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

Icons Hazard

Holiday entitlement and pay for atypical working arrangements: Harpur Trust v Brazel [2022] UKSC 21

Julie Bann and David Leach analyse a landmark Supreme Court ruling on holiday entitlement and pay for atypical working arrangements.
Icons House

UK Emission Trading Scheme to include waste incineration installations

Steve Gummer and Gonzalo Puertas take a look at the UK Emission Trading Scheme and new decisions on waste incineration.
Icons Document

Signet Trading Limited v First Property Group – First Award under the Commercial Rent (Coronavirus) Act 2022 Scheme

Joe Walker and James Nelson outline and analyse the first award under the Commercial Rent (Coronavirus) Act 2022 Scheme.
Icons Deal

Procurement reforms – implications for procurement challenges and remedies

Colin Ricciardello considers the implications for procurement challenges and remedies arising out of the Government's procurement reforms.
Icons House

Relationship between limitation act and scheme for construction contracts

David Owens and Natasha Barlow look at the implications of Hirst & Another v Dunbar & Others [2022] EWHC 41 (TCC)
Icons House

An Introduction to the Building Safety Act 2022

The Building Safety Act 2022 (BSA) received Royal Assent in April 2022. Deborah Down outlines the main provisions.
Icons Date

Tackling Teckal – does the new Procurement Bill adequately deal with the Teckal exemption?

Peter Collins and Sophie Pilcher take a look at whether the new Procurement Bill adequately deals with the Teckal exemption
Icons Hazard

Local authorities on track to more freedom to cut ties with Russian and Belarusian suppliers

Juli Lau and Gonzalo Puertas discuss the increased freedom for Local Authorities to cut ties with Russian and Belarusian suppliers.
Icons Hazard

Nitrogen Credits Commentary

Emily Knowles, Bernadette Hillman and Steve Gummer discuss the impact of nitrate on planning permission and development in the UK.
Icons House

Thurrock Council & Another v Adams & Ors [2022] EWHC 1324 (QB)

William Rose, Partner at Sharpe Pritchard LLP, has successfully acted for Thurrock Council and Essex County Council in obtaining a ‘first of its kind’ injunction against individuals connected with the protest group Just Stop Oil.
Icons Date

The Adjudication Part 3: The Response and Further Submissions 9 June 2022

David Owens and James Goldthorpe look at the responding party's response and further submissions during adjudication.
Icons House

A renewable future: focusing energy solutions at a local level

Natasha Barlow and Steve Gummer discuss the 'Energy Trilemma' and how it is playing out at a local level.
Icons Date

Procurement Bill – Initial impressions from the first draft

Juli Lau and Sophie Mcfie-Hyland outline their initial impressions from the first draft of the Procurement Bill.
Icons Hazard

Let’s paint the town green! Government plans for green homes

Laura Campbell discusses the change urgently needed in towns and cities to make the landscape greener.
Icons House

The Queen’s Speech in Brief

The number of Bills which affect public sector clients is greater than usual – and the government have got straight off the starting blocks by publishing some of them already.
Icons Hazard

Refurbishment and Retrofitting: In with the old, out with the new!

Sharpe Pritchard analyse the challenge of decarbonising the construction sector.
Icons House

NET ZERO – What obligations are there on the UK to achieve it?

Radhika Devesher takes a look at the legal duty to achieve net-zero placed upon the UK.
Icons House

Championing green goals through public buying

Juli Lau considers how public purchasing power can be used to champion Net Zero goals, and how public procurement might be used as another driver for change.
Icons Hazard

Top Tips for Local Authority Lawyers advising on Data Protection Matters

Charlotte Smith and Hannah Peto set out some of their top tips to consider when advising on data protection matters.
Icons Court

The Cost of Freedom of Information – The Council’s Failure to Advise

Charlotte Smith and Nadia Ahmed summarise the case and judgement of Moss v Royal Borough of Kingston-upon-Thames and another (NJ/2018/007).
Icons QA

Ask the team

These are frequently asked questions to our experts from colleagues in Local Government via the Sharpe Pritchard ask the team facility concerning local authority companies, partnerships, charging and trading.
Icons Court

A call to review public contracts with Russian suppliers

Juli Lau and Gonzalo Puertas discuss the first official document to consider public sector contracts with companies linked to the Russian and Belarusian state regimes, issued by the Cabinet Office.
Icons Date

A New NEC Option to tackle greenwashing in the construction industry

Allan Owen and Sophie Drysdale discuss 'greenwashing' in the construction industry and a new secondary option clause X29 for its NEC4 suite of contracts developed by NEC.
Icons House

The Pathway to the Future – The Road Map for Employment Tribunals

David Leach discusses and outlines the road map of the planned changes for modernising the Tribunals in 2022 and 2023 released by The Presidents of the Employment Tribunals.
Icons House

Farrar Out

Clare Mendelle and James Goldthorpe discuss how the insolvency of Farrar Construction leads to clarity from the Courts on dealing with an insolvent contractor under JCT.
Icons House

The UK government has this week introduced the Economic Crime (Transparency and Enforcement) Bill

Peter Collins and Sophie Pilcher discuss the Economic Crime (Transparency and Enforcement) Bill introduced by the UK Government this week.
Icons Hazard

A sweet truth for selectivity

Steve Gummer and Gonzalo Puertas discuss a case that concerns an application for judicial review seeking to challenge a decision to introduce a zero-duty autonomous tariff quota (“ATQ”) of 260,000 metric tonnes of raw cane sugar for refining.
Icons House

Adjudication 101: Introduction and Overview

Michael Comba traces the origins of adjudication and considers why the process was introduced, who it is aimed towards and how construction contracts must include certain provisions.
Icons Date

New Government Guidance on PFI Expiry

Rob Hann, Head of Local Government at Sharpe Pritchard, takes a look at new guidance on PFI expiry recently published by the IPA to help public bodies wrestle with the complexities of transition they will face as these contracts reach full term.
Icons Hazard

Three new Levels to ‘level up’ Local Government in England?

Rob Hann, Sharpe Pritchard’s Head of local government, takes a look at the new proposals under the Government’s Levelling Up White Paper to facilitate devolution to remaining regions of local government in England which are currently without a Mayoral Combined Authority.
Icons Hazard

Will employers still be able to use the practice of ‘fire and rehire’ in 2022?

Christian Grierson and Julie Bann discuss a recent case in which the High Court has granted an injunction preventing Tesco from using the controversial employment practice of ‘fire and rehire’.
Slide background