At last! It's official. Adjudication is not all it's cracked up to be, writes Kim Franklin. Well, that was the distinct impression gained from speaking to various industry delegates at GF Partnership's recent conference on construction disputes, aptly named 'Avoid the Bloodletting'.
Some of them muttered that adjudication is not cheap. Others commented that it's a godsend to those advisers who like to rack up the fee income. And a few others wondered, rhetorically, what you get for it.
The quality of adjudicators is so variable that you might be better off tossing a coin. You never get your costs back, even if you win. Some adjudicators even split their fees between the parties, irrespective of the outcome. Then there are the problems with enforcement. Adjudicators have to be careful to avoid challenges on the grounds of natural justice, but most adjudicators wouldn't recognise a breach of natural justice if it leapt up and slapped them. The government consultation is not going to make any difference. They aren't even considering the real problems. And what do you get at the end of the day? A decision that's not final. For all you know you'll have to go around the same block again in arbitration or litigation.
While it would be wrong to say that everyone expressed such views, there was a distinct breeze of change in the air. Adjudication might work for some cases, but it's not the be all and end all.
The reason I was there was to talk about the 100 Day Arbitration Procedure*, recently launched by the Society of Construction Arbitrators, which provides for a flexible dispute-resolution process, within a truncated but sensible timescale. It gives both parties a reasonable opportunity to put their case forward following a clearly defined procedure. All the ingredients for reliable dispute resolution are there: exchange of written cases, disclosure of documents, evidence and an oral hearing. Everyone knows where they are and there is no mad rush. The result is final and enforceable and the successful party stands a good chance of recovering its costs.
If the 100 Day Procedure is so good, why, one industry representative asked, has no one thought of it before? The answer to this question lies in the genesis of the two relevant statutes:
the Arbitration Act 1996, and the Housing Grants Construction and Regeneration Act 1996.
The Arbitration Act was the result of a private initiative and funded by commercial concerns who wanted a user-friendly code for all commercial arbitrations. It took six years to draft, promote and enact. The first parliamentary draughtsman was axed in a bid to get the no-nonsense drafting style used for the statute. The Act was only passed because it had universal support and required no parliamentary debate.
By contrast, the adjudication provisions of the Housing Grants Construction and Regeneration Act were introduced as a result of the governmentled review of construction industry practices. Adjudication was suggested, almost as an afterthought, in two short paragraphs of Michael Latham's report. No one had any real understanding of the process proposed and, as Latham has admitted, he was not consulted when the Act was drafted. The result, produced in record time, demonstrates all the shortcomings of rushed legislation.
The Arbitration Act contained carefully considered procedures introduced by an experienced commercial lobby to meet clearly defined end-user needs. By contrast, adjudication was a flash-in-the-pan crowd pleaser. But both came into force at about the same time. Everyone leapt on the adjudication bandwagon and its promise of quick, cheap, reliable justice. It is only now, seven years down the line, that they are wondering quite where it will take them.
The 100 Day Arbitration Procedure introduces nothing that hasn't been available to disputing parties under the Arbitration Act since 1996. It merely acts as a wake-up call to those who have been mesmerised by the lure of adjudication and shows them just what they have been missing out on.
*The 100 Day Arbitration Procedure is available at www. arbitrators-society. org Kim Franklin is a barrister and chartered arbitrator at Crown Office Chambers. Visit www.crownofficechambers. com