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Rollercoaster of contract change

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PRACTICE

The construction industry is naturally conservative. If evidence were needed, it is to be found in the use of fourth- and fifth-generation photocopies of the standard form jct 63, long after the advent of jct 80. This reactionary body now finds itself living in exciting times: 'exciting' in the turbulent and stressful sense usually associated with moving house and Christmas. Until now, key legal developments in construction law have taken place at regular intervals. Developments such as the decline in the law of tort marked by the House of Lords decisions in Murphy v Brentwood, and the subsequent proliferation of collateral warranties; the complexities of contractual assignment highlighted by the Linden Gardens and St Martin's Properties cases; the introduction of the Construction (Design and Management) Regulations, the redefining of the role of the final certificate by the Court of Appeal in the Crown Estates v Mowlem case, and the resolution of the old chestnut as to whether extensions of time should be calculated 'net' from the contractual completion date or 'gross' from the delaying variation by Balfour Beatty v Chestermount Properties.

By comparison, in the space of a year so, the industry has had to come to terms with not one but two brand-new pieces of legislation, both designed to sweep away the old approach and attitudes and introduce new ways of resolving construction disputes.

The Arbitration Act 1996 and the Housing Grants, Construction and Regeneration Act 1996, (sometimes called the hgcr Act, the New Construction Act, the Housing Grants etc Act, or, inexplicably, the Hugh Grant Act) have both come into force within 15 months of each other. The genesis and gestation of the new statutes is very different: their interdependent future could not have been foreseen. The uk's Departmental Advisory Committee did not know, for example, when, in the late 1980s, it recommended the rewriting of the law of arbitration, that the new Arbitration Act would ultimately provide the vehicle for enforcing an adjudicator's decision. Seven years followed during which private funding for the new act was raised and parliamentary texts were amended and then abandoned in favour of the present version, written almost single-handedly by Lord Saville.

By contrast, when, in 1994, Sir Michael Latham recommended adjudication as the first tier of dispute resolution in almost any building contract, he did not know that part of the New Arbitration Act would not be enacted, and that disputes in all contracts with an arbitration clause (most building contracts) would have to go to arbitration, like it or not, and that adjudicators' decisions could not, therefore, be enforced in the courts. The new Construction Act was passed only two years later after what was seen by many as a scandalous want of consultation. The delay in its enactment, until now, was caused only by the time taken to finalise the government's Scheme for Construction Contracts, the fall-back position to be adopted if the contract does not provide for adjudication. The scheme has now been approved and compulsory adjudication applies to all contracts entered into after 1 May 1998. These innovations have been greeted by some with enthusiasm and by others with trepidation. Whatever the feeling, however, no one can say how the new provisions will work in practice or what the future holds for those involved in construction disputes - commentators can only watch this space.

It seems that the dire Chinese curse has been visited upon the construction world: 'may you live in interesting times'.

Kim Franklin is a barrister, arbitrator and adjudicator who specialises in construction law.

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