Construction: What is Crystallisation and what does it mean?

This relates to disputes that arise between parties in respect of a construction contract. Before a party is able to issue a notice to adjudicate, the dispute has to be ‘crystallised’

If the dispute is not crystallised, then that party may have no right to issue an adjudication.

So, what does it actually mean?

What is ‘Crystallisation’?

Essentially, this means that there must be a dispute, a claim must have been made and the claim is
not admitted/disputed.

For a claim to be made, you are required to:

  • Set out your claim in writing (and send this to the intended respondent);
  • Ensure the claim is easily understood and clear;
  • Clearly detail what is being sought;
  • Highlight the basis for your claim

Why is crystallisation so important?

Crystallisation of a dispute is extremely important as the Courts can refuse to enforce decisions from adjudications if the notice to adjudicate has been served before a dispute has actually crystallised. That is to say, where one party formally presents the claim and the other party disputes the claim.

As adjudications can incur significant costs, then costs may have been incurred unnecessarily if it then transpires that the decision is unenforceable.

It sounds pretty straightforward…

The case law surrounding disputes and whether they have crystallised can be complex. Please do not hesitate to contact us should you wish to discuss the facts of your claim and we can provide specific advice tailored to your matter.

Someone has issued an adjudication against me but the dispute has not crystallised – what can I do?

It is not always the case that a decision becomes unenforceable due to the claim not being set out as above and the outcomes can differ on a case to case basis, dependant on the facts.

However, if you do find yourself in a situation where you do not consider the dispute to have sufficiently crystallised, then the jurisdiction of the adjudicator would need to be challenged as soon as possible and you would need to reserve your position in respect of jurisdictional challenges.

If jurisdiction is not challenged at the earliest opportunity, then this would make it more difficult to challenge any decision at the enforcement stage.

What if there is more than one dispute set out in my claim?

Parties can only issue a notice to adjudicate in respect of one dispute, the notice cannot include multiple disputes.

Should you have multiple disputes then these may need to be dealt with in separate adjudications, depending on the facts of the matter.

Points to note:

  1. It is so important to keep a good record of all documentation where you have detailed the claim and where the claim has not been admitted as you may need to rely on this should crystallisation ever come into question, whether during adjudication proceedings or at the enforcement stage.
  2. Set out your claim clearly.
  3. State your reasons clearly for any dispute.
  4. Seek advice on multiple disputes.

Case Study

In one particular case, Party A issued an adjudication against Party B and the Adjudicator’s decision was awarded in favour of Party A. As such, Party B believed they had a claim against Party C a result of this decision against them. Party B simply issued an adjudication against Party C for loss under the contract and believed that the claim was crystallised because they had provided a copy of the Adjudicator’s decision. The Claim was NOT in fact crystallised in this case as Party B did not set out the full claim and why they considered Party C responsible for the said losses contained within the decision.

Should you have any queries, or wish to discuss construction disputes in further detail, please do not hesitate to contact Rashmi Dubé or Siobhan Dexter on (+44) 1133021330 (Leeds) / (+44) 20 787 32279 (London). Alternatively, you can email rashmi@legatuslaw.com or siobhan@legatuslaw.com. More information can be found at www.legatuslaw.com