8.1 2001 review

• • The government acknowledges that non-payment and late payment are significant problems for small businesses in the UK, and remains fully committed to tackling them.
• • Part 2 of the Housing Grants, Construction and Regeneration Act 1996 (‘the Construction Act') creates a framework for fair and prompt payment through the construction supply chain, and a resolution procedure for disputes.
• • The Post-Implementation Review of the 2011 Amendments to the Construction Act will formally assess the impact on the construction sector.
• • The stakeholder responses to the consultation which supported the Post-Implementation Review broadly favoured the principles of the framework and dispute resolution procedure.
• • Better guidance to and training of adjudicators, so that they understood the full extent of, and the limitations on, the powers and duties given to them by the Statutory Scheme.
• • Better guidance to lay parties on their rights and on what to do and when, to use the adjudication system effectively.
• • Amending the Statutory Scheme where the difficulties that have been encountered could not be dealt with by better guidance and were not likely to be resolved by the courts, providing that there was a wide measure of agreement on the proposed amendments, and providing also that they did not risk detracting from the simplicity, speed or cheapness of adjudication.
• • Amending the Act in so far as was necessary to outlaw the practice of putting into contracts requirements that a party that referred a dispute to adjudication should bear the other party's legal and other costs.
• • Inviting the industry, through the board or its successor organization, to consider whether more could be done by way of marketing or persuasion, to promote the use of the Statutory Scheme rather than of bespoke adjudication procedures; and also whether there was a role for clients in encouraging the specification of Statutory Scheme adjudication procedures.1

• • The review had identified some evidence of a form of ambush in which referring parties submit unmanageable quantities of ‘relevant information', which under paragraph 17 of the Statutory Scheme the adjudicator is obliged to take into account. The review noted that robust adjudicators have dealt with this matter effectively by telling the referring party that a decision is not possible in the

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  time available or by requesting summary submissions when appointed, and concluded that, in order to avoid any suggestion that this practice is an infringement of paragraph 17, paragraph 17 should be deleted. The department's view was that paragraphs 13 and 17, read together, provided a balance of powers and duties that is reasonable as between adjudicators on the one hand and the parties on the other. Deletion of paragraph 17 might alter that balance, detracting from the rights of the parties. This paragraph was the key to a party's ‘right of response’ as advocated by the board as it put a duty on the adjudicator to consider ‘any relevant information'. The department's view was that the balance of powers and duties provided by the two paragraphs was a reasonable one and that to delete paragraph 17 would be detrimental to the rights of the parties. It was clear, however, that both adjudicators and the parties would benefit from guidance on their respective powers, duties and rights provided for by the Statutory Scheme. The department agreed.
• • The review concluded that guidance was needed both for adjudicators and the parties on applying the principles of natural justice. The department agreed.
• • The review recommended that the right of defendants to respond to a referral to adjudication should be made clear. The department's view was that paragraph 7(3) read together with paragraph 17 already provided an implicit right of response to the parties and a duty on the adjudicator to consider any relevant information submitted in a response from a party. There was no need for any further provisions in the Statutory Scheme, but there was a need for guidance to parties and adjudicators about their rights and duties under the Statutory Scheme.
• • The review recommended that the matter of intimidatory legal tactics be kept under review, with improved publicity to deter bad practice. The department's view was that this was an issue that should be covered in guidance to adjudicators.
• • The review was concerned to clarify that adjudicators should have the power to correct obvious mistakes on the face of the decision (namely that part which the parties were bound to implement). It suggested using the device of a simplified version of the ‘slip rule’ as used in the Arbitration Act. The department's view was that adjudicators had an implicit power to amend manifest errors of typography or arithmetic and that it might be sufficient to give guidance to adjudicators. However, the department was not opposed to the inclusion of a provision in the Statutory Scheme defining the extent of an adjudicator's power to correct slips. If this were done, it would be preferable, in the department's view, to limit its scope to manifest errors of typography or arithmetic in the decision and for the timetable to be determined by the adjudicator using the powers given by paragraph 13. The department's concern was that if a wider definition (similar to that used in the Arbitration Act) were to be imported into the Statutory Scheme, it would risk extending corrections to matters requiring more extensive consultation, prolonging arguments, extending timescales and detracting from the speed and simplicity of the adjudication process. On balance, the department and industry representatives concluded that there would be benefits to adjudicators and the parties if an explicit provision defining the adjudicator's powers to correct slips were to be included in the Statutory Scheme. They wished to consider further how tightly it should be drawn, given that some industry representatives prefer a wider definition of slips. Comments were invited.

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  • The review recommended that each party in the adjudication should be required to meet its own legal and other costs, as was the original intention of the Act. The department agreed in principle that the Act should be amended. The form of the amendment required further consideration. The department would also consider an interim amendment to the Statutory Scheme, although, without a corresponding amendment to the Act, there was a risk that such an amendment might encourage greater use of bespoke adjudication.
• • The review recommended that the Statutory Scheme should be amended to require that any request for written reasons to support the decision should be received before delivery of the adjudicator's decision and that, if requested by one party, the reasons should be provided to all parties in the interests of clarity and openness. The department's view was that there was some risk that including such a requirement in the Statutory Scheme could provoke parties to take the precaution of requesting reasons in a greater proportion of cases. This might unnecessarily add to the complexity and time taken. Nonetheless, adjudicators ought to give the parties reasons, however basic, for their decision, and there were practical reasons why it is better that this should be agreed either before the adjudicator issues his or her decision or very shortly thereafter. Adjudicators might be given guidance that they could use their powers under paragraph 13 to require that a request for reasons should be put to them by a specified date. This would be a more flexible approach than amending the Scheme in the way proposed. However, an amendment to paragraph 22 of the Scheme might be required to put beyond doubt that the parties’ rights under paragraph 22 might be subject to the adjudicator's power to set deadlines under paragraph 13.2

8.2 Enterprise Act 2002

8.3 2004 review

• • There was a case to review whether or not to amend the orders made under section 106(1)(b) (paragraph 4 of the Construction Contracts (England and Wales) Exclusion Order 1998 and the equivalent Orders for other jurisdictions) which exclude contracts entered into under the Private Finance Initiative.
• • There was a case to review whether or not to retain the exclusion in section 106(1)(a) for residential occupiers.
• • Section 107 should be amended in light of the decision in RJT Consulting Engineers v DM Engineering 8 concerning contracts in writing to clarify the law.
• • Further consideration should be given to the introduction of statutory protection for adjudicators in line with that provided to arbitrators under section 29 of the Arbitration Act 1996.
• • The issue of adjudicator independence should be looked at in further detail and paragraph 4 of Part 1 of the Statutory Scheme (which provides: ‘A person required or selected to act as an adjudicator shall be a natural person acting in his personal capacity and not be an employee of any of the parties to the dispute and shall declare any interest, financial or otherwise, in any matter relating to the dispute') should be considered as a suitable example of wording to be added to section 108.
• • Section 108(1), which provides that ‘A party to a construction contract has the right to refer a dispute arising under the contract…’ should be amended.

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  • There was a need for proposals to be implemented as quickly as possible to effect the necessary changes to the primary and secondary legislation to prevent parties from introducing Bridgeway v Tolent 9 type provisions.
• • The legislation should be amended to prohibit such provisions that monies should be paid into trustee stakeholder accounts or require adjudicators to order payment into a trustee stakeholder account pending the final outcomes of the dispute.
• • Section 108 should be extended to outlaw unacceptable provisions that sometimes appear in bespoke procedures, by tightening up on the minimum requirement for a compliant procedure.

• • For the sake of clarity, that there was a case for amending paragraph 7(1). More suitable wording would be ‘Where an adjudicator has been selected in accordance with paragraphs 2, 5 or 6 the referring party shall, refer the dispute in writing (the “referral notice”) to the adjudicator within seven days from the date of the notice of adjudication. Subject to any timetable given by the adjudicator in accordance with sub-paragraph 13(g)'.
• • The deletion of paragraphs 8(1), 8(2), 8(3) and 8(4) dealing with more than one dispute and related disputes.
• • Where an adjudicator decided in good faith that he or she did not have jurisdiction to decide the dispute, he or she should resign and should be entitled to fees in accordance with paragraph 9(4). Reference to the adjudicator resigning through lack of jurisdiction should therefore be added to paragraph (4).
• • Subparagraph 20(c) should be amended in accordance with the following example: ‘Decide the circumstances in which, and the rates at which, and the period for which simple or compound rates of interest shall be paid, having regard to any term of the contract relating to payment of interest and the law'.
• • Paragraph 22 should be reversed so that the adjudicator should give reasons for his or her decision unless all of the parties agree otherwise.
• • Both paragraph 23(1) and 24 should be deleted because they were considered unnecessary in both the English and Scottish courts.
• • The words ‘whether in negligence or otherwise’ should be inserted after the words ‘his functions as adjudicator’ in paragraph 26.
• • There should be an additional paragraph to read:
‘The responding party or parties shall be entitled to provide a written response to the referral notice to the adjudicator and the other parties to the dispute. The time by which the response shall be provided shall be determined by the adjudicator'.

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  • The following paragraph should be added to the Statutory Scheme:
‘The adjudicator may, within 7 days of delivery of the decision to the parties, deliver a corrected version of his decision which removes any accidental error or omission or clarifies or removes any ambiguity.