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Nobody’s forcing you to do it
The Construction Act deals a knock-out blow to
adjudicators who try to hold on to the award until they get
paid. But if the parties don’t like that rule, they don’t have
to adjudicate at all
“If the parties conduct a dispute under
machinery of their own choice and neither insists on his right
to have construction Act dispute machinery, so be it”
Hamish Lal, solicitor advocate at Dundas &
Wilson, has splendidly argued that the adjudication in
Mott MacDonald vs London & Regional Properties is
unenforceable and probably a nullity.
Two technical and complex knock-out blows
defeat the adjudicator’s decision, which was that Mott MacDonald
should get £63k in withheld fees. Knock-out blow number one was
the awfully silly rule about “contracts in writing”. I need say
no more about that, except “parliament, please get rid of it”.
Knock-out blow number two is much more
interesting. It’s another affair to do with what I call “fair
exchange”.
If your adjudicator says you can have their
product – the decision – when you pay for it, is that fair
exchange? This is important, because the decision contains some
good news and some bad news. And the receiver of the bad news is
sometimes a tad fed up. And sometimes they become spiteful and
want someone’s blood – the adjudicator’s.
As a result, adjudicators up and down the
land now say: “Fair exchange, please”. There are even several
respectable institutions that publish standard adjudication
rules saying, “Pay the adjudicator, then take delivery of the
award”. What’s more, in arbitration, parliament has laid down a
rule that the arbitrator is allowed to refuse to deliver their
award before full payment of fees and expenses.
In several recent cases, the adjudicator has
run past the formal due date for the delivery of their decision
because their fees had not been paid. What’s more, the parties
both seem to have agreed to those terms in their adjudication
agreement or implied their consent by agreeing the adjudicator’s
terms. You would have thought that if those parties had agreed
such a deal as “fair exchange”, the deal would stick. Well, er,
no.
Some of the cases have said that delivery of
the award on day 28 or some other agreed date is mandatory. No
pre-dispute agreement in adjudication rules can defeat that.
Fair enough. So if the contract has a rule that allows the
adjudicator to run past the mandatory date, that rule is said to
be void under the Construction Act because parliament created a
rule that cannot be overruled.
The Construction Act is one of those acts of
parliament that contains rules that cannot be changed by
party-and-party consent. So, any rule in the Construction Act is
unalterable even if the parties agree it is. Moreover, a party
can even resile after the decision is delivered. And in recent
cases, the courts have then said the decision was void. Wow,
what a great escape route. Can’t be right.
Look, Construction Act adjudication and its
mandatory rules are only mandatory when used. Construction Act
adjudication is not mandatory in itself. When a dispute pops up,
the parties need not use Construction Act adjudication at all.
They can use litigation, arbitration, mediation, expert
determination, negotiation or any invented dispute resolution
process.
On the other hand, parties can ignore
parliament’s adjudication machine and invent their own if they
want. So, if the parties conduct a dispute under machinery of
their own choice and – this bit is important – neither party
insists on their right to use the Construction Act machinery, so
be it.
Here is a silly example. If you and I, in a
contract, pre-agree that my Auntie Nell will be the adjudicator,
and you know I am her favourite nephew, then it’s bias and the
Construction Act will strike it down. It’s not compliant. That’s
true, but unless you or I insist on a Construction Act
adjudication, we can use our own dispute resolution process,
even though it offends the act.
Put shortly, as soon as two parties agree by
one means or another, a rule or machine outside the Construction
Act, they are not triggering their statutory right, they are
triggering a homemade right – and that’s not void at all. It is
enforceable and fair.
Two things to remember: you can invent all
your own rules, but you can’t take away the statutory right to
sling your own rules out of your own contract. Parliament reigns
supreme … sort of.
Readers are invited to forward recent
judgments for reporting in this column (with full
acknowledgement) to: Tony Bingham, 3 Paper Buildings, Temple,
London EC4Y 7EU. DX: 37164 Biggleswade
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