27 Aug 2021
Matt Molloy reflects on the past 25 years of adjudication in the UK
This year marks the 25th anniversary of the Housing, Grants Construction and Regeneration Act 1996 (the Construction Act) receiving Royal Assent, although it didn’t come into effect until 1 May 1998. With it came the introduction of statutory adjudication into the UK construction industry. How has this affected the sector? And what does the future hold?
Where have we come from?
The call for adjudication from certain sections of the construction industry came as a result of dissatisfaction with how disputes were dealt with in the UK. Litigation was a lengthy and expensive process and arbitration was perceived as the same, ie ‘litigation in suits’. Those players with deeper pockets could postpone payment for years after completion and engage in a drawn out process where only those with sufficient funds were able to last the course. Thus, in some way, adjudication was seen as a means of redressing the balance with the rubric of ‘pay now, argue later’.
At the time, the reception from the legal community was frosty. The titles of some of the papers published at the time give some clues:
The latter paper gives a characteristically strong and colourful account of the perceived shortcomings of ‘industry’ arbitrators or adjudicators and their seeming bias against the client or ‘paymaster parties’.
Where Are We Now?
It is fair to say that adjudication is now an embedded and integral part of the UK construction industry dispute resolution landscape. A key factor in this is the support and guidance the process has received from the Courts, most notably the Technology and Construction Court, its alumni in the Court of Appeal and further endorsement in the Supreme Court. Lord Justice Coulson’s parting gift before his elevation to the Court of Appeal in S&T (UK) Limited v Grove Developments Limited [2018] EWHC 123 (TCC) and his subsequent leading judgment in Bresco Electrical Services Limited (in liquidation) v Michael J Lonsdale (Electrical) Limited and Cannon Corporate Limited v Primus Build Limited [2019] EWCA Civ 27 (Bresco) give a flavour of the rise in status of the process. Lord Briggs’ opinion in the UK Supreme Court in Bresco ([2020] UKSC 25) added even greater weight.
However, one aspect of the increase in status is the increase in complexity of the process. Allied with this is the effect it has on the cost of the process. Thankfully, there has been some progress in this regard, with the advent of low value dispute schemes, such as the CIC LVD Model Adjudication Procedure and the TeCSA LVD Scheme.
Where Are We Going?
Oscar Wilde is quoted as saying that “imitation is the sincerest form of flattery that mediocrity can pay to greatness”. Hence, we can see adjudication being adopted in other industries – for example, the Professional Negligence Bar Association and Society of Computers and Law have introduced adjudication schemes. There has also been an increased uptake of adjudication internationally. Perhaps predictably, this has been confined to common law and/or Commonwealth countries, but there are predictions that this may not always be the case. Germany, for instance – a civil law jurisdiction – has been considering the process. The International Federation of Consulting Engineers is also currently looking to cater for an increased demand for adjudicators on projects where its contracts are used.
Although training and qualification of adjudicators has developed in line with the increase in complexity, one concern among those who have invested in the training is the difficulty of developing a practice as an adjudicator. The situation is arguably similar to mediation and arbitration. However, the difference is that, historically, newly trained or qualified arbitrators or mediators were able to act as pupils or observers in order to get hands on experience and receive guidance from experienced practitioners which they could then use in support of getting onto panels and getting their first appointment. My view is that there is a real need for adjudication to follow suit in this respect.
Final Thoughts
Adjudication is now a mature, complex and highly legal process. With this comes expense and an increased need for quality and accountability. Recent moves to make adjudication more accessible to SMEs in order to resolve low value disputes are welcome. However, low value does not necessarily equate with simplicity or an absence of complexity. Thus, the training requirements, case management and decision making skills are as, if not more, demanding for these types of disputes as for high value, complex disputes with sophisticated and experienced representatives. This provides a challenge. It also provides an opportunity.
About the Author
Matt Molloy is a Chartered Surveyor, Barrister and Chartered Arbitrator. He acts as a full time adjudicator, arbitrator and mediator in the UK and internationally. He is a Director of MCMS Limited and the current Chair of the CIC ADR Management Board.
Matt Molloy, Chartered Surveyor, Barrister and Chartered Arbitrator