10 th Adjudication Update Seminar ADJUDICATION FOLLOWING THE LATHAM REVIEW Graham Watts Chief Executive Construction Industry Council Chairman, Construction Umbrella Bodies (CUB) Adjudication Task Group

10 th Adjudication Update Seminar Five Documents Budget March DTI “kick-off” letter24 March CUB Report29 July Latham letter17 September Griffiths response21 October

10 th Adjudication Update Seminar Budget 2004 Section 3: meeting the productivity challenge Para 3.59 ‘… following concerns expressed by the construction industry on unreasonable delays in payment, the Government will review the operation of the adjudication and payment provisions in the Housing Grants, Construction and Regeneration Act 1996 to see what improvements can be made’.

10 th Adjudication Update Seminar DTI “kick-off” letter ‘the Chancellor announced a review of payment provisions…’ DTI to run Review Latham to chair Review Detailed Timetable

10 th Adjudication Update Seminar Review Timetable End April - First meeting End July- Reports from work groups Early September- Agree options Early October - Publish consultation paper End March ‘05- Implementation starts

10 th Adjudication Update Seminar Review Group meeting – 29 April Not a personal review Establish two sub-groups for Review - Payment Group chaired by Richard Haryott - Adjudication Group chaired by Graham Watts Agreed timetable

10 th Adjudication Update Seminar CUB Adjudication task force Existed since 2001 Guidance for Adjudicators (June 2002) Users’ Guide to Adjudication (April 2003) Enhanced Membership for Review Invited views from other bodies

10 th Adjudication Update Seminar CUB Report 29 July Modus Operandii Three full meetings Need for consensus - Green - Amber - Red

10 th Adjudication Update Seminar CUB Report 29 July Major Issues Adjudication Working Well Need for further guidance 19 ‘green’ recommendations 8 ‘amber’ recommendations

10 th Adjudication Update Seminar CUB Report 29 July Further Guidance Improve Quality of Adjudicators More training & guidance on: - dealing with late/inadequate submissions - adjudicator’s power to take the initiative to ascertain the facts/the law - appointment of experts, assessors and legal advisers - fees Improve Guidance for users - assess whether adjudication is right for them

10 th Adjudication Update Seminar CUB Report 29 July Recommendations – Scope Case to consider removing exclusion for PFI contracts Case to consider removing the residential occupier exclusion Law needs to be clarified in relation to ‘evidenced in writing’ Case to consider deleting process plant exclusions

10 th Adjudication Update Seminar CUB Report 29 July Recommendations – Act Cost Outlaw the practice of one party requiring that the referring party pays both parties’ costs irrespective of outcome Parties have freedom to agree that the adjudicator may award the parties legal costs

10 th Adjudication Update Seminar CUB Report 29 July Recommendation – Act Single Adjudication Procedure Section 108 should outlaw unacceptable provisions by tightening up on the minimum requirements for a compliant procedure There should be a single procedure

10 th Adjudication Update Seminar CUB Report 29 July Recommendations – Act Immunity/Independence Consider the introduction of statutory protection for adjudicators Provide a clearer definition of the term ‘independent’

10 th Adjudication Update Seminar CUB Report 29 July Other Recommendations – Act Amend Section 108(1) to include under or arising out of the contract Prohibit such devices as requiring payments to a trustee stakeholder account (or similar) Adjudicator should have a power to make full and final decision on their own jurisdiction for all purposes – or a power limited to certain circumstances

10 th Adjudication Update Seminar CUB Report 29 July Green Recommendations – Scheme enforce the principal that the parties will bear their own costs enable adjudicator to resign through lack of jurisdiction. reasons to be given unless the parties agree otherwise. express reference to the right to serve a response. express ‘slip rule’. express requirement that the adjudicator shall copy legal or technical advice to the parties. Several drafting amendments aimed at improving procedure for appointment, related disputes, payment of interest, enforcement, negligence.

10 th Adjudication Update Seminar Latham Letter 17 September Key Points – General ‘…enquiry into payment and related issues…’ A Government proposed and commissioned review. New option for making Regulatory Reform Orders under Regulatory Reform Act (2001). Adjudication = ‘agreed set of proposals’. Payment = ‘harder to reach consensus’ Invite Government Consultation document

10 th Adjudication Update Seminar Latham Letter 17 September Key Points – Adjudication Act has worked ‘generally very well’. Adjudication – ‘remarkably successful process’. Changes recommended – ‘to deal with those unforeseen issues which have arisen’. Not to alter general thrust of Act. Reinforce the intentions of Parliament.

10 th Adjudication Update Seminar Griffiths Response 21 October Key Points – General Review is ‘valuable’ Credit that Review generated so much agreement Excellent starting point for full consultation exercise Consultation paper will contain ‘detailed proposals to establish degree of support …for... specific changes to the Act’. Amber issues are still under consideration. Objective ‘has to remain that of building further consensus wherever possible’.

10 th Adjudication Update Seminar Griffiths Response 21 October Rules out Changes to Scope Extending Act to cover contracts for domestic customers Removing exclusion of head contracts under PFI Removing exclusion for operations related to process plant

10 th Adjudication Update Seminar NEXT STEPS Complicated negotiations within Government - Inter-departmental - What can be done under RRA - Devolved Powers in Wales No consultation paper this side of 2005 No chance of action before next General Election