Out-Law Analysis | 01 Apr 2021 | 2:59 pm | 3 min. read
The Joint Contracts Tribunal (JCT) is seeking to follow other standard form contract publishers in allowing users to adopt a dispute adjudication board (DAB) as part of the regular dispute resolution machinery.
The documentation, designed in collaboration with the Chartered Institute of Arbitrators (CIArb), will be made available in early May 2021. It has been designed to work with two of the JCT's main contract forms: the JCT Design and Build construction contract and the JCT Major Project construction contract.
The JCT's aim is for the amendment to "provide a framework for parties to identify and resolve potential disputes early on and to avoid costly litigation and damaging of project relationships". This is an admirable purpose, and demonstrates a contemporary attitude to problem solving. However, there are signs that the construction market may have moved on even further than thought by the JCT.
My own experience with DABs, particularly on the African continent, has shown that DABs are at their best when deployed on large scale energy and infrastructure projects. Here, standing DABs, made up of a steady and consistent three member tribunal, are a mainstay of contracting, with employers, contractors and subcontractors alike supportive of, and active in, their use.
These projects are generally those with long lifecycles and large budgets; projects which are willing, and really compelled, to invest in proactive, speedy and contemporaneous dispute resolution. It is also worth bearing in mind that the legal landscape in Africa does not generally provide a mandatory alternative to a DAB, and so it is incumbent on the parties to cater for alternative procedures to lengthy and costly arbitration or court proceedings.
However, the opposite is also true. The principal benefits of a DAB are likely to be eroded when deployed on smaller scale projects, or where the parties have access to quicker, cheaper and better understood dispute resolution options.
Large scale construction and engineering projects are prevalent in the UK. However, typically these types of projects are not procured using the JCT suite – and when it is used, it tends to be limited only to discrete, comparatively short term construction elements.
The main standard form competitors to JCT are the NEC and FIDIC: the former because it is mandated for use on publicly-funded projects; the latter because many of the international developers are familiar with and comfortable with its terms. Due to their prevalence on energy and infrastructure projects, the users of the NEC and FIDIC forms have been able to provide valuable feedback on trends in dispute resolution to policymakers.
The latest forms from both the NEC and FIDIC - NEC4 and the 2017 FIDIC suite - have moved away from the purist concept of a dispute adjudication board towards more collaborative and flexible models. The NEC4 suite incorporates a dispute avoidance board (DAvB); and the FIDIC form includes a dispute avoidance/adjudication board (DAAB).
These mechanisms allow for the DAvB or the DAAB to involve itself in the pre-dispute stage to a greater or lesser extent, seeking to resolve matters before they escalate to adjudication or arbitration. Although the standard CIArb rules provide for a similar option in the form of a dispute review board, it does not seem from the available promotional material that the JCT intends to adopt it.
However, the biggest challenge to the uptake and implementation of the JCT's new DAB scheme in the UK is the wide and mandatory availability of statutory adjudication under the 1996 Housing Grants, Construction and Regeneration Act (Construction Act). Users of the JCT forms of contract make up a very significant proportion of the parties who use the UK's statutory adjudication scheme.
Despite its flaws, statutory adjudication provides an expeditious, well-understood, enforceable and generally fair dispute resolution mechanism. It is difficult to see how the 84-day, quasi-arbitral regime in the JCT can compete. To be fair to the JCT, it recognises this difficulty, conceding that the uptake of DABs on UK projects "has been limited given that statutory adjudication is provided in the form of the Construction Act".
The JCT is not alone in recognising this issue. The NEC4 suite incorporates the DAvB as option W3 to be used where the Construction Act "does not apply". Similarly, FIDIC's DAAB will generally be used on projects where the Construction Act does not apply, either because they are located outside the jurisdiction of the UK or because the type of project falls into one of the exclusions to "construction operations" in the Act itself.
It remains to be seen precisely how the JCT will seek to incorporate the DAB mechanism into the Design and Build and Major Project forms, and whether it seeks to compete with statutory adjudication or provide an alternative to it where it is not applicable.
There is certainly a place for an alternative to statutory adjudication in the UK. However, this must complement and not compete with that regime. If the former approach is adopted by the JCT, I suspect take up of the new DAB option in reality may be low.