REUTERS | Stephen Hird

The Pre-Action Protocol for Construction and Engineering Disputes: what do users really think?

Amid speculation that the Pre-Action Protocol for Construction and Engineering Disputes (Protocol) might be abandoned, or made voluntary, by the Civil Procedure Rule Committee, the TeCSA committee (on which I sit) felt that it was important to obtain the industry’s views, to inform the debate on the Protocol’s effectiveness. As Simon Tolson, retiring chairman of TeCSA, told its members, TeCSA “decided to undertake a detailed study obtaining views from not just solicitor specialists but from across the industry”. TeCSA sponsored a major piece of research, carried out by an independent company on its behalf, to evaluate the perceived value of the Protocol.The final report was published last week.

The final report

This is the most comprehensive survey ever undertaken on the usefulness of the Protocol as a tool to achieve the aims of Jackson. Those surveyed include solicitors, main contractors, specialist subcontractors, consultants and insurers. In other words, those most likely to be involved in operating the Protocol.

The survey gathered and analysed data records from 216 disputes. This data was then supplemented by 39 in-depth telephone interviews with construction lawyers and leading construction companies. Those interviewed had collective experience of 677 disputes that had followed the Protocol over the last three years.

For me, the three most striking outcomes were:

  • 95% of respondents thought that the Protocol was a valuable pre-action mechanism.
  • 87% believed that it is creating access to justice.
  • 49% suggested amendments to make the Protocol more effective.

This underlines the value placed on the Protocol by those who are directly involved with disputes in the engineering and construction sector.

Furthermore, and of very real significance for clients, of the 677 disputes that were subject to the Protocol, 277 disputes, or  41%, settled without the need for formal proceedings. If you recall, this was one of the key aims of the Jackson reforms.

Can the Protocol process be improved?

The survey also reinforced a desire, among those surveyed, for the Technology and Construction Court (TCC) to “police” the Protocol process  to avoid the risk of abuse.  The Protocol has received bad press from participants who have been scarred by undergoing a protracted and costly Protocol process, that they did not feel able to cut short for fear of being penalised if the case eventually came to trial.  When asked if they thought the Protocol could be improved, approximately 75% of respondents felt that they would benefit from guidance from TCC judges during the process. This accords with the views I expressed to the TeCSA/TECBAR annual symposia, not long after the Protocol was introduced in 2002.

Given the high level of costs that can be incurred, it is not surprising that debate rages about the recovery of Protocol costs.  At the moment a defendant is unlikely to recover costs involved in rebutting a claim that does not go to trial.  Resolving pre-action cost issues was favoured by 56% of respondents. Simon Tolson summed up TeCSA’s conclusion that:

“The issues surrounding costs are a key area for discussion within the Civil Procedure Rule Committee looking at reform and TeCSA has urged them to focus on this area whilst recognising the value of the Protocol as a mandatory pre-trial mechanism.”

The results of the survey reflect my opinion, and those of many I have spoken with, about the pros and cons of the Protocol as a compulsory process, but also the parallel need for there to be policing by the courts to minimise the risk of any perceived abuse.

If you read nothing else I would urge you to read the comments of those construction clients who were interviewed (at page 18 of the final report). One client thought the Protocol encouraged early consideration of issues:

“You can have built-in adversarial views before the case will ever get to court, but quite often the senior people in a company do not get to explore what the arguments are about until they are sitting in the court room wondering why they are there because the matter could have already been dealt with. The [Protocol] offers a reasonable balance because it is serious enough to draw in the senior people in a company provided it is managed properly.”

Another considered that it prevented litigation and promoted mediation:

“Rather than rushing off and issuing proceedings, if it works effectively the process makes someone think that they have to try and convince a claimant on the other side of what [their] position is, and equally if I am the defendant I have to understand what difficulties lie in presenting the position. At its best the Protocol process, coupled potentially with mediation, has that benefit.”

There we have it: our industry clients see its benefits.

What now?

Having regularly seen the positive results of the Protocol in action, yet also having been subjected to the frustration of a Protocol process that has been hijacked by one party with the apparent aim of dragging it out and racking up costs, I hope that the judiciary will:

  • Take on board the results of the survey and retain the Protocol as a mandatory tool for the effective early settlement of disputes in the construction industry.
  • Embrace and implement the necessary procedural changes to support those who find themselves in a Protocol process that is being abused. The feedback on ways to improve the Protocol clearly shows the learned judges that the TCC can contribute to the effectiveness of the Protocol by making themselves available to both parties to give guidance.
  • Recognise that for the Protocol to be effective, the parties need to investigate their claims and defenses in sufficient detail so that they can make informed commercial decisions about whether to reach a compromise or fight the dispute. Inevitably this requires front loading of costs. In my view, these should largely be recoverable if the Protocol fails to dispose of the dispute and the matter proceeds to court.

It will be interesting to see how the judiciary responds to this evidence of overwhelming support for the Protocol.


Berwin Leighton Paisner LLP Caroline Pope

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