COVID-19 impact on construction disputes – our top tips for virtual proceedings

The pandemic has significantly changed how construction claims are dealt with. We look at the impact on adjudication, arbitration and litigation

14 August 2020

Since the prime minster announced lockdown on 23 March 2020, the UK has been adjusting to the ‘new normal’ – abiding by social distancing and (largely) staying at home. This has brought about unprecedented challenges for the construction industry and the resolution of construction disputes. 20 weeks in and lockdown is slowly starting to ease. Whilst there is a sense of the country slowly re-opening and construction operations ramping up, social distancing and all the associated challenges look set to remain for the foreseeable future.

This article explores the transition of the courts and specialist tribunals (namely arbitration and adjudication) from the early months of lockdown into the ‘new normal’ for construction and engineering dispute resolution. As well as the inevitable challenges the industry has faced, we have found that there have been some advantages to the new working practices. After considering some relevant judgments and official guidance, we share our five top tips for remote proceedings.

Initial impact of COVID-19 on proceedings

During the very early days of lockdown, like many other organisations, the courts were struggling to adjust to the new restrictions. The courts were prioritising more urgent cases, hearings were adjourned, some individual courts were closed and others operated with fewer staff and on reduced opening hours. Even for those courts that remained open there were issues, as postal and other businesses were also grappling with new lockdown measures. Parties also grappled with the usual paper heavy processes of adjudication and arbitration and some claimants were less keen to proceed into dispute whilst they also dealt with the upheaval to the ‘day job’.

It was clear that guidance was needed on how to proceed.

The courts were swift to respond. By the middle of April 2020, 15 High Court judgements referenced COVID-19, providing a range of guidance and directions for the resolution of the claims before the court, and new Practice Directions on remote hearings (PD 51Y) and staying possession proceedings (PD 51Z) had been published.

Similarly for adjudication, the construction industry was given a clear message from the Technology and Construction division of the Business and Property Courts (the TCC): it is business as usual.

Millchris Developments Ltd v Waters [2020] 4 WLUK 45 established the principle that parties cannot rely on the unprecedented circumstances caused by the pandemic to avoid adjudication. The judge ruled that difficulties resulting from COVID-19 were not valid reasons for parties to avoid participating in adjudication proceedings and natural justice arguments would not be engaged if adjudications proceeded. Rather, the parties had to work around the challenges. In this case, given adequate means of electronic communication, site visits could have been conducted via video link and extensions were proposed to accommodate potentially unavailable witnesses.

Broseley London Ltd v Prime Asset Management Ltd [2020] EWHC 944 (TCC) demonstrated that while cash flow will undoubtedly be a problem for many companies during the pandemic, the court was not prepared to allow adjudication to deviate from its primary purpose of a facilitating a ‘pay now, argue later’ regime.

The courts’ message of ‘business as usual’ meant that proceedings needed to adapt. A new way of working was needed.

A ‘new normal’ for proceedings

Courts and tribunals are rapidly settling into a new way of working, allowing them to continue to function in these exceptional circumstances. Here’s what the ‘new normal’ for proceedings looks like:

  • Remote hearings: the updated Practice Direction, on conducting remote hearings, has been wholeheartedly adopted by the TCC and hearings (both public and private) via video conferencing software such as Zoom and Skype are the new norm. We have also seen hybrid solutions where some participants appear in person but others join the proceedings remotely.
  • Electronic filing and bundling: whilst already on the rise, electronic filing and bundling is now commonplace, via the courts or through emails and data rooms for private hearings.
  • Constant change: it is clear that guidance and procedures are rapidly changing. Parties are advised to keep track of the government’s website which publishes live updates on the status of each court, including details on which courts are open, staffed and suspended. Guidance from the courts on what the latest procedures are can be found in the recent Practice Directions.

Given the rapid technological changes, we have also seen the courts grapple with how they maintain due process and proper control of proceedings. A strong warning message has been issued recently in this regard in the case of (1) Aleksej Gubarev (2) Webzilla Ltd V (1) Orbis Business Intelligence Ltd (2) Christopher Steele (2020) EWHC 2167 (QB), with the key takeaway message being to ensure strict compliance with any orders as to the procedure for remote hearings made by the courts.

Top Tips

With social distancing looking set to remain for the foreseeable future, it is important that parties are comfortable with the new normal and even make the best of some of the changes arising. From our experiences to date, here are our five top tips for virtual proceedings:

  • Be flexible: we have seen a trend emerging in the approach to virtual proceedings. The courts, arbitrators and adjudicators alike are expecting the parties to act reasonably, work collaboratively and make allowances for the unique working environment. Any party that seeks to be difficult or place unnecessary barriers in the way of the fair hearing of a dispute is unlikely to be looked upon favourably by the tribunal. This is important to bear in mind, particularly when seeking to agree timetables and directions with the other side.
  • Hearing protocol: pre-agreeing a protocol for the hearing helps to remove some of the uncertainty and lets everyone focus on the important issues. The protocol should deal with timings, documents (hard copy/electronic?), logistics (who is sending the invites for a hearing? attendees?), technology matters (which mics and cameras are on and which are off?) and costs (both of any system and/or additional services such as e-bundling and/or transcription).
  • Managing documents: the accelerated move to managing documents electronically has brought benefits and challenges. Whilst this could be the much needed opportunity to switch to e-copies, not everyone will be familiar with the technology. Electronic bundles therefore need to be easy to navigate, with clear instructions on accessing and use of documents. Timing of the collation of an electronic bundle cannot be under-estimated – whilst it may be electronic, it does not necessarily mean it will be quicker than hard copy collation, especially if documents did not originate in electronic form. Further, it should be considered that the adjudicator / arbitrator / court may still require a hard copy bundle. If this is the case, consider the logistics involved, for example, who will prepare the bundle? Are there any postal restrictions?
  • Pre-empt technical issues: technology will always bring challenges and IT issues. Parties should pre-empt this and take steps to minimise the impact. Don’t leave submission via email/data site to the last minute – plan ahead! A test/trial set-up for any hearing to check technology is also recommended, as well as building into your protocol agreement arrangements on what happens if things go wrong (e.g. who does the affected party contact mid-hearing if they drop off the virtual platform?).
  • Appropriate communication channels: when you are not at an in-person hearing, there isn’t an opportunity to pass notes to counsel or catch your expert at the break out session. Therefore, give some thought in advance as to what channels of communication need to be set up to ensure that the relevant people can contact each other. We have found the use of a platform separate to the one being used for the hearing is a useful way of ensuring we stay in touch and are joined up.

In our view, with an innovative and resourceful approach, it’s more than possible for remote proceedings to be conducted smoothly and in some cases more efficiently in spite of the unprecedented times.

If you would like to discuss any of the issues in this article, please contact Richard Adams.

This article was written by Karen Paley and Sophie Smith.

Key contact

Richard Adams

Richard Adams Partner

  • Construction and Engineering
  • Construction Disputes
  • Infrastructure

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