At the Annual Conference of the Adjudication Society held yesterday (30 November 2023), the Centre of Construction Law & Dispute Resolution at King's College London made public the results of the most recent research conducted by it into trends in adjudication. It makes interesting reading, particularly as 2023 marks the 25th anniversary of the coming into force of the 1996 Act, which gave the construction sector statutory adjudication to try to deal with disputes in the industry.
The 78-page report, formally entitled 'Tracing trends and guiding reform', is produced in collaboration with the Adjudication Society and is worthy of careful consideration. It is based on responses to questionnaires received from all those involved in adjudication including parties, party representatives, adjudicators and ANBs. The data covers the period 1 May 2022 to 30 April 2023.
Some findings stand out:
Trends
- The most common value of an adjudication claim was between £125,000 and £500,000. Only 3% of claims had values less than £25,000.
- So called 'smash and grab' adjudications accounted for most claims made, as identified by 63% of respondents.
- The number of referrals to adjudication between May 2022 and April 2023 was 2078, the second highest on record.
- The most common hourly rate of adjudicator remuneration was between £301 and £350.
- Most respondents indicated that the cost of an adjudication was between £20,000 and £30,000.
- 55% of respondents supported a pilot scheme to trial the publication of redacted adjudication decisions, although a majority were opposed to the publication of decisions generally.
- 27% of respondents indicated that they suspected adjudicator bias on at least one occasion.
Possible Reform
Part ll of the 1996 Act only applies to construction contracts for the carrying out of construction operations as defined in the 1996 Act. Importantly, the 1996 Act contains certain notable exceptions and exclusions which means that they restrict what amounts to a 'construction contract' and ‘construction operations'. Some consider that many of the exceptions and exclusions can't now be justified, particularly given how the work done by the construction sector has developed since the 1996 Act came into force.
The research indicates that a majority of respondents are in favour of repealing most of the section 105 exceptions and exclusions, while a majority would not support changing the residential occupier exclusion in section 106.
The construction operations exceptions in particular may be ripe for reconsideration. Some judicial pronouncements indicate a certain level of frustration at the perceived artificiality of some of the exceptions and exclusions which are thought to cause unnecessary complexity, for example, in relation to hybrid contracts where some operations are covered by the 1996 Act and others are not. As the report highlights, the English Court of Appeal said in one case:
“In the last 20 years, too much time and judicial resource has been spent grappling with the problems created by such hybrid contracts, of which this appeal is but one example. But until the Act is amended to do away with these unnecessary distinctions, the courts have to do their best to resolve the resulting, self- inflicted problems.”
It remains to be seen how the results of the research will inform and affect the practice and reform of the law of adjudication as we move forward into its next 25 years.
