CONSTRUCTION AND REGENERATION ACT

Housing Grant: Construction and Regeneration Act 1996

Construction and Regeneration Act 1996

Background and Past Analysis

The preferred method of third party dispute resolution for the U.K. construction industry has until recently been arbitration. As compared with the only alternative available historically, litigation through the Courts, it was seen as being private, quick, and relatively inexpensive. Even so, arbitration was seen as being a last resort. Construction contracts were written on the basis that arbitration could only be commenced once practical completion of a project had been attained (Stewart, 2001, 149).

In the late 1970s and early 1980s arbitration started to lose its gloss as far as the construction industry was concerned. It remains a matter of speculation as to why this occurred. Certainly the building process became more complex and the size of projects increased dramatically. In addition, during this period, construction arbitration, particularly with respect to disputes at the higher end of the pecuniary scale, changed from a process that verged upon expert determination into a detailed forensic examination of the matters in dispute with formal presentations by learned counsel and a key involvement by expert witnesses. With the general move, within society to an expectation that every formal process should become more transparent came the expectation that reasoned awards would be given. While the basic principles of reaching a decision do not differ whether reasons are given or not, additional time will be needed in the production of the award itself when reasons are given with an accompanying effect on the cost of the arbitration.

There is no evidence that there is any interest in such industries to be included within the ambit of the Construction Act. That said, there is no bar to contracting parties adopting adjudication within their contracts and this may well be a way that is used to get round the bar.

The Construction Act came into force on May 1, 1998 and, from a fairly slow start, if one discounts the fact that negotiation nonetheless succeeds in most situations, has become the principal method of dispute resolution in the U.K. construction industry. Disputes of all kinds are referred to adjudication. It is not restricted just to matters relating to payment but in the majority of cases, the issues involved result in a plea for relief of a commercial nature. The success of adjudication in the United Kingdom has been recognized elsewhere in the world particularly in Australia and New Zeal also Singapore where provisions to encourage payment which include adjudication have been enacted.

Improvements

The ARC report includes a review of the matters taken to adjudication from which sample it seems that more than half the disputes related to matters other than failure to make payments of a temporary nature. Many of these are final accounts that traditionally would have rumbled on for many years, which if not resolved by negotiation would eventually end up in arbitration or the courts (Stewart, 2001, 149). Such disputes do not relate to immediate cash flow, and it may well be ...