1. European Society of Construction Law Bucharest, 26th October 2018
Developments in procurement and dispute resolution under English law: will withdrawal from the EU make a difference?
Jonathan Cope, Director, MCMS, Chair, UK Society of Construction Law
Professor Anthony Lavers, Counsel, White & Case, Visiting Professor of Law, King’s College, London

2. Procurement Law before 1990
Almost complete discretion for tender awarding body in public and private sector
As to information given to tenderers/prospective tenderers
As to procedure for submission, if any
As to criteria for evaluation and award, if any
As to adherence to procedures of criteria advertised
As to equality of treatment of tenderers
As to procedure for award, if any
As to reasons given/feedback on outcome, if any
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Transormation in the 1990s
The arrival of the tender contract
Court of Appeal decisions of:
Blackpool and Fylde Aero Club v Blackpool Borough Council [1990] EWCA Civ 13
and
Fairclough Building v Port Talbot Borough Council [1993] 62 BLR 82
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4. The Two Contract Analysis
Diagram A: Ontario v Ron Engineering Two Contract Analysis
Contract B = Principal contract
Successful
tenderer
Contract B
Contract A
Tendering authority
Contract A
Tenderer
Contract A
Tenderer
Contract A = Tender Contract
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5. The effect of a tender contract
In the private sector: “there was a binding contract to the effect that the principles of the Code of Procedure would be applied” J & A Developers v Edina Manufacturing [2006] NI QB 85 And in the public sector: “the implied terms of such an implied contract extend to the implied terms of fairness and good faith” Scott v Belfast Education and Library Board 2007 [2007] 114 Con LR 209
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6. Role of EU Public Procurement Directive and UK legislation
Public Works Contracts Regulations Regulations 1 Schedule Public Contracts Regulations Regulations 6 Schedules
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7. Role of EU Public Procurement Directive and UK legislation
Of the 122 Regulations Over 20 are based on the Public Contracts Directive Over 15 contain procedures involving the Official Journal and the EU Publications Office 10 are dependent upon the Treaty on the Functioning of the European Union Others refer to the European Court of Justice
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8. Role of EU Public Procurement Directive and UK legislation
Examples: ESPD and Provisions for Termination Regulation 59 Acceptance of European Single Procurement Document Regulation 73 Contract should not have been awarded on the grounds of breach of the Treaty on the European Union or Treaty on the Functioning of the European Union
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9. So: can the Public Contracts Regulations 2015 survive?
s.2 “EU-derived domestic legislation, as it has effect in domestic law immediately before exit day, continues to have effect on and after exit day” It is hard to see how they can continue to operate with such a high proportion of EU dependent provision
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10. The UK will continue to need public procurement legislation
The Public Contracts Regulations could be replaced in time by new provisions. In the meantime, tender contracts offer a degree of protection and potential recourse for public sector tenderers, as they already do in the private sector and in public sector projects below the EU 5 million threshold.
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11. The impact of Brexit on construction dispute resolution in the UK
Adjudication under the Housing Grants, Construction and Regeneration Act 1996 (“the Construction Act”) is the dispute resolution forum of choice in the UK construction and engineering sector
Other ADR processes in use in the UK include:
Arbitration – Arbitration Act 1996
Expert determination
Mediation
None of these processes were introduced as a result of EU Directives or the like, and they should be unaffected by the UK’s withdrawal from the EU
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12. Drawbacks of adjudication
Adjudication cannot be started until a dispute has arisen, and it therefore cannot be used to avoid disputes arising
Adjudication is an adversarial process so may damage working relationships, which in turn may be harmful to the overall success of an ongoing project
Adjudication is usually led by lawyers which take the disputes away from the project teams. The project teams therefore no longer own and control their own issues, and this can be detrimental to the project level relationship
Adjudicator’s decisions are binding until the dispute is finally determined by legal proceedings, by arbitration or by agreement. Parties are therefore obliged to comply with an adjudicator’s decision until the dispute is decided by a judge or arbitrator or otherwise agreed, and this may take some time and involve significant costs
The procedure for adjudication is prescribed in the Construction Act and/or the Contract, together with any supplemental adjudication rules, and the remedies are materially the same as those that can be sought in legal proceedings or arbitration. Adjudication is therefore relatively inflexible and the outcomes available are limited
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13. Alternatives to adjudication on large UK infrastructure projects
Dispute boards
Channel Tunnel
Docklands Light Railway
Channel Tunnel Rail Link (High Speed 1)
London 2012 Olympic and Paralympic Games
Queensferry Crossing
Transport for London
Network Rail
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14. Transport for London’s Conflict Avoidance Process
Bond Street Station Upgrade – 2013
Duration + complexity + environment + change = potential for disputes
Bond Street Station
In the heart of London's West End, on Oxford Street
Two lines; the Central Line, built in the 1920’s, and the deeper Jubilee Line built in 1975
Currently serves 185,000 passengers per day
Forecast 225,000 passengers per day with Crossrail
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15. Transport for London’s Conflict Avoidance Process
New North Entrance
Interchange with Crossrail
Replace Escalators 1 & 2
New escalators and route to Jubilee line
SFA & new interchange between the Jubilee and Central lines
Post Office tunnel over Jubilee line
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16. Transport for London’s Conflict Avoidance Process
Interchange to/from Crossrail by CRL
New escalators and route to Jubilee line
New interchange between the Jubilee and Central lines
Oxford Street. Worksite
Limits of Deviation
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17. Transport for London’s Conflict Avoidance Process
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18. Transport for London’s Conflict Avoidance Process
Tanzanian Embassy
Listed building
New ticket hall
New shaft constructed beside listed building
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19. Transport for London’s Conflict Avoidance Process
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20. Transport for London’s Conflict Avoidance Process
TfL considered standing dispute boards, as adopted on London 2012, to be impractical
TfL wanted a procedure that could be called upon only when needed (“pay as you go”)
TfL wanted an early intervention approach that would allow differences to be resolved without the need for formal dispute resolution procedures
TfL developed the CAP with RICS Dispute Resolution Service
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21. Transport for London’s Conflict Avoidance Process
Key features of the CAP
Either party may refer a dispute to a CAP
In the first instance, the parties will attempt to agree on the identity of the CAP member/s (one or three) but, if they cannot, then they can ask RICS to nominate the CAP member/s
RICS will select an appropriately qualified person/s to deal with the particular issue/s
RICS has established a list of CAP members including lawyers, engineers, architects and surveyors
It is for the parties and CAP member/s to decide on the particular procedure, but the general intention is that the dispute will be referred to the CAP member/s within seven days of his/her appointment, a response will be issued within a further seven days, and a Recommendation will be issued seven days after that. That is 21 days in total from the appointment of the CAP member/s. Alternatively the parties may submit an agreed bundle
The timetable can be extended if required, and meetings and site visits incorporated
The CAP member’s Recommendation is not binding on the parties, even if no notice of dissatisfaction is served
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22. Transport for London’s Conflict Avoidance Process
Benefits of the TfL CAP
Process can be dealt with at project level, thereby leaving the ownership and control of the issues with the project teams. It should also result in a less adversarial process than other more formal processes run by lawyers
Although the Recommendations are non-binding, given the experience and qualifications of the TfL CAP members, most of whom also sit as adjudicators, arbitrators, etc, the Recommendations can provide a useful indication of the likely outcome in a more formal dispute resolution process. The Recommendations produced should therefore allow the parties to make informed judgments on how to proceed and to assist them in continuing to work together collaboratively
Whilst the Recommendations would address the issues raised by the parties, the TfL CAP member/s are at liberty to introduce alternative proposals if they come to the view that such proposals might be of assistance to the parties. Such flexible outcomes are not available in other more formal dispute resolution procedures
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23. Transport for London’s Conflict Avoidance Process
TfL’s CAP in practice
NEC3 – new clause W2.A
CAP provisions in a number of major TfL contracts, and going forward they are incorporated in all TfL contracts, including framework agreements
Memoranda of Understanding incorporating CAP provisions in other contracts
The introduction of CAP has been welcomed by TfL’s supply chain
23 referrals to date
My experience of acting as a TfL CAP member
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24. Network Rail’s Dispute Avoidance Panel
Commercial Directors Forum
DAP Guidance Note
DAPs work with the parties on live projects to provide observations on potential areas where disputes could arise
This principal objective has been summed up as follows:
“At its heart, DAP is about establishing a team to be on ‘fire watch’, looking for the smouldering embers of a dispute in the dry grass and inviting leadership teams to take action to prevent a fire.”
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25. Network Rail’s Dispute Avoidance Panel
Key features of DAPs:
A DAP will normally consist of no less than two and no more than four members, and once constituted the DAP members will visit the site to meet and discuss issues with key members of the project’s contracting parties
A pre-read pack of information will be provided to the DAP prior to their visit and this will contain the relevant contract documents, programmes, progress reports, applications for payment, etc
The DAP will produce a DAP Review Report which provides observations on areas of concern which, if not addressed, may lead to the crystallisation of disputes. The DAP applies one of three categories of status to each observation (critical, essential or recommended), which relate to the likelihood for a dispute to arise from an issue. The DAP Review Report is not binding on the project leadership team
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26. Network Rail’s Dispute Avoidance Panel
Difference to dispute boards and TfL CAP
The DAP members are not just legal, technical and commercial, they also include behavioural experts
The DAP is not constituted to decide disputes. Members are also not to advise the parties or mediate any disputes
Observations from pilot scheme
Concerns over the clarity of the language within the change order provisions
Stresses in relationships and competing priorities with wider business interests
A lack of integration, particularly with traditional forms of contract
Poor contract administration
Poor communication
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27. Conflict Avoidance Pledge
Coalition:
Institution of Civil Engineers, International Chamber of Commerce, Royal Institute of British Architects, Chartered Institute of Arbitrators, Dispute Resolution Board Foundation, Chartered Institution of Civil Engineering Surveyors, Transport for London and Network Rail
Pledge:
“We believe in collaborative working and the use of early intervention techniques throughout the supply chain, to try to resolve differences of opinion before they escalate into disputes.
We recognise the importance of embedding conflict avoidance mechanisms into projects with the aim of identifying, controlling and managing potential conflict, whilst preventing the need for formal, adversarial dispute resolution procedures. We commit our resources to embedding these into our projects.”
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28. The future of conflict avoidance
Recommendations
Educating key stakeholders about the importance of collaborative working
Educating key stakeholders about the importance of dispute avoidance, as opposed to dispute resolution
Educating key stakeholders, including the provision of written guidance, on the diverse ways in which panel members can assist parties in avoiding conflict, e.g. without prejudice meetings, mediations, etc
More research and quantification of the cost savings that conflict avoidance can bring about
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Conclusion
The Public Contracts Regulations 2015 are heavily EU influenced and it is hard to see how they can survive Brexit intact
Tender contracts offer some protection under English law where the Regulations do not apply and could therefore be of increasing importance after Brexit
None of the ADR processes in use in the UK construction and engineering sector were introduced as a result of EU Directives or the like, and they should be unaffected by the UK’s withdrawal from the EU
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