The number of adjudicator appointments and the steady flow of reported cases suggests that adjudication is developing as the first tier of formal dispute resolution. However, adjudication was envisaged as having an important role to play in dispute avoidance.
Sir Michael Latham in his 1994 report, Constructing the Team, suggested that adjudication could have a key role in resolving potential conflicts. In particular, Sir Michael suggested pre-pricing variations.
The idea was relatively simple – identifying and agreeing the implications of variations when ordered would leave both parties clear as to cost and programme implications. There would be no nasty shocks for the paying party later. The party undertaking the variation would be aware at an early stage of the implications and consequences of the variation, avoiding the need to prove such implications potentially years after the variation was undertaken. Latham suggested that, if the parties could not agree what those implications were, then the adjudicator could be called in.
So far, there is little evidence to suggest that adjudication is being used by parties in this pre-emptive manner. Indeed, my firm's recent experience suggests that parties continue to allow vast gulfs to develop between them as to the cost and implication of extensive variations. By the time those parties bring the dispute before an adjudicator, relationships have soured, attitudes have hardened and adjudication is a first-tier dispute resolution process.
The number of adjudicator appointments and the steady flow of reported cases suggests that adjudication is developing as the first tier of formal dispute resolution
Perhaps the adjudication model enacted in the Construction Act is unsuited to such a proactive approach. Its structure and approach tends to suggest a post-event formalised dispute resolution process and it appears to have been used so far in that way. This is reflected in the decisions from the courts. No reported case looks at an adjudicator’s decision made in the context of attempting to avoid a dispute by pre-pricing variation. In the same vein, there is little evidence to suggest widespread take up and use of the JCT amendment 18 provision for valuing variations – the option “A” route.
If adjudication has developed as an adversarial system, then what of alternative dispute resolution techniques such as mediation and conciliation. These are based on the principle of consensual resolution. However, in various American states, parties are required to seek to resolve their dispute by mediation/conciliation before using the courts. To require parties to use mediation/conciliation is alien to the consensual nature of the process.
The danger is that parties forced to use such a process will quickly start to view it as a preliminary part of the court system. Although the courts in this country cannot yet require the parties to mediate or conciliate, but can facilitate such a process only if the parties want to adopt one, there is a suggestion that penalties for those refusing, unreasonably, to mediate or conciliate are not far away.
The reality is that adversarial attitudes are likely to breed adversarial systems for dispute resolution. Processes such as adjudication, which are intended to avoid adversarialism, and processes such as mediation and conciliation, which are designed to be consensual, can quickly change their nature. Perhaps the second anniversary of the Construction Act is a good time to consider whether the current model of adjudication is satisfying its users, the industry.
James Bessey is a partner specialising in construction dispute resolution at edge ellison in Birmingham.