Exit the engineer

One of many distinguishing features of the Institution of Civil Engineers’ Conditions of Contract over the years has been the referral of disputes to the engineer for a decision under clause 66. This provision has figured in many hundreds of disputes and has made intermittent appearances before the courts.

Under the ICE seventh edition, either party may ask the engineer to make a decision on a “matter of dissatisfaction”. The engineer must come to a decision within one month and both parties must comply with it.

Engineers’ decisions under clause 66 may have reached the end of its road as far as the ICE is concerned. An amendment to the seventh edition jettisons the engineer’s decision as a step in the dispute resolution process.

The ICE press release introducing the amendment said the engineer’s decision mechanism has lost credibility. Dispute resolution processes must be seen to be fair and impartial, but the engineer is in the employer’s camp and so cannot properly claim to be independent.

Statutory adjudication had, in fact, probably rendered the engineer’s decision obsolete.

The point was to provide a quick and temporarily binding decision for disputes. Adjudication does the same thing.

An engineer may be more capable than an outside adjudicator of reaching a quick decision, but you don’t need both and, apparently, the two couldn’t live together. The “matter of dissatisfaction” mechanism seems doomed.

A series of judicial decisions that referred to in the ICE’s notes for guidance on the new amendment were the writing on the wall.

So what of the new regime?

An introductory comment made by the ICE in its publication release is that by 2002 the procedures “occupied four pages of text and 12 detailed subclauses” which suggests an attempt at reduction. Although the clause 66 appears longer than the original, it is fair to say that it simplifies the dispute resolution process.

The clause offers a range of dispute resolution options and comes with added bells in the form of the requirement for “advance warning”. The advance warning, the ICE tells us, is intended to be consensual and, indeed, there is no express sanction for non-compliance. The amendment’s guidance notes suggest tribunals may take into account a failure to operate the advance warning when considering how to award costs. It is not clear how or why they might do this – the guidance is not a direction to such tribunals. Nonetheless, giving advance warning is a sensible thing to do, so the clause is generally welcome.

Another feature is the “Notice of Dispute”. Either party may serve one of these at any time. The main purpose is to define the dispute for “amicable dispute resolution” by 66a (negotiation, conciliation or mediation).

The amicable dispute resolution processes are consensual, so a notice of dispute ought not to be a document that carries procedural gravity. If the dispute is later referred to adjudication, however, a party in default of the notice of dispute may be penalised in costs.

The adjudication clause (66b) gives authority to the adjudicator to determine his or her own jurisdiction - a provision that is likely to reduce the time spent on jurisdictional challenges. A party that has not served a notice of dispute under 66a will be required to pay the adjudicator’s fees in determining their jurisdiction. This is mandatory.

Litigation is not offered as an option. Otherwise, the adjudication provisions (66b) and arbitration provisions (66c) are much as they were.

Of course, it is certain that the amendment will not find its way into many contracts let after 1 July.

Also, an engineer’s decision can be requested “at any time” so there will be plenty of live contracts that will make use of the mechanism long into the future.

Clause 66 now presents a series of dispute resolution options to suit all tastes which is a welcome route taken in other contract forms. To take advantage of the amendment, contracting parties should endeavour to follow the ICE’s recommendation to adopt the amendments in contracts let after 1 July 2004.

Simon Goss heads the construction team at TLT Solicitors