15 December 2016

Forecasting the future is always difficult; but it helps when you have solid foundations on which to build. Since its first introduction in Sir Michael Latham’s 1994 review, Constructing the Team, construction adjudication has laid down some very significant foundations and indeed has developed into a stable and mature market in just a couple of decades. In that first review, Latham identified his aim as: "helping clients to obtain the high quality projects to which they aspire. That requires better performance, but with fairness to all involved. Above all, it needs teamwork. Management jargon calls that "seeking win-win solutions". I prefer the immortal words of the Dodo in Alice’s Adventures in Wonderland, "everybody has won and all must have prizes". The prize is enhanced performance in a healthier atmosphere. It will lead to a brighter image and better rewards for a great industry."

In his report, Latham advocated a cheaper and quicker way of resolving construction disputes, backed up by legislation. Fast forward a couple of years, and the Construction Act 1996 arrived, bringing with it adjudication as a statutory method of resolving construction disputes. Adjudication has now been around for 20 years and the dispute resolution "landscape" for construction has undoubtedly changed – but is construction dispute resolution in 2016 really a case of "everybody has won and all must have prizes"?

In the late 1980s and early 1990s, the number of claims (or writs, as they were) issued in the Official Referees' Court (the forerunner to the TCC) ran to well over 2,000 every year. The annual number of claims in today's TCC is around 400 to 500. Domestic arbitration, which was itself subject to a new Act in 1996, has dwindled for construction disputes. Adjudication, meanwhile, continues to be popular and still generates new and complicated issues to be considered by the courts. The past 12 to 18 months alone have seen decisions by the TCC on areas such as transparency, the inter-relation between interim payment applications, valuations and payless notices and the use of factually inconsistent arguments in different adjudications. Adjudications frequently involve lawyers, claims consultants and experts and, as Mr Justice Coulson noted at the TeCSA Annual Adjudication Conference on 17 November 2016, adjudication cases are "not getting any easier".

Adjudication has certainly "matured" as a method of resolving sometimes complex construction disputes. The old moniker of it being "the Wild West" of dispute resolution is now, arguably, inappropriate. But it remains a relatively "rough and ready" form of dispute resolution, which delivers results quickly and reasonably cheaply. Adjudication probably also achieves an underlying aim of the Latham report, which is that it usually allows disputes to be resolved while works are ongoing, with minimal disruption. And it has certainly lived up to Sir Michael Latham's aim that adjudication should be the "normal" method of dispute resolution.

So are we now in a place where everybody wins and all have prizes? Construction disputes can certainly be resolved much more quickly, cheaply and less adversarially than used to be the case. But adjudication, as a process, will have to continue to mature and develop over the next 20 years if the construction industry is to reap even greater rewards than it already has done.

In the shorter term, it looks likely that 2017 will see a continuation of the use of adjudication to resolve construction disputes, as well as the TCC in adjudication enforcement proceedings. This promises to provide new, interesting and complex areas for discussion in the dispute resolution arena for the construction industry, probably building on the case-law from 2016 relating to payless notices, interim applications and valuation disputes.

If you would like any further information, please contact our Construction Disputes specialist team.

This article was first published on 29 November 2016 and has been updated as part of out Dispute Resolution Festive Forecast.

Dispute Resolution Festive Forecast

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Steven James

Steven James Partner

  • Construction and Engineering 
  • Energy and Utilities
  • Construction Disputes

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