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Arbitrators need to get a grip BY KIM FRANKLIN

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Legal matters

Not all the amendments proposed by jct Amendment 18 relate to adjudication, nor for that matter arise out of the new Construction Act. Certain amendments (those which have escaped the Blind Pew-style black spot) arise out of the Latham report. The mischiefs these changes seek to address are well known, if not notorious: whether the proposals will prove effective remains to be seen.

Mischief: late design information can cause delay. Arguments then arise as to the critical status of the information and when it ought to have been supplied. The solution: the information release schedule or irs. The irs is provided by the employer and named as a contract document. New clause 5.4 requires the architect to ensure that information referred to in the irs is provided at the time stated. If it is not, the employer is in breach and the contractor can claim losses caused by its late supply. Will it work? The irs may protect the employer from spurious claims that information ought to have been supplied sooner than necessary and provide contractors with clear evidence of breach if it is supplied late. The contractor will still have to establish that the late supply caused delay and that such delay caused the losses claimed. The arguments will continue.

Mischief: variation prices are not agreed during the course of the works but are left to accumulate into a mountain to be dealt with at the end. Solution: the contractor's price statement (cps). The contractor can state his price, by means of a cps, within 21 days of executing the varied work and can state at the same time any knock-on effects caused by the variation. The employer can either accept the contractor's proposals or dispute them with reasons. Disputed prices can be referred to adjudication. Will it work? New clause 13.4 is fairly complex and introduces onerous procedures for both contractor and employer alike - with the spectre of adjudication lurking at the end. Contractors are no more likely to produce a cps within 21 days of a variation than they presently give adequate information of the effect of delaying events.

Mischief: there is no contractual provision for interest to be paid on sums certified but paid late. Solution: new clause 30.1 provides that simple interest should accrue on late payments at a rate of 5 per cent above base. Will it work? It should do if it is not deleted by the employer in the early stages of contract negotiation. It is a limited remedy since it provides for simple interest only and applies to late payment rather than late certification.

Mischief: there is nothing to stop an employer deducting contract charges from interim payments. Solution: new clause 30.1.4 requires the employer to give written notice of any amount to be deducted from payments due and the grounds for withholding each deduction made. Will it work? Neither the new Construction Act, nor Amendment 18 distinguish between set-off (a deduction from a sum otherwise due) and abatement (a reduction of the sum due to reflect the actual value of work done). Arguably the proposals relate to set-off only and do not prevent abatement for, for example, defective work.

Whether these proposals will work will depend firstly upon whether they are implemented. Some, particularly those relating to the valuation of variations, are sufficiently complex to put off both contracting parties and their advisers, already shell shocked from the barrage of far-reaching legislative changes. The jct may have been over-ambitious in its attempts to accommodate the new Construction Act and right all the wrongs of the construction industry with one stroke. Those who prefer to take one thing at a time should follow Blind Pew and stick with the black spot.

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