10 th Adjudication Update Seminar 08.11.04 ADJUDICATION FOLLOWING THE LATHAM REVIEW Graham Watts Chief Executive Construction Industry Council Chairman,

10th Adjudication Update Seminar 08.11.04

ADJUDICATION FOLLOWING ADJUDICATION FOLLOWING THE LATHAM REVIEWTHE LATHAM REVIEW

Graham Watts

Chief ExecutiveConstruction Industry Council

Chairman, Construction Umbrella Bodies (CUB)

Adjudication Task Group


Five Documents

• Budget 2004 17 March

• DTI “kick-off” letter 24 March

• CUB Report 29 July

• Latham letter 17 September

• Griffiths response 21 October


Budget 2004

Section 3: meeting the productivity challenge

Para 3.59

‘… following concerns expressed by the construction industry on unreasonable delays in payment, the Government will review the operation of the adjudication and payment provisions in the Housing Grants, Construction and Regeneration Act 1996 to see what improvements can be made’.


DTI “kick-off” letter

• ‘the Chancellor announced a review of payment provisions…’

• DTI to run Review

• Latham to chair Review

• Detailed Timetable


Review Timetable

• End April - First meeting

• End July - Reports from work groups

• Early September - Agree options

• Early October - Publish consultation paper

• End March ‘05 - Implementation starts


Review Group meeting – 29 April

• Not a personal review

• Establish two sub-groups for Review

- Payment Group chaired by Richard Haryott

- Adjudication Groupchaired by Graham Watts

• Agreed timetable


CUB Adjudication task force

• Existed since 2001

• Guidance for Adjudicators (June 2002)

• Users’ Guide to Adjudication (April 2003)

• Enhanced Membership for Review

• Invited views from other bodies


CUB Report 29 July

Modus Operandii

• Three full meetings

• Need for consensus

- Green

- Amber

- Red


CUB Report 29 July

Major Issues

• Adjudication Working Well

• Need for further guidance

• 19 ‘green’ recommendations

• 8 ‘amber’ recommendations


CUB Report 29 July

Further Guidance

• Improve Quality of AdjudicatorsMore training & guidance on:

- dealing with late/inadequate submissions- adjudicator’s power to take the initiative to ascertain the facts/the law- appointment of experts, assessors and legal advisers- fees

• Improve Guidance for users- assess whether adjudication is right for them


CUB Report 29 July

Recommendations – Scope

• Case to consider removing exclusion for PFI contracts

• Case to consider removing the residential occupier exclusion

• Law needs to be clarified in relation to ‘evidenced in writing’

• Case to consider deleting process plant exclusions


CUB Report 29 July

Recommendations – Act

Cost

• Outlaw the practice of one party requiring that the referring party pays both parties’ costs irrespective of outcome

• Parties have freedom to agree that the adjudicator may award the parties legal costs


CUB Report 29 July

Recommendation – ActSingle Adjudication Procedure

• Section 108 should outlaw unacceptable provisions by tightening up on the minimum requirements for a compliant procedure

• There should be a single procedure


CUB Report 29 July

Recommendations – Act

Immunity/Independence

• Consider the introduction of statutory protection for adjudicators

• Provide a clearer definition of the term ‘independent’


CUB Report 29 July

Other Recommendations – Act

• Amend Section 108(1) to include under or arising out of the contract

• Prohibit such devices as requiring payments to a trustee stakeholder account (or similar)

• Adjudicator should have a power to make full and final decision on their own jurisdiction for all purposes – or a power limited to certain circumstances


CUB Report 29 July

Green Recommendations – Scheme

• enforce the principal that the parties will bear their own costs• enable adjudicator to resign through lack of jurisdiction.• reasons to be given unless the parties agree otherwise.• express reference to the right to serve a response.• express ‘slip rule’.• express requirement that the adjudicator shall copy legal or

technical advice to the parties.• Several drafting amendments aimed at improving procedure for

appointment, related disputes, payment of interest, enforcement, negligence.


Latham Letter 17 September

Key Points – General

• ‘…enquiry into payment and related issues…’• A Government proposed and commissioned

review.• New option for making Regulatory Reform

Orders under Regulatory Reform Act (2001).• Adjudication = ‘agreed set of proposals’.• Payment = ‘harder to reach consensus’• Invite Government Consultation document


Latham Letter 17 September

Key Points – Adjudication

• Act has worked ‘generally very well’.• Adjudication – ‘remarkably successful process’.• Changes recommended – ‘to deal with those

unforeseen issues which have arisen’.• Not to alter general thrust of Act.• Reinforce the intentions of Parliament.


Griffiths Response 21 October

Key Points – General

• Review is ‘valuable’• Credit that Review generated so much agreement• Excellent starting point for full consultation exercise• Consultation paper will contain ‘detailed proposals to

establish degree of support …for ... specific changes to the Act’.

• Amber issues are still under consideration.• Objective ‘has to remain that of building further

consensus wherever possible’.


Griffiths Response 21 October

Rules out Changes to Scope

• Extending Act to cover contracts for domestic customers

• Removing exclusion of head contracts under PFI

• Removing exclusion for operations related to process plant


NEXT STEPS

• Complicated negotiations within Government

- Inter-departmental

- What can be done under RRA

- Devolved Powers in Wales

• No consultation paper this side of 2005• No chance of action before next General

Election