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Latham revisited: adjudication through the looking glass

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legal matters

While clearing the shelves to make way for the latest 'Instructions to Counsel', which these days arrive in lever-arch files by the box load, an innocuous, unmarked file fell open, revealing a document entitled Constructing The Team by Sir Michael Latham. Remember him?

It was his joint government and industry review of contractual arrangements in construction that first suggested, back in 1994, that construction disputes should be resolved by adjudication. Two short years later, adjudication was on the statute books. A careful read of his original proposals shows that what Latham had in mind, at the end of the last century, bears little resemblance to what we have now. For example:

Latham built his recommendations upon the work of the JCT which had, a year earlier, made proposals for clauses in their contracts providing for mediation and adjudication. For this reason, no doubt, he called for adjudication to be incorporated into the JCT family of contracts only - not every construction contract.

The adjudication system - that contractors and sub-contractors were pressing for - was to be made an effective standard procedure, not by the forces of government and legislation, but by the spirit of contractual teamwork.

A well-drafted disputes procedure, involving adjudicators operating in an unrestricted manner, was intended to help disputes to be resolved quickly and inexpensively.

The adjudicator was to be named in the contract. Only in default of agreement was an appointment to be made, as most appointments now are, by a relevant professional body.

The courts were to be a last resort.

Only last week (AJ 13.6.02), I contemplated the jungle that adjudication has become, bristling with legal complexities and procedural traps for the unwary as a result of the 100 or so court decisions on contested adjudicators decisions. A significant number of adjudicator nominating bodies now appoint adjudicators to administer a variety of adjudication schemes.

The incomprehensible enforcement regime set out in the government's scheme for construction contracts had to be taken to court if Latham's intention, that adjudication decisions should be implemented at once, was ever to be realised.

Since then, a stream of jurisdictional and procedural points have been referred to the courts, not as a last resort, but as a matter of necessity.

Complex and uncertain dispute resolution procedures do not come cheap, and when the words 'legal' and 'complex' are added together the answer is usually a five-figure sum. One cannot help but conclude that either Latham was in cloud cuckoo land all along, or the legislature's heavy-handed attempts to translate his ideas into a reality have succeeded only in pushing us through the looking glass. Can this paradise of quick, cheap resolution ever be regained?

Not surprisingly, views vary and some recognise that cost is one area where the vision does not square with reality. Adjudication is expensive, whether measured in terms of a company's inhouse resources or hourly rates of independent consultants or lawyers.

Construction consultants Harold Crowter Associates (HCA) seeks to address this problem with a fixed-fee adjudication service, limiting the cost of a referral to adjudication to £7,000. HCA's Christopher Linnett says the service would not apply to complex and sizeable claims and similarly would not be cost-effective for smaller claims. He believes adjudicators themselves could act for a fixed fee, on the basis that there is only so much work you can do in 28 days.

Construction arbitrator and adjudicator Neville Tait is not convinced, believing that you can no more predict what will be involved in an adjudication than you can gauge the length of a piece of string. His experience as an ABTA arbitrator, deciding holiday disputes on a fixed nominal fee, suggests disputes are invariably more complicated than expected and any fixed fee would automatically exclude complex disputes.

In his foreword to Constructing the Team, Latham adopted the words of the Dodo: 'Everybody has won and all must have prizes.' Was it all Alice in Wonderland?

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