Is a clause requiring the referring party to pay both parties' adjudication costs enforceable?
A pre-dispute clause that makes the referring party bear both sides' legal or expert costs is generally ineffective under section 108A. Historic decisions reached different results before the statutory amendment took effect.
Apply section 108A first: a pre-notice Tolent clause allocating party costs is ineffective under the current regime
The older authorities disagreed on whether freedom of contract permitted a clause requiring the referring party to pay both parties' costs even after success. Section 108A now controls contractual allocation of adjudication costs. A party-cost agreement must be in writing after notice of intention to refer. A written term in the construction contract may separately empower the adjudicator to allocate the adjudicator's own fees and expenses. It does not validate a pre-notice transfer of the other party's legal and expert costs.
| Issue | Position |
|---|---|
| Pre-notice allocation of party costs | Ineffective under section 108A |
| Written party-cost agreement after notice | May be effective |
| Contract term on adjudicator's fees | May confer allocation power |
| Historic Tolent authority | Read subject to the statutory amendment |
| Clause deters referral | Do not apply without statutory analysis |
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