In-House Brief: Adjudication of Subcontract Claims

stevenhunt4

Oct 5

3 min read

Professor Indrawansa Samaratunga

Steven Hunt of C&IDS

5 October 2026

We had many positive responses to our earlier paper, and some constructive comments. A number concerned how subcontract claims and disputes might benefit from adjudication. We have prepared a Practice Note on how adjudication would work under a Subcontract where the Main Contract provides for the adjudication of disputes upstream. Details of how to obtain a copy are at the end of this post.

The current reality, however, is that on the majority of UAE and GCC projects the Main Contract has no working adjudication, the Subcontract is drafted back-to-back, and payment is conditional on the Contractor being paid (“pay if paid” or “pay when paid”).

Even here, there is a compelling case for the parties to a subcontract to attempt to resolve their differences through adjudication of the Subcontract claim before the issues are elevated to the Main Contract, whether part or all of the claim is back-to-back. The adjudication would operate on two levels. Elements that cannot be attributed to the Employer, and so fall outside the Main Contract, would be decided on a (temporarily) binding basis. Back-to-back elements would not be binding: the purpose there is to frame the case to be presented under the Main Contract, with the Subcontractor’s entitlement then determined by the Main Contract outcome.

Why the Contractor should want it

No exposure on the back-to-back elements. There is no risk of being bound to pay downstream on an issue later lost upstream; the Subcontractor’s entitlement on those elements still follows the Main Contract outcome.
Bound only on its own risks. The binding part of the decision covers only matters that cannot be passed to the Employer, which are the Contractor’s responsibility in any event.
An inexpensive way to frame the upstream case. The Subcontractor’s records and quantum are set out and tested before anything is put to the Employer, giving the Contractor a ready-made foundation for its Main Contract claim.
A test run before elevation. An independent view tells the Contractor how strong the claim is before it commits time, cost and credibility upstream.
A cleaner claim upstream. Separating out the elements that are not the Employer’s responsibility removes a ready line of defence for the Employer and strengthens the credibility of what remains.

Why ad hoc Subcontract adjudication makes sense

Aligned interests. Both parties want the upstream claim to succeed; the process puts them on the same side before the Employer.
A clear dividing line. The parties go upstream with an independent view of which elements belong to the Main Contract and which do not.
Lower cost. Adjudication is quick and comparatively inexpensive, and the work done is reused in the Main Contract claim and any later proceedings.
Final forum preserved. The binding part of the decision binds only until final resolution, and the Subcontract’s agreed arbitration or court route remains available.

The Contractor is bound only on matters that are its own responsibility anyway and gains a tested claim to take to the Employer. The Subcontractor gains a prompt decision on everything outside the Main Contract, and a tested back-to-back claim that is actively progressed and properly presented, rather than one that waits indefinitely.

How to obtain the Practice Note

There is a strong case for adjudication at subcontract level, whether it is entirely ad hoc or feeds into adjudication under the Main Contract. "Practice Note: Subcontract Adjudication" is available to Steven's LinkedIn connections. If you are already connected with him, you will find it posted on his profile. If you are not, send him a connection request through his LinkedIn profile and he will send you a copy.