Local Government Lawyer Home Page


Sharpe Edge Webpage Banner

Welcome to Sharpe Edge, Sharpe Pritchard’s local government legal hub on Local Government Lawyer.

Sharpe Edge features news, views and analysis from our team of specialist local government lawyers working at the heart of the latest legal developments. Sharpe Edge platform is also the only place where local government lawyers can get e-access to two law books by our Head of Local Government Rob Hann: The Guide to Local Authority Charging and Trading Powers (‘LACAT’) and The Guide to Local Authority Companies and Partnerships (‘LACAP’).

 

                                                                                                  

Slide background

JCT Dispute Adjudication Board Rules: a case of “three’s a crowd”?

<a href=Peter Jansen who specialises in construction law and dispute resolution, examines the roles and functions of the JCT’s Dispute Adjudication Board and highlights some key considerations for parties planning to adopt the Rules in their JCT contracts.

Background

In March 2021 the JCT issued the JCT Dispute Adjudication Board Rules 2021 (the “Rules”).

This is the first attempt at introducing an Adjudication Board (“DAB”) specifically for use in the UK. As such, the Rules need to comply with S.108 of the Construction Act 1996 (the “Act”) and whilst they are likely to be compliant, jurisdictional challenges are still a possibility.

Roles and Functions

DABs serve both as an advisory panel to help resolve disputes throughout a project and also as the formally appointed adjudicator to whom disputes are referred. There is potential tension between these two roles.

The advisory role has three functions:

  • Periodic site visits and meetings with the parties on site;
  • Providing non-binding ‘informal advisory opinions’; and
  • Making non-binding ‘recommendations’ through a formal process.

Setting up the DAB

In order for the Rules to take effect, the JCT contract the parties are to use has to be amended. The supplement containing the Rules includes recommended wording that incorporates them into the contract. JCT contracts otherwise apply adjudication rules under ‘Scheme for Construction Contracts’ 1998 (“Scheme Rules”).

Once adopted, the DAB Rules become mandatory, with some exceptions. The Scheme Rules are not replaced, however, they are retained for cases where the Rules cannot be implemented. Once the contract is signed, the DAB should be appointed within 20 days. If DAB appointments cannot be agreed this can be done by the Chartered Institute of Arbitrators on request by either party.

JCT DAB panels come in two sizes: a one person DAB or a panel of three. There are risks in the number the parties select, as explained opposite.

Another scenario is where a JCT contract is signed with DAB Rules, but the parties then do nothing to appoint the DAB. If a dispute arises, without a DAB having actually been appointed, adjudication can proceed not under the DAB rules but under the Scheme Rules, which become the default in this situation.

There are other exceptions where the Scheme Rules would be applied instead of the DAB Rules. These include DAB failing to reach a decision, cases of extreme urgency or requiring relief outside the powers of the DAB (e.g injunctions).

Compliance with the Construction Act

The Scheme Rules in any event apply whenever adjudication provisions do not comply with S108 of the Act, so do the Rules comply? To do so, they must:

“Enable a party to give notice at any time of his intention to refer a dispute to adjudication.”

The Rules do this. Whilst they offer alternatives, adjudication is commenced by a party notifying its intention to refer a dispute to the DAB and is mandatory for obtaining a decision.

“Provide a timetable to secure the appointment of the adjudicator and referral of the dispute to him within seven days of the notice of intention to refer.”

In appointing the DAB parties chose between the options of a one-member or three-member DAB. The Rules can only clearly comply with the seven day timetable requirement if the single-member option has been selected in the contract.

A three-member DAB is problematic because S108 makes no provision for a “plural” adjudicator. It has been argued that the word ‘adjudicator’ used in S108 doesn’t require the adjudicator to be a single or ‘natural’ person.

Nevertheless, the position is unclear. S108(2)(b) refers to the ‘appointment of the adjudicator and referral of the dispute to him within seven days of such notice’.

The same pronoun appears in S108(2)(c), with “his” and “him” used consistently throughout, pointing to a requirement for a single adjudicator. Paragraph 4 of the Scheme also provides: ‘any person requested or selected to act as an adjudicator in accordance with paragraphs 2, 5 or 6 shall be a natural person acting in his personal capacity’, which suggests (although does not mandate) a single adjudicator.

Arguably if the intention had been for the “adjudicator” to be either singular or plural a neutral expression such as “the tribunal” as in the Arbitration Act 1996 would have been used. Whilst a panel of three is not expressly precluded, it is safer to choose a single adjudicator.

“Require the adjudicator to reach a decision within 28 days of referral to him or such longer period as is agreed by the parties after the dispute has been referred”.

This time limit provides a further good reason for a single adjudicator requirement in the legislation. Ordinarily, it can be met by a single adjudicator. Imposing this commitment on three independent adjudicators is likely to involve a greater burden.

That will be increased because the 3 member DAB must always try to reach a unanimous decision. The DAB is likely to have less than 28 days to reach a decision because time must be allowed for trying to achieve unanimity.

As written, the Rules do reflect this precise requirement of S108. However, doubt remains about whether the requirement for a three-member DAB to reach a unanimous decision within 28 days from receipt of the referral is realistic or achievable.

The Rules comply with other S108 requirements and are consistent with them.

Decisions

The referring party notifies the responding party and simultaneously the DAB of its intention to refer a dispute to adjudication. Within seven days from that notice the referring party serves its referral on the DAB and the responding party. At that point 28 days for reaching a decision commences. The DAB can establish its own procedures in the adjudication.

Experts

The Scheme empowers the adjudicator to arrange independent tests / experiments, e.g., on defective materials. By contrast the Rules empower the DAB to “make use of its own specialist knowledge” e.g., meaning that one member of a three-member DAB panel could give expert advice to the DAB as a whole. The position of a single member DAB is unclear.

Under the Scheme, the adjudicator may by agreement appoint his own experts, assessors or legal advisers. In disputes about instructions to open up the works for inspection, JCT contracts require the adjudicator either to have his own relevant expertise or to appoint an independent expert with suitable expertise. The DAB Rules if applicable cancel these requirements.

The focus on a DAB’s own specialist knowledge could involve the opinion of another member, perhaps a member not previously involved in the dispute. In that situation rules of natural justice should be observed.

These can require the DAB to share with both parties any technical opinion (including from another member of the DAB) upon which a decision might be based. In RSL (South West) Ltd v Stansell1 Ltd the TCC refused to enforce an adjudicator’s decision which relied upon the final report of an expert that had not been shared with both parties.

The Scheme requires adjudicators to make available all information taken into account in reaching his decision, including all the information that it receives from third parties such as experts. The equivalent Rules, however, only cover information received from parties to the dispute.

Decisions are binding pending final determination of the dispute by a court or arbitrator. Unlike a scheme adjudication, the DAB adjudication is mandatory: disputes cannot be referred to arbitration or court proceedings unless first determined by the DAB. Even if a final determination is sought, the adjudicator’s decision must be complied with without delay. Summary relief is available from the court to secure compliance until the dispute is finally determined.

Recommendations

As an alternative to an adjudication decision the Rule allow the referring party instead to ask the DAB to make a “Recommendation”.

Although procedural rules for arriving at a Recommendation are the same for reaching a decision, a Recommendation is not adjudication under the Act. Therefore, many of the legal principles around adjudication would not apply to a non-binding Recommendation.

Although non-binding, a “Recommendation” is nevertheless admissible in later legal/arbitral proceedings: neither party is bound by the Recommendation, but the court could assess its evidential weight. However, parties should be cautious: unlike some forms of “evaluation” given by mediators, a “Recommendation” is not a “without prejudice” communication.

A favourable Recommendation cannot be used to support a subsequent referral for an adjudication decision on the same dispute.

Informal Advisory Opinion

The DAB can be asked to give an informal advisory opinion on a potential dispute. The opinion may be provided during a conversation with the parties (e.g., a conference call), at a meeting on site with the parties or during a site visit, or in a written note requested by the parties.

In any subsequent Recommendation or decision, the DAB is not bound by any “advisory opinion” it has previously given to the parties including any statements made during a site visit.

The intent is to capture anything said by the DAB in the nature of “advice”. The broad description covers much of what is stated, whether recorded or not and irrespective of the DAB’s intention.

Site Visits and Meetings

Informal advisory opinions are an extension of the DAB’s site visiting role. After an initial meeting, the frequency of the DAB’s site visits is agreed, with a default frequency of 2 months. During site meetings the DAB can take information from “informal conversations” with attendees about the performance of the contract and pending claims. Visits may also be combined with hearings of any disputes which have been referred for a decision.

The DAB will prepare a report of each site visit.

The DAB may not communicate, orally or in writing, with any one party in the absence of the other. Communications from one party
to the DAB must also be copied to the other.

Without prejudice correspondence is not to be copied to the adjudicator2.

The dual role of the DAB can mean that the risk of apparent bias from its presence at discussions on site will be inevitable.

Costs and Fees

Unless otherwise directed the parties are jointly and severally responsible for DAB members’ fees for ongoing site visits.

The DAB is empowered to decide how its fees for acting as adjudicator on any disputes will be apportioned. Ordinarily the losing party is ordered to pay these but not necessarily so. The parties must meet their own legal costs.

Peter Jansen is Legal Director at Sharpe Pritchard LLP.


For further insight and resources on local government legal issues from Sharpe Pritchard, please visit the SharpeEdge page by clicking on the banner below.

sharpe edge 600x100

This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any issue raised in this article, please contact us by telephone or email This email address is being protected from spambots. You need JavaScript enabled to view it.

LACAT BookFREE download!

A Guide to Local Authority Charging and Trading Powers

Written and edited by Sharpe Pritchard’s Head of Local Government, Rob Hann,

A Guide to Local Authority Charging and Trading Powers covers:

• Updated charging powers compendium          • Commercial trading options

• Teckal ‘public to public’                                    • Localism Act

FREE DOWNLOAD

LACAT BookAvailable to buy:

A Guide to Local Authority Companies and Partnerships

An invaluable, comprehensive toolkit for lawyers, law firms and others advising
on or participating in Local Authority Companies and Partnerships”

- Local Authority Chief Executive

BUY NOW

  More Articles

<a href=

Momentum for Heat Network Roll Out Gathers Pace

Steve Gummer discusses the increased momentum for a Heat Network Rollout.
Icons Hazard

Unconscious Bias, Discrimination and a Warning to Public Sector Employers

Christian Grierson and Julie Bann discuss two employment tribunal judgements, which provide a stark warning to public sector employers about unconscious bias and discrimination.
<a href=

Levelling up – A new opportunity for further devolution in England?

Rob Hann explores the Government's 'levelling up' policy and looks at whether it is an opportunity for further devolution in England.
<a href=

Time limits for commencing proceedings in procurement challenges

Colin Ricciardiello discusses a landmark procurement challenge judgment on the time limit for commencing proceedings.
Icons Hazard

The Revised National Planning Policy Framework: Better design, greener outcomes?

Alastair Lewis and Sarah Wertheim outline the latest National Planning Policy Framework changes and explain how future developments will be impacted by the new rules.
<a href=

Loose talk costs money: Oral agreement to forego liquidated damages was valid

Michael Comba outlines and analyses a contract dispute resolution: Mansion Place Ltd v Fox Industrial Services Ltd [2021] EWHC 2972 (TCC)
<a href=

Procurement reform – an update

Radhika Devesher and Natasha Barlow provide a summary of the proposed and enacted changes to the UK procurement regime post-Brexit.
Icons Court

The Public Procurement Review Service Report: Procurement Pitfalls and How to Avoid Them

Juli Lau and Beth Edwards examine some of the most common procurement pitfalls and provide a checklist of points for local authorities to bear in mind in order to avoid costly errors.
<a href=

The Electric Vehicle Revolution or…

Emily Knowles discusses new legislation on the requirement of electric vehicle charging points, and its potential impact on the Electric Vehicle Revolution.
<a href=

Consultation on the Electronic Communications Code – What’s Changing?

Lillee Reid-Hunt outlines the legislative changes to the Electronic Communications Code.
Icons Court

You Must Adjudicate First NEC3 imposes obligation to adjudicate first before commencing court proceedings.

Michael Comba discusses NEC3 imposing an obligation to adjudicate first before commencing court proceedings.
Icons Court

Rocking aground the Christmas tree

Clare Mendelle and George Dale discuss and solve a common construction scenario, looking at the position under the Contract, and how the Employer should deal with the Contractor's request.
Icons Hazard

Adequacy Decision Granted to the UK

Charlotte Smith considers two recent adequacy decisions and explains how this affects existing data practices.
<a href=

Managing employees with long COVID and employees who have anxiety about returning to the office

Julie Bann and Victoria Smith consider how Long Covid may be treated under existing employment laws and provide compliance guidance for employers.
<a href=

Environment Act 2021: What Does it Mean for Waste Authorities?

Sally Stock, Juli Lau, Ellen Painter and Beth Edwards discuss notable changes made to the Environment Bill 2021-2022, which received Royal Assent on the 9th November.
<a href=

ESG and its relevance to the public sector

Peter Collins and Sydney Chandler discuss the growing importance of Environmental, Social, and Governance criteria in public procurement.
<a href=

JCT 101: Time and Punishment

Rachel Murray-Smith, Clare Mendelle and Laura Campbell discuss a common Construction scenario regarding the Practical Completion of a project, and the position under the unamended JCT DB 2016.
Icons Court

The importance of due process, communication and fairness in employee conduct investigations – what you need to know.

Julie Bann and James Hughes discuss the importance of fairness in employee conduct investigations, taking a look at the London Borough of Hammersmith and Fulham -v- Mr S Keable case.
<a href=

Becoming More Inclusive: VAT and Public Procurement

Juli Lau, Natasha Barlow and Beth Edwards examine the recently published Public Procurement Regulations 2021, focussing upon amendments to the thresholds within various procurement regimes.
<a href=

The LADs are Alright

Laura Campbell discusses liquidated damages in construction contracts, focussing upon the long-running Triple Point saga which ended in the Supreme Court this year.
<a href=

Procurement Policy Note 08/21

Juli Lau and Beth Edwards outline Procurement Policy Note 08/21, recently published by the Cabinet office.
Icons Court

Hard Times: Improving Air Quality with Clean Air Zones

Rob Hann and James Goldthorpe examine the introduction of Clean Air Zones to improve air quality across the UK.
<a href=

Autumn Budget Spending Review 2021 – What Public Bodies Need To Know

Rob Hann and James Hughes examine the Autumn Budget Spending Review 2021, looking at what Public Bodies need to know.
<a href=

Net Zero – What’s new for local authorities?

Steve Gummer and Sophie Drysdale look at two major climate publications: the Heat and Buildings Strategy and the Net Zero Strategy.
Icons Hazard

Jumping to conclusions: Final Statements, liquidated damages and material breaches of natural justice

Michael Comba looks at a recent Technology and Construction Court case that provides useful guidance on the JCT’s procedural requirements on disputing Final Statements.
Icons Court

Three times one equals one: Several disputed payment applications amount to a single dispute

Michael Comba considers a case in which the High Court dismissed an employer’s argument that an adjudicator lacked jurisdiction because the referral concerned three separate payment applications and, therefore, comprised three separate disputes.
<a href=

Warm feelings or hot air: the Heat and Buildings Strategy and Heat Networks

This week the government published its Heat and Buildings Strategy (Strategy). This contained vital innovations and essential step changes in terms of how heating is provided, writes Steve Gummer.
<a href=

Procurement reforms: update from Cabinet Office

Rob Hann, Nicola Sumner and Juli Lau assess the Cabinet Office's update on the progress of the government's public procurement reforms.
Icons Court

Bond, Performance Bond. Delivering value for the Public Sector?

Justin Mendelle examines whether public sector clients achieve value for money from the provision of performance bonds.
Icons Hazard

Not so personal messages: R. (on the application of Good Law Project Ltd) v Secretary of State for Health and Social Care and Abingdon Health Plc [2021] EWHC 2595 (TCC)

Nicola Sumner, Juli Lau and Beth Edwards look at The Good Law Project's challenge of the direct award by the Secretary of State for Health and Social Care of three contracts for the production and supply of rapid Covid-19 antibody tests (the “Contracts”).
<a href=

Insolvency – Termination and Beyond

Rachel Murray-Smith and Clare Mendelle consider the potential warning signs of, and the compliant manner for dealing with, contractor insolvency.
Icons Court

Settlement agreements – waiving Personal Injury claims

In the case of Farnham-Oliver v RM Educational Resources LTD, the Queen’s Bench Division of the High Court allowed a Personal Injury claim (“PI claim”) to be pursued by an employee against his former employer despite the parties signing a Settlement Agreement in respect of an Employment Tribunal claim on the same issue. Julie Bann and James Hughes report.
Icons Hazard

Mandatory Vaccination for Care Home Workers in England – Update

Rachel Murray-Smith and Francesca Gallagher look at the detail of the government's guidance on compulsory vaccination for care staff.
<a href=

Make your mind up! Liquidated Damages clause upheld despite Employer’s challenge

In the recent case of Eco World Ballymore (EWB) v Dobler[1] , an Employer took the unusual position of challenging their own entitlement to liquidated damages (LDs) on the ground that the LDs provision constituted an unenforceable penalty clause. Clare Mendelle and James Goldthorpe investigate.
<a href=

Are Collateral Warranties Construction Contracts? Timing is Key.

Clare Mendelle and Anna Sidebottom examine the recently decided case of Toppan v Simply[1], which has provided guidance on when collateral warranties may be considered “construction contracts” under the Housing Grants, Construction and Regeneration Act 1996 and so give the warranty holder the right to adjudicate.
Slide background