When the DTI asked an industry mob to discuss the Construction Act, a fight quickly ensued - but those present showed great solidarity on another issue
There were nine bods at each square table. Reminded me of nursery school. Not much playdough though. Mind you, we had a few daft ideas and some antics.
There were 16 square tables, so there were about 150 squabblers crammed into this DTI consultation day. The idea was to work out that changes we would like made to what you and I call the Construction Act. Once that is done, the DTI is going to report "the views of the industry arising out of full consultation", and parliament will introduce changes it thinks the industry "wants".
The winning daft idea for me was that when a dispute arises on a building or civil engineering contract, the employer should be the final and binding referee. Honest. I taxed the proposer: "You mean that if Manchester United is at home to Chelsea, Manchester United would decide all and any dispute in the game?"
The attendees were completely at odds about revising the payment rules in the Construction Act. It is simple. The payee wants his monthly application to be paid because, well, it is true and honest and fair. The payers want to pay what they say, because payers are true and honest and fair. Then some brat at the next table blew a raspberry. Another clouted a little girl. A fight broke out. Parliament, make note. There was no majority, no consensus on what is to be paid and when in interim payments. The 16 square tables were in dispute.
But, I tell you this, after a cracking DTI lunch the brats at the 16 tables began to get on. That's because an even bigger daft idea was included in the Construction Act when it was born in 1996. Section 107 said that adjudication only applies when the construction contract is "in writing". Now I tell you this, everybody in that room believed that the "in writing" rule should go. Don't tinker: sling it out. It is costing a fortune.
Time and time again an adjudication is started, then the respondent runs an argument that the contract is not "in writing". A mini war breaks out. There is a panicky satellite dispute. Arguments zap to and fro. Even lawyer-adjudicators have a job grappling with the legal argument. Meanwhile the real dispute about loss and expense or extension of time becomes forgotten, buried. A good half of the "in writing" challenges fail, the adjudication presses on, then tens of thousands is spent challenging the whole adjudication in court. Waste.
Parliament, make note. There was no consensus on what’s to be paid and when in interim payments. The 16 square tables were in dispute
Look, the "in writing" rules were stolen from the Arbitration Act. It says that for statutory arbitration the arbitration agreement (only) is to be "in writing". The contract itself can be "not in writing" but the arbitration clause has to be "in writing". Why? Two reasons: (1) if "in writing" the arbitration is within the Arbitration Act, and (2) the participants to arbitration are giving away a constitutional right to litigate in court in favour of arbitration. When adjudication came along, the parliamentary draftsmen stole the words about "in writing" from the Arbitration Act 1996 and put them into the Construction Act. But it changed the rule by saying the contract had to be in writing. By the way, if an arbitration clause is not "in writing" but proved to be an oral agreement, the arbitration still goes ahead. That arbitration is controlled by the common law, not the Arbitration Act. Anyway, this importation into the Construction Act has caused more trouble that it is worth.
Some argue that if a contract is not in writing it will lead to all sorts of quarrels about what promises were made. All that will get in the way of adjudicating the "real" quarrels. Truth to tell, it doesn't. It is just another quarrel about which party promised what. In any case some people ignore the "in writing" rule and include quarrels about promises made in the contract.
Hands on heads DTI and hands on heads parliament. Listen: get rid, lock stock and barrel, of section 107. Our adjudicators are quite capable of dealing with a quarrel about the existence or non-existence of a verbal promise in a construction contract. And, one more thing: next time the DTI gets us lot in for a consultation day, can we please have some playdough, jelly babies and a sand pit? Otherwise, I am going to watch Manchester United win against Chelsea.
Tony Bingham is a barrister and arbitrator