No doubt we’ve all now had enough of reading about the annus horribilis of 2016, so I’m not going to dwell on that. Rather I want to set out my 2017 construction law wish list.
A judgment dealing with the conflict between section 108A of the Construction Act 1996 and section 5A(2A) of the Late Payment of Commercial Debts (Interest) Act 1998
In August and September 2016, I wrote a couple of blogs about this issue (see Part 1 and Part 2), following the case of Lulu Construction Ltd v Mulalley & Co Ltd.
Based on the narrow interpretation of section 108A, unless the parties make an agreement concerning their costs after the issue of the notice of adjudication, the only effective contractual provision concerning the allocation of adjudication costs is one that allows the adjudicator to allocate his own fees as between the parties. Consequently, Tolent-type clauses are ineffective under section 108A. However, this appears to conflict with section 5A(2A) of the Late Payment Act 1998, which provides the supplier with a right to its reasonable debt recovery costs.
In Lulu, the adjudicator awarded debt recovery costs and the decision was enforced in the TCC. However, as I made clear in my blogs at the time, in my view Lulu is not authority for the proposition that a referring party can claim costs in an adjudication under the Late Payment Act 1998. The court simply found that the adjudicator had jurisdiction to award debt recovery costs as they were connected with and ancillary to the referred dispute. The judge did not consider the question of whether the adjudicator was right in law to award those costs.
This has led to a situation where referring parties seem to be relying on Lulu with abandon in an attempt to claim adjudication costs, and:
- It appears that some adjudicators are buying the argument.
- Other adjudicators are awarding adjudication costs without relying on Lulu.
- I’ve even heard of adjudicators awarding costs to purchasers, whereas the right to debt recovery costs only applies to suppliers.
- Other adjudicators are not awarding any costs on the ground that the provisions of the Late Payment Act 1998 take effect as implied terms in contracts and therefore fall foul of section 108A.
I appreciate that the only way to finally resolve the conflict will be in the form of Part 8 proceedings, rather than at an adjudication enforcement hearing. However, even obiter comments in an enforcement judgment would certainly help to clarify the position.
Use of the second edition of the SCL Delay and Disruption Protocol
The final version of the second edition of the protocol is yet to be published, but when it is (in early 2017), I would like to see parties taking heed of its provisions. Comment and/or approval by the TCC of its contents would also be very helpful, but that might be a wish too far!
Judicial support for adjudication in Ireland
To the best of my knowledge, we are yet to see an adjudicator’s decision come before the courts in Ireland, but it surely can’t be long before that happens. When it does, it is vital for the success of adjudication in Ireland that its courts are seen to support the process, just as the TCC did in the UK in Macob Civil Engineering v Morrison Construction.
Amendment of UAE Penal Code, Article 257
Many of you will be aware that the UAE has amended article 257 of its penal code such that it now reads:
“An expert, arbitrator or translator or investigator who is appointed by a judicial or an administrative authority or elected by the parties, and who issues a decision or expresses an opinion or submits a report or presents a cause or proves an incident, in favour of a person or against him, contrary to the duty of fairness and unbiasedness, shall be punished by temporary imprisonment.”
Don’t get me wrong, it is quite clearly a fundamental principle that an expert or arbitrator acts fairly and impartially when undertaking their roles, but imprisonment – really?
The UAE has fought hard to build its reputation as the “go to” centre of arbitration in the middle east, and unless article 257 is repealed or amended, I fear that arbitration in the UAE is going to become unattractive to parties, representatives, arbitrators and experts alike.
Avoiding a “post-truth” construction law era
Finally, I appreciate that I said that I wouldn’t dwell on 2016, but I think the post-truth phenomenon is worthy of a mention.
Adjudication is an adversarial process, and long may that remain. However, when presented with a factual rebuttal that quite clearly defeats a point hands down, I wish that parties wouldn’t simply ignore it and persevere. It is embarrassing and risks the adjudicator asking himself “do they think I’m stupid?”.
The best representatives know when to concede points, and pick their battles carefully.
Happy new year.