The future of adjudication is still unclear because of politics
More than 200 people packed the West Hall of London's St Barts Hospital in February to witness Michael Latham consult his crystal ball, writes Kim Franklin. The event, co-hosted by the Chartered Institutes of Building and Arbitrators, was entitled 'The Statutory Future of Adjudication'.
Latham, you may remember, spearheaded the industry review into construction practices. His report, Constructing the Team, recommended numerous changes in contracting, many of which were incorporated into the 1998 JCT standard forms. Hidden away in two paragraphs, he suggested 28-day adjudication for construction disputes. That was over 10 years ago.
The government liked the idea of construction adjudication and rushed to implement it in the Construction Act 1996. After a short hiatus while the attendant Scheme for Construction Contracts was thrashed out, in May 1998 the right to adjudication became available to the parties to most (but not all) construction con racts. Since then adjudication has become a fact of life for those involved in construction disputes, and more than 15,000 adjudicator appointments have been made.
In April 2004, the government announced a review into the operation of the payment and adjudication provisions of the act. Latham was keen to point out that unlike last time, this review was led by Westminster, not the industry.
The objective was to seek industry consensus on limited changes to the legislation.
The review has considered issues varying in significance from the macro (whether the scope of the act should be widened to embrace residential occupiers or contracts for process-engineering plant) to the micro (whether adjudicators should enjoy complete immunity from suit). The original timetable envisaged the production of a consultation paper last October.
Although construction minister Nigel Griffiths gave an initial indication of the Department of Trade and Industry's thinking at the time, the consultation paper is still awaited.
So, what does Michael's crystal ball tell him? He confidently predicted that the consultation paper would appear by mid-March or Easter at the latest. It is certain that the scope of the act will not be increased but likely that detailed changes to the scheme will be proposed. A single adjudication procedure is possible. It is unlikely that adjudicators will be given the power to award a successful party its costs. Immunity from suit for adjudicators, however, is likely. There were no proposals to change the right to adjudication 'at any time', even long after practical completion or the issuance of a final certificate. In fact Michael revealed that he had never intended that adjudication should be available for final account claims.
After the consultation process, the minister could do one of several things:
implement generally agreed recommendations by means of a Regulatory Reform Order;
introduce a new bill for disputed recommendations or for everything.
Gordon Brown is apparently interested in the process so it is unlikely nothing will be done. In any event, Latham emphasised that it is now a matter of raw politics. From now on, interested parties will engage in lobbying and MPs will find themselves under increasing pressure from their constituents.
But hang on. All this talk of Westminster rings a bell. Isn't there a general election on its way?
What does the crystal ball say about that?
Leaving aside that there may be a different government altogether, there is the question of whether Brown will remain chancellor. A new chancellor may not be so bothered with adjudication. In any event, new governments bring reshuffles. A new construction minister, with different priorities, would certainly start off knowing nothing about the adjudication review.
She may wonder whether adjudication is, in fact, 'broke' and if not whether the industry really wants it fixed. In short, after the general election, the review could quietly die a death.
So, ultimately the crystal ball failed the 200 or so adjudicators who flocked to hear Michael predict the future of the legislation that now provides them with their livelihood. The answer is 'who knows?' Kim Franklin is a barrister and chartered arbitrator at Crown Office Chambers.
l Visit ww. crownofficechambers. com