Pay now argue later

This article is all about Pay now argue later in the construction industry. This phrase is extensively used in connection with Adjudication.

Stravelles run a course in Adjudication which aims to allow the student to run their own adjudication as the referring or responding party without paying for legal representation.

We support legal representation in more complex cases but we want to encourage especially smaller companies to feel more confident fighting for their contractual rights.

Introduction to Pay now argue later

The expression ‘Pay now argue later’ was a term coined to describe the new construction dispute resolution process, Adjudication.

It refers to the fact that in Adjudication heavy emphasis is put on getting a final interim decision made within four weeks.

This means that a dispute over say payment can be made quickly perhaps at the expense of detailed argument, investigation and cross examination of the facts.

The advantages of adjudication are that its leads to a fast, cheap decision that is binding in the interim. The disadvantages are that it does not spend as much time investigating and cross challenging each argument as opposed to litigation.

Is Pay now argue later a fair Description of Adjudication?

Well no its not an entirely fair description, but lets look at why we think so:

The phrase when coined was not meant to disparage Adjudication but we feel it has been used as a weapon against it.

We feel that this term has been used inaccurately and unfairly in disparaging Adjudication. Its almost always used in tandem with the phrase ‘rough justice’. Any article on adjudication will tell you that as one of its disadvantages it is seen to be ‘pay now, argue later’/’rough justice’.

Its composition at first glance perhaps suggests that Argue/Argument can be taken to mean due process, justice, fair hearing.

So Pay now, argue later = Pay money now and you can get an actually fair hearing at a later date.

This suggests that justice is sacrificed for speed and that Adjudication gives you a rough and ready slice of justice. Which can be actually given proper thought by the courts process at a later date if required.

But that is unfair to adjudication. Just because the process is not as thorough as litigation is does mean the result is not good. For comparison, a computer has more computation power than a calculator but if you only need to know basic sums then the calculator is all you need. We don’t say ‘well your shopping budget is good on the calculator, now lets run the figures through the computer’. We don’t say ‘well your calculator has produced an interesting result but wait till the supercomputer gets his hands on it!’

The fact is, that most cases can be decided by Adjudication unless they are very complicated.

Who coined the term Pay now argue later?

It has been attributed to Lawyer Robert Fenwick Elliott.

It follows the review of the Report ‘Constructing the Team’ issued by Sir Michael Latham which proposed introducing Adjudication as a form of dispute resolution into construction contracts.

Lord Howie was tasked with creating this legislation and sought the advice of the Technology and Construction Solicitors’ Association (TeCSA) about how this adjudication process should work.

He was encouraged to ensure that Adjudication decisions were not final and binding as this would be challenged in the courts.

Instead the plan was to ensure Adjudication decisions were binding in the interim (they had to be complied with now) but could be challenged in the future through Arbitration or the Courts system.

The thinking was that if the losing party had to pay up now but could challenge later, upon reflection the losing party would not bother challenging the decision.

In reality this has played to be true. Most losing parties comply with the decision and don’t challenge the decision in Arbitration or the courts.

Adjudication is replacing litigation

There is a slow dawning of realisation that the courts process with its impressive courthouse and expensive barristers will not produce a much better result compared to Adjudication or say mediation.

In Adjudication, both parties have the opportunity to submit their arguments and the Adjudicator reviews these arguments.

The process has to by law take four weeks in total.

How long do both parties want or need to get their basic points across? Especially in small or medium sized projects where the facts are lets be honest, easy to understand.

This is why Adjudication and other forms of dispute resolution are replacing litigation. Most of the time, no party needs months of investigation or cross examination to get their argument across. Litigation encourages a ‘lets throw the kitchen sink at every possible argument’ mentality and this is why people increasingly don’t want to pay for litigation in terms of time or money.

Conclusion

The term Pay now argue later is not an accurate description of Adjudication. It was a term that was coined as Adjudication was being developed. Its like a nickname for a child still being used forty years later. Maybe its time to retire the phrase.

Both parties do argue extensively throughout the adjudication process through the referral document, the response document, rejoinders and surrejoinders.

There is plenty of argument put before the adjudicator.

And this argument leads to a decision which leads to compulsory compliance.

Yes, it is true that the parties can argue further later through Arbitration or Litigation but in most cases there is sufficient argument in Adjudication.

Sometimes we don’t need a clever phrase to describe a process when a sentence is more appropriate – Adjudication is ‘argue for four weeks and then pay, and then you can argue more if you like’.