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FORWARD MARCH

LEGAL

There is a new phrase on the block, guaranteed to raise the hackles of the purists. It is 'going forward', writes Kim Franklin. I recently learned that my building society is 'going forward to dematerialisation'.

Happily, they explained this meant that they no longer stored paper title deeds, otherwise I would have had no idea what was involved, but would have imagined some form of 'beam me up Scottie' scenario. The concept of futuregazing reminded me of the wag's graffiti, 'whither atrophy?' All this sprang to mind when I was asked to present a paper entitled 'The Future of Adjudication'. As I pointed out to the delegates, you cannot predict the future without looking at the past. This, of course, is in sharp contradistinction to what any financial adviser with a sense of self preservation would tell you, but none the less true for all that.

Adjudication has come a long way from the germ of an idea first floated by Sir Michael Latham in his 'Constructing the Team' report of 1994. He meant it to be an 'on-site' remedy for payment disputes between contractors and sub-contractors, possibly even employers. He did not intend it to be used for £10 million final-account claims brought long after practical completion. He has said so. He also envisaged that it would provide rough justice, cheaply and quickly - within 28 days in fact.

Since then, adjudicators' fees have gone up disproportionately to the amounts at stake - fees in excess of £150 per hour are common. Adjudicators are permitting increasingly expensive procedures, such as extended exchanges of written submissions and meetings with the parties. A signifi cant proportion of adjudications are now conducted over an extended time scale, beyond the original 28-day limit.

Reliable information as to the cost of all this to the parties is not available, but anecdotal information abounds. In CIB v Birse, for example, the adjudicator's fees totalled £150,000 and the parties' costs were in the region of £1 million. So adjudication has come a long way. Where is it going?

Some light may be thrown on its future by the recent decision of the Court of Appeal in Carillion Construction v Devonport Royal Dockyard (16.11.05). The court refused the dockyard's application to appeal from an adjudicator's substantive decision that they pay the contractors, Carillion, £12 million. The court pointed out that the scheme was not enacted to provide definitive answers to complex questions.

In adjudication, the need to have the 'right' answer has been subordinated to the need to have an answer quickly.

To challenge an adjudicator's decision, save in the plainest of cases, was likely to lead to a substantial waste of time and expense. Better to pay up and then take legal or arbitration proceedings to establish the true position.

It seems, therefore, that if you want the wrong answer, not too quickly and at surprising cost, the future for adjudication is bright.

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