It is arguable that the Construction Act will, in due course, prove to be one of the most significant pieces of legislation ever to affect the construction industry in this country. The act was of course based on the Latham report and its two main aims were to resolve perceived payment problems in the industry, particularly those experienced by subcontractors, but also to attempt to reduce the amount of adversarial litigation in the industry. This, if it was achieved, would be in keeping with the ultimate goal of fostering long-term relationships and partnerships between parties.
A quick look at the figures demonstrates the dramatic rise in adjudication over the past three years. Figures from the major adjudication nominating bodies suggest that there were some 1760 adjudication nominations during the course of 2000, compared with less than half that number in 1999. Those figures do not of course include adjudications where parties agreed the identity of an adjudicator and therefore did not need to consult a nominating body.
Therefore, it is not unlikely that the actual number of adjudications was much greater, and perhaps as many as 2000. It is safe to say that last year, there were at least 30 to 40 new adjudications commenced each week.
By way of contrast, for the period May to December 1998 the figure was of the order of two to three a week.
It is clear that adjudication is increasing at a phenomenal rate, and is now including disputes that Latham may never have thought would be the subject of such a procedure.
The same disputes are being re-adjudicated over and over during the course of a single project. Parties are preparing their cases in ever increasing detail and including expert evidence, CD-ROM presentations, using leading and junior counsel as well as solicitors and/or claim consultants. Lectures, articles, books and cases abound on the subject. Adjudication is big business.
It is clear that, since adjudication was introduced, far more construction disputes are being resolved by a formal process than was ever the case before. Perhaps as many as 80% of disputes that are proceeding now to adjudication would formerly have been resolved by negotiations between the parties in good faith, without the need for any formal dispute resolution process. The industry has become more adversarial than it has ever been, the exact opposite of what Latham hoped to achieve.
Adjudication is all about winning. Evidence shows that claimants are only too pleased to use every trick in the book to maximise their chance of success
It is hardly surprising that this has happened.
A process designed primarily to help subcontractors kept out of their money has been used by all sides of the industry to gain tactical and legal advantages for themselves. Employers use it where they have defective buildings, consultants use the process for unpaid fees, contractors use it for their loss and expense claims, design-and-build contractors use the process to claim for unforeseen ground conditions. Adjudication remains, in many people's eyes, a cheap trick, and an underhand process. It does nothing to encourage long-term relationships, and leads, inevitably, to poor relations on site.
Some might say that the process has been abused. Certainly, people such as Melinda Parisotti, who has criticised me for suggesting that parties should consider ambushing their opponents, appear to believe that a Woolf-like culture should apply to adjudication (12 January, page 63).
One can understand Parisotti's position. An insurer may be faced with having to pay out millions of pounds in relation to a claim of negligence against a professional that has no real basis, but that an adjudicator, based on the loaded evidence before him, has no option but to accept. But Parisotti's real gripe appears to be against the process as a whole that allows such a scenario to occur, and which on any view is simply not an appropriate way to determine technically complex and high-value disputes.
Further, although there is no doubt that a Woolf-like approach to adjudication would be fairer, it is unlikely to lend itself favourably to many claiming parties. By the time lawyers and consultants are brought in, negotiations, and in most cases the relationship, has often broken down. Clients want their money, and they want it swiftly. Adjudication helps them achieve this, and they are hardly likely to accept advice that suggests they give the other side a better opportunity to put their case, simply because that is fairer. Adjudication is all about winning. The dice are loaded in favour of claimants and experience shows that claiming parties are only too pleased to use every trick in the book to maximise their chances of success. Rightly or wrongly, adjudication allows them to do this.
As the adjudication bandwagon continues to roll, more and more complex disputes are becoming the subject of adjudication proceedings. Whereas, initially, the vast majority of adjudications concerned a lack of payment or a withholding of payment, major defects claims and professional negligence claims against consultants are becoming increasingly common.
Nick Henchie is a solicitor with Rowe & Maw.