10 years of the Construction Act

My, how time flies. The Construction Act, those payment rules, this adjudication thing is 10 years old! I rank this piece of legislation as the most important act of parliament in our world of building and civil engineering. It would get a gold medal in the Olympics for importance. I rank this piece of legislation as the most successful thing to happen in our world of commerce. I rank this piece of legislation as the most remarkable step in the English legal system. More gold medals.

And yet and yet, at 10 years old, I still don’t know truly what it is. This brat at two had tantrums, at four had a mind of its own, at six and eight it was tricky, and at 10 it gives the rest of us tantrums. And I wouldn’t be without it. Flawed? Yes. Must improve? Yes. Could do better? Yes. Come on, what were they saying about you at 10?

The feature that astonishes me most is cash flow. The new payment rules, together with the thought of getting a thick ear from an adjudicator, really does move cash. More than that, it stops dead the bloke who thinks he should be paid for this or that because an adjudicator shows him he is owed nothing.

There was an awful lot of whingeing that this or that payer was screwing his subcontractors. It is true, sometimes. But the subcontractors have been pushed to compile interim accounts, and even final accounts, in a much more detailed and accurate way. Do that and impress the payer; do that and impress the adjudicator; do that and get paid; don’t do that and don’t get paid.

Before the brat, before 1 May 1998, what was to be done about payment disputes? Well, what you could not do was litigate. The courts in 1998 could not decide a dispute without “a deep forensic investigation”. But commerce, particularly building contractors, needed something faster – miles faster. Something within days, even if it was broad-brush; and we were given a system that an awful lot of lawyers thought was daft. The row was stopped, temporarily at least, by an industry wallah, unconnected with the project, deciding in the round whether the money should be paid or not.

Cash flow starvation tactics were tackled immediately and effectively. Start to finish, the process was 28 days … crash, bang, wallop. None of that needed lawyers. And I bet, if you pause here, all that makes sense, doesn’t it? All it needed was an engineer, QS or architect to look, sniff, prod and decide.

I vividly remember, heaven help me, urging these “lookers and sniffers” not to confuse their role with that of an arbitrator. An arbitrator does the work of a judge, requires evidence, legal submissions, witnesses on oath, barrister, solicitors and experts. Tish tosh, said I, none of that’s needed or expected for a 28-day crash bang wallop. All that was needed was a “feel” for if money ought to be paid pro-tem. Ten years on, looking and sniffing is not on.

Snags began to show up when a building firm refused to obey the adjudicator’s decision. How do we “oblige” the naughty party to obey? The dispute was taken to court and a judge was asked to enforce the adjudicator’s decision. It was all new to the court. The system of Construction Act adjudicating had none of the “grinding detail” of normal dispute resolution. Damn it, the act didn’t even call itself a dispute resolution system. Damn it again, the High Court was being asked to enforce some idea from Mars, asked to ignore plain errors of law, ignore the weight of evidence, ignore the fact the adjudicator used a procedure and carried out an inquiry in a way no arbitrator would dream of doing. Some judges found the idea of an adjudicator talking to one side without the other present utterly repugnant. Nobody understood what this brat wanted in 28 days.

To their credit the courts and the adjudicators edged their way to accommodate each other’s worries. The courts would enforce the decision, provided the adjudicator adopted more traditional “due process”. The courts have made adjudication work. Adjudication gets the cash moving … even the threat of adjudication gets things moving.

And after 10 years the system has worked so well adjudication is managing the most complex disputes. And after 10 years the adjudicators have massively improved their skills. True, we’re more likely to apply proven facts to the law of the contract, and while we adjudicators don’t always get gold medals from both winner and loser, everybody wins a prize in the proper 10-year end of term report. Parliament’s a winner, construction too, and the courts as well. Wow!

aders 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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