REUTERS | Neil Hall

Are the draft amendments to the Scheme a damp squib?

The draft amendments to the Scheme for Construction Contracts 1998 were published last week. Although they have been a long time coming, having now read them, I’m not sure it’s been worth the wait. They are, in my view, a “damp squib“.

The draft amendments have been published for consultation by the construction industry. Anyone who is interested in responding has until June to do so. I anticipate the usual industry bodies will prepare responses in much the same way as those same bodies prepared responses to the consultation on the Construction Act 1996, which led to the changes in Part 8 of the LDEDC Act 2009.

Adjudication amendments

The adjudication amendments fall into two categories:

  • Those that are consequential on the changes to the Construction Act 1996; and
  • Those that are described as “supplemental”, that is, they are amendments that an umbrella task group (the CUBATG and the CIC) consider to be necessary to “remove any ongoing uncertainty or lack of clarity”.

(There are also a number of proposed changes to payment, but I will leave those for another day.)

Consultation’s consequential proposals, questions 1-4

Apportioning fees and expenses (question 1). The consultation proposes that an adjudicator has an express power to apportion his fees and expenses between the parties. This already happens in practice, but I think it makes sense to expressly provide for it (or, put another way, I cannot see any harm in adjudicators having this express power).

The slip rule (questions 2-4). The consultation proposes a number of changes to allow an adjudicator to deal with slips. It suggests that:

  • They are dealt with within a 7-day time limit. On the one hand, this may provide certainty to the parties, but is it appropriate to have a time limit? I would prefer to see “within a reasonable time” or “as soon as practicable”.
  • The time for complying with the adjudicator’s decision should be delayed by 7 days (to 8 days after the decision is delivered). On balance, I don’t like the idea of stipulating a time period. I also think 8 days is too long. If the Scheme has to change, I prefer “forthwith” or “as soon as practicable”, which would take into account the particular circumstances of a case, such as if the adjudicator has amended his decision under the slip rule.

Consultation’s supplementary proposals, questions 8-12

These changes are said to be necessary to “remove any ongoing uncertainty or lack of clarity”. I’m not so sure.

Clarifying the meaning of 7 days (question 8). I don’t think paragraph 7(1) of the Scheme needs to be altered: 7 days from the date of the notice is clear in my mind.

If the referral was served from receipt of the notice by the adjudicator, or from the date of his appointment, as is suggested, this could result in the referral being served out-of-time under the Construction Act 1996 (section 108(2)(b)). It would defeat a timetable with the “…object of securing the appointment… and referral… within 7 days” of the notice.

Dealing with related disputes (question 9). I think the adjudicator should be allowed to consider and deal with more than one dispute under the contract, or related disputes, if one party refers those issues to him. The current restriction on this creates jurisdictional challenges, which is time consuming and expensive for the parties, especially if a court finds the adjudicator got it wrong, and acted without jurisdiction.

Confidentiality in adjudication (question 10). This was something of a surprise to read, not least because my last blog post was all about confidentiality in adjudication.

To date, I think the assumption has been that there is confidentiality in adjudication akin to the position in arbitration. However, whether the parties want their adjudication to be private and confidential may depend on the facts. Some may want to publicise, others not.

“Final and conclusive” certificates (question 11). If the scope of the issues that an adjudicator may consider is broadened, to include “final and conclusive” certificates, I can see no practical problems. In my view, the Scheme, as presently drafted, is restrictive and provides a way for some parties to avoid adjudication.

Awarding interest (question 12). I would welcome a statutory power to award interest, like arbitrators and the courts have. It would provide consistency across all forms of dispute resolution. This is important given that, nowadays, adjudication is used for the majority of construction industry disputes.

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