Practical Law

What is a protocol referee?

That was the question I asked myself when I saw the agenda for the launch of the new pre-action protocol for construction and engineering disputes and the referee procedure on 2 November. On arrival, I saw the new protocol on which Caroline Pope has commented. I then heard a presentation from Simon Tolson and Alexander Nissen QC, with a summing up by Coulson J.

I now know what the referee is required to do but it remains to be seen how the scheme will operate in practice. It has no parallels in other protocols applicable under the Civil Procedure Rules.

Protocol referee procedure

The essence of the referee system is that it is consensual. It is intended to enable directions to be given during the course of the pre-action protocol procedure. Coulson J said that this is not a task that could be undertaken by the judiciary, both on the grounds of cost and a lack of jurisdiction where no proceedings have been issued. Therefore, the process has been privatised.

If the parties agree to engage the referee, they can apply to the chairman of the
Technology and Construction Solicitors Association (TeCSA) for nomination and appointment of a referee. TeCSA and the Technology and Construction Bar Association (TECBAR) will maintain lists for this purpose and nominations will be made alternately from each list. The application fee is £3,500 plus VAT.

The procedure provides for the applicant to give (with its application) brief details of the directions it seeks on no more than four sides of A4 paper. If the nominated referee accepts the appointment, there is provision for the respondent’s reply within five working days of the notice of appointment (also on no more than four sides of A4 paper) and a reply within two working days thereafter (this time, on no more than two sides of A4 paper).

The referee is to reach a written decision no later than 10 working days after receipt of the notice of appointment, although the parties (but not the referee) can agree to extend this. The referee can give directions for future conduct of the protocol process, find whether there has been non-compliance with the protocol and, if so, whether that non-compliance demonstrates a flagrant or significant disregard for the terms of the protocol.

The referee’s decision is binding on the parties and must be complied with until the dispute is determined by legal proceedings or agreement between the parties.

But how will it work in practice?

If one party is recalcitrant in operation of the pre-action procedure then, presumably, that party will not agree to the appointment of a referee and will, instead, take its chance on costs later on.

If parties disagree as to the progress of the protocol (for example, as to the extent of information to be provided) then both may see advantages in the referee giving a decision. However, will the referee be minded to act where the parties have effectively complied with the spirit, if not the letter, of the protocol? There is a hint in the procedure that the referee’s intervention may only be required where disregard for the terms of the protocol is “flagrant or significant”. (This is a theme that is used in the protocol itself, when the court looks at whether a party has complied and whether it is appropriate to impose costs consequences for non-compliance.)

How easy will it be to find referees?

It is a small world in construction litigation and the referee must give a declaration as to “Conflicts, Independence and Impartiality” before taking on the role. This declaration states that the referee is unaware of any conflict of interest that may give rise to “any real or perceived bias“. It also requires details of the approximate percentage of the referee’s total income for the previous three-year period that has resulted from repeat appointments for one or more of the parties or their affiliates.

This applies when those appointments are as a referee, adjudicator, arbitrator or instructing solicitor or counsel. There may be some reluctance to disclose such information and, in practice, conflicts of interest (and this declaration) may reduce the pool of referees, especially where the parties are major organisations.

The £3,500 plus VAT flat fee may also be substantial for small cases or somewhat unrewarding for large cases, particularly where the latter require intensive consideration of papers within a very short time period. It is paid by the applicant up-front, although the referee can direct that the respondent reimburses it to the applicant. In any subsequent court proceedings, it becomes costs in the case.

How will the referee’s decision be viewed in subsequent proceedings?

The procedure says that the court must give due weight to the referee’s decision but is not bound by it. This may lead to satellite litigation, effectively amounting to a review of the referee’s decision.

Overall, this is a bold step by those responsible for drafting the new protocol and the referee procedure. In practice, if it results in the protocol process running more smoothly then it may be seen as a template for other protocols, although it may be that in courts where Masters are available (which is not the case in the TCC) the referee role may be undertaken by them, if the cost and jurisdiction issues as above can be overcome.