With the Construction Act nearing its second birthday, Nick Raynsford should be giving himself a pat on the back for pushing it through. But he could do more, such as allowing adjudicators to correct their mistakes.
I recently heard a rumour that Nick Raynsford pulled out of the running for London mayor because he felt he had too much unfinished business. That business, so the story goes, is fine-tuning Part II of the Housing Grants, Construction and Regeneration Act 1996, otherwise affectionately known as the Construction Act. Strangely, I have been unable to get official confirmation of that rumour, but the minister for construction is apparently inviting representations from interested parties about how the legislation is working. Its second anniversary – it came into effect on 1 May 1998 – is fast approaching.

My own impression is that over those two years, the Construction Act has been an amazing success story, probably far beyond the expectations of Sir Michael Latham, Tony Baldry and its other protagonists in those far off days following the publication of Sir Michael’s seminal Constructing the Team back in the summer of 1994. Much of the credit must go to Raynsford, who inherited the initiative from the Tories and, as one of his first political challenges in government, steered it through its final stages in parliament.

You can probably remember the scare stories that the legislation attracted before its introduction. One of the main concerns was the concept of ambush: one party burning the midnight oil with its advisers to get a massive document launched on Christmas eve. There has been some of that silliness but, for the main part, those fears have proved to be wildly exaggerated and, when it has happened, adjudicators have been prepared to take a firm line so that ambush simply does not pay.

Another major area of concern was the enforcement of adjudicators’ awards. Now, here the government really did make a pig’s ear of things. Rather than simply providing in the Construction Act that a successful party in adjudication could proceed to court and get summary judgment, it came up with a bizarre alternative in the Scheme for Construction Contracts, which (sensibly) no one has, to my knowledge, ever tried to invoke. Fortunately, the government has been bailed out by the courts, which have taken a pragmatic and proactive approach.

A real surprise has been the extent of involvement of lawyers in the adjudication process itself. I get the impression that some people, particularly some of the claims consultants, were rubbing their hands with glee at the thought of ousting construction lawyers from disputes. On the contrary, since adjudication has tended to be the final resort for disputes to a much greater extent than was anticipated, parties have chosen to use lawyers to assist in the preparation and presentation of their case. It is somewhat ironic to think that in consultation document Making the Scheme for Construction Contracts, the government canvassed the idea of banning lawyers from the process altogether.

  • Fears about adjudication ambushes have been exaggerated
  • The government did make a mess of enforcement
  • Lawyers have not been banished as some hoped

A related issue is whether adjudicators have the power to require one party to pay the legal and expert costs incurred by the other. Both the act and the scheme are silent on this point. But, the recent decision of Judge Bowsher in the Technology and Construction Court, which took the opposite approach to the judge in the earlier John Cothliff vs Allen Build case probably means that, in future, an adjudicator will consider he has no power to award costs in this fashion. There are arguments both ways, but personally I think that, unless such a power is given through an amendment to the legislation, the economically stronger party will have a major advantage that it will no doubt seek to exploit.

There are two major changes to the act that I would particularly welcome. First, adjudicators should be given the power to amend their decisions in exceptional cases. For instance, where there has been an obvious mistake, as in Bouygues vs Dahl Jenson (17/11/99) or there is an obvious ambiguity in what the decision means, as in FW Cook vs Shimizu (14/1/00). The current position is that there is nothing that an adjudicator, whose job is over once the decision has been delivered, can do to correct such an error or ambiguity. In my view, the legislation should be amended so as to give the adjudicator power to amend his decision.

Second, it is an inevitable part of the construction process that the same dispute or matter will potentially affect more than one contractual relationship. In those circumstances, it makes no sense to have multiple adjudications heard by different adjudicators, at different times, reaching different decisions, on the same facts. All that does is to maximise the disruption that inevitably accompanies disputes, to the detriment of all concerned.

The answer is surely to amend the legislation to enable a party involved in adjudication proceedings to bring other parties into the adjudication where they have a dispute that involves similar subject matter and where the adjudicator thinks that it would be in the interests of justice for both disputes to be heard at the same time.