Tim Seal is head of construction at Ridgemont
July marked the 30th anniversary of Sir Michael Latham’s 1994 seminal report Constructing the Team. As such, now is a good time to reflect on how one of its recommendations – the introduction of statutory adjudication – is faring today. And whether, in its current form, it’s likely to be what Latham had in mind.
“It may be that Latham knew that some of his aspirations could not be achieved”
First, it’s helpful to remember a few things about the report. It was commissioned by the government and industry and was preceded by another report titled Trust and Money, which is very much worth reading too. The final report’s full title is Joint Review of Procurement and Contractual Arrangements in the UK Construction Industry. It contained “recommendations to tackle the problems revealed in the consultation process”.
The report’s aim was to help clients obtain high-quality projects which required better performance, fairness and teamwork. So teamwork and collaboration were the primary motivators – not confrontation born of distrust and a drive to maximise profit.
Latham thought that a contract form with a built-in adjudication process provided a clear route ahead and away from the delay, high costs and inequality inherent in litigation that he saw bedevilling the construction industry in 1994. “Such a system must become the key to settling disputes in the construction industry” he said.
His adjudication recommendations were:
- It should be introduced within all standard form contracts and underpinned by legislation.
- There should be no restriction on the issues referable to an adjudicator.
- Decisions should be implemented immediately.
- Any appeals should be made after practical completion and should not be permitted to delay the implementation of the decision, unless an immediate and exceptional issue arises or if a party refuses to implement the decision.
- Training procedures for adjudicators and a code of practice should be drawn up.
Numbers 1 and 3 were implemented. Save that it must be a “dispute arising under the contract”, recommendation 2 was also implemented. The “made after practical completion” part of recommendation 4 was not implemented. In effect the rest of it was. Training procedures, but not a code of practice, were implemented from recommendation 5. So, most of his recommendations were brought into law.
Negative attitudes
It is right within these headline recommendations that the primary challenges faced by adjudication continue to manifest. It may be that Latham knew that some of his aspirations could not be achieved because of sector attitudes he had seen during the consultation stage. The review states: “The issues of the review provoke profound disagreement throughout the construction process.”
In fact, he predicted that two out of three responses to his report would be negative. In the report he wrote: “(i) they can refuse to have anything to do with the report” and “(ii) they can pick out the sections which suit them and reject the rest”.
Only the third predicted response was positive: “(iii) or, hopefully, they can try to make the package work, through the implementation structures which the report recommends. They can set about Constructing the Team.”
Regarding the recommendation that there be no restrictions on the issues referable to an adjudicator, clearly that creates a wide gateway into adjudication, but it is a forum narrowed considerably by the time available to conduct it and the sophistication of every aspect of its procedure.
Therefore one often ends up with large, complicated, voluminously pleaded and evidenced disputes, that the process and participants are ill-equipped to handle. That frequently creates some mayhem. Why Latham thought there should be no restrictions is not clear from his final report. It may be that in trying to address imbalance between the top and bottom of the supply chain right across his report, he left behind too few impediments.
As for training for adjudicators and a code of practice, this may be the Latham recommendation that ties into the bias concern that features as a “potential problem” in King’s College London’s 2022 adjudication survey and report and the comments about adjudicator competence often mentioned in conversation but not widely written about. The court’s reluctance to undermine adjudication decisions citing the ‘pay now, argue later’ adage and the nominating bodies’ apparent hostility to criticism of its adjudicators, means that quality control of adjudicators seems to be sparing.
Finally, recommendations 3 and 4. Here is the tension between the drive to have decisions implemented quickly on the one hand, and the need for at least some limited protection for the unsuccessful party from decisions that cross some lines. Like the wide gateway versus the limited time and (sometimes) limited quality points above, the tension between recommendations 3 and 4 is a big part of the adjudication experience.
How do we to improve these built-in conflicts, whether by legislative reform or otherwise? Is that what is wanted anyway? Perhaps on balance users like the lottery? These are questions for another day.
