Group therapy for adjudicators

Despite having been with us for almost six years there appears to be no consensus as to what the process of adjudication, as envisaged by the Construction Act, is really meant to be. Some regard it as a full-blown mini-legal process complete with strict rules of evidence. At the other end of the spectrum, others consider it to be little more than a quick "look and sniff".

Sir Michael Latham's two reports advocating adjudication as a means of providing a temporary balance between the positions of payer and payee had a groundbreaking result: it was the first time that parliament saw fit to intervene and provide statutory rules for an industry rife with payment abuse and seemingly unable to regulate itself. Sadly, nothing much has changed in the last six years and now the flicker of progress has been snuffed out by the Court of Appeal.

First we had RJT Consulting vs DM Engineering in which the law lords seemed unable to agree on when a negotiated contract satisfied the definition of a construction contract under the requirements of section 107 of the Act. Then came Tally Weijl vs Pegram Shopfitters Ltd, which effectively said that unless there is contemporaneous evidence of a concluded agreement of all essential terms then you might well have an enforceable contract to be valued on a quantum meruit basis, but you do not have a section 107 construction contract. Thus, there is no jurisdiction for an adjudicator.

Being Court of Appeal decisions, both RJT Engineering and Tally Weijl are binding on the Technology and Construction Court, and on adjudications generally. Had these decisions been given retrospective effect, probably 80% of all decided referrals in the last six years would have been unenforceable.

Effectively hapless adjudicators are now left with the major value, loss and expense type, post-contract disputes to try to unravel in 28 plus 14 days if the referring party so consents. Disputes arising during contracts of the "quote and start, paperwork to follow" variety have been removed from the ambit of adjudication and thrown back on to the mercies of arbitration or litigation.

So what is adjudication? The TeCSA Adjudication Rules, 2002, version 2.0, provides the most helpful definition. "Wherever possible, any decision of the adjudicator shall reflect the legal entitlements of the parties." If a satisfactory answer is not found within the practical constraints of a rapid and economical adjudication process, then the adjudicator is free to "think outside the box" and reach a decision based on his "fair and balanced view in light of the facts and the law insofar as they have been ascertained by the adjudicator".

However, in an obviously incomplete contract arrangement, the Court of Appeal has withdrawn this right from the adjudicator. He must have nothing to do with it, leaving the scene of the crime to the forensic experts.

No wonder the subcontractor fraternity are fast losing confidence in adjudication, especially when they have to pay for the privilege of getting their own money back. As for the adjudicators themselves, like Custer at Little Big Horn, they are also feeling increasingly isolated.

So do we hear the sound of the cavalry coming to the rescue? Maybe, but it is early days. Someone must urgently redefine adjudication as a bespoke, unique construction industry process and that someone may well be the newly formalised Adjudication Society.

The aim of the Adjudication Society is to be a non-aligned, non-profit-making learned society, with up to eight regions covering the British Isles and local centres of activity in each region. The society will not just represent adjudicators but everyone who has an interest in resolving construction disputes. It aims to agree benchmarks for adjudicators' required knowledge and experience and will offer a focal point for advice to adjudicator nominating bodies in order to establish best practice by consensus rather than by dictat.

In other words, the Adjudication Society will hope to shape future modifications to what has been a pretty good prototype vehicle, but is now showing her age and in urgent need of a respray. Moreover it is a model that other industries may well be looking at in future years.