relates
• be accompanied by any application fee charged by the ANA.

Additional information

The claimant may make submissions that are relevant to the application, including the reasons for disagreeing with the payment schedule or performance security schedule.

Copies of documents that the claimant wants the adjudicator to take into consideration should be attached. As a guide, the following information is relevant to all adjudication applications:

• the construction contract under which the claimant did the work or supplied the goods or services
• the payment claim and/or performance security claim
• the payment schedule and/or performance security schedule
• evidence of the work done or goods or services supplied, such as invoices from suppliers, measurements, test results, quality assurance certificates and expert reports.

Serving a copy of the application on the respondent

A copy of the application, including the attachments, must be served on the respondent no later than 3 business days after the application is lodged with the ANA.

The respondent’s copy of the application can be served in the manner (if any) required by the construction contract. In any other case, it can be served by one of the following means:

• by delivering it in person
• by leaving it at the respondent’s ordinary place of business
• by posting it to the respondent’s ordinary place of business
• in any manner instructed by the respondent as being an acceptable manner for service.

For more information