ConstructionCast 5 – Adjudication

For this week’s episode, we were joined from Ireland by Niav O’Higgins, partner at law firm Arthur Cox and Shane Dempsey, head of communications for Construction Industry Federation, the representative body for the industry in Ireland. In the UK we had Chair of the Society of Construction Law and adjudicator, Jonathan Cope and Bill Bordill, Director at Decipher Consulting.

The video is available to watch here:

We started this week with the disappointing news that Westlife have had to cancel their Irish tour. But, more importantly for the construction industry, Shane gave us a view of what we’ve seen in the region over the last three weeks.

The industry has been on a journey since the initial shock and paralysis that has been seen all around the world. Until the 28th March, the situation in Ireland was largely similar to that in the UK. However from that date, restrictions across the country were increased and the Minister for Health specifically said construction workers should not go to work unless they absolutely need to. CIF advised the shutting down of sites, highlighting the need to ensure any closed sites were secure. Feelings in Ireland echoed those in the UK, that perhaps a little more clarity was needed from the government in relation to the construction sector, but on the whole the message did seem to be clearer.

As the pandemic continues, Shane is beginning to see the Irish construction sector begin to prepare for a potential return to work – even if it may not be in the way we were previously used to. Shane and the team at CIF have put hundreds of hours of work into putting together the Standard Operating Procedures for all construction workers in Ireland for these new and difficult times.

He would encourage everyone in the industry to read and share these documents. Discussions between the organisation and the Government have been taking place to make sure we return to work safely and can drive the economy. The key to getting back to work is ensuring the industry, Government and public are happy that construction can be done safely, and these standards are part of that process. CIF are working hard to make sure the industry is prepared for going back to work.

Shane also points out that a major cause of concern has been contractual matters, particular for those who are working for the public. Many of the bodies were waiting for instructions from central government before giving orders to close the sites. Or in some cases waiting for contractors themselves to decide to stop work. This has put pressure on contractors, particularly those companies that wanted to shut and were worried about the safety of their work force but unsure where they may stand legally without getting instructions from public bodies.

Niav’s client base is predominantly employers and developers. She’s been surprised by the range of responses she’s been seeing from clients. Some of her larger clients in manufacturing and pharma sectors were very proactive, introducing measures even before the government. Guidelines were issued. Either reducing activity on sites or suspending works all together, and by working actively with contractors.

Other clients have been more reactive in their approach, responding to claims from contractors. These claims started to be issued before restrictive requirements were brought in and have continued. Niav has seen lots of notices for Force Majeure and change of law provisions. But overwhelmingly, and indeed positively, the response from most has been to seek to collaborate with their contractors.

The primary objective is to secure long-term success of projects and with COVID-19 being outside the control of both parties, projects will only succeed when parties work together. Hopefully as a result of the co-operation and collaboration in managing suspension or reduction of activities on site which Niav is seeing, we will see a more positive result for the industry.

Compared to the UK, in Ireland site closures were more extensive. Everyone except those involved in essential services (essentially core infrastructure) had to shut. But now, Niav thinks the industry will really welcome a slow move to open some sites. The next challenge will be managing that activity as safely it presumably extends from essential works to the whole industry. Going forward, Niav thinks the biggest problems will come from dealing with the inevitable impact on programme, productivity and cost.

In the UK this week we have seen the Construction Leadership Council issue their newest guidelines which may go some way to making the situation a little clearer.

Bill is seeing a mixed response from his clients. Decipher closed their office for a day two weeks before lockdown which gave them almost a dummy run to tease out issues. But even so, small things can cause problems. For example, this week a notice of adjudication had to be served late, due to un-planned reduced opening hours at the Post Office. Bill’s not seen any major disputes yet, but has been giving some thought to the kinds of practical issues that could come with many of us working from home.

Bill shares some of the issues he predicts we may at particular stages in the adjudication process:

  • If notice has to go to ‘named individual’ they could be furloughed, not on site, ill etc.
  • Documents you need to prepare a response could be stored as hard copies on a closed site, or you may be unable to access a server from home.
  • Be prepared – can you scan documents from home?
  • Can you rely on home internet?
  • Consider how you will prepare documents, especially those which multiple people may have worked on.
  • Difficulties such as pagination and referencing can be difficult but possible to address in an office, but could be really difficult now.

Bill also takes note that the Technology and Construction Court have has clearly made a statement ‘it’s business as usual’ by the Judgment of Jefford J in MillChris Developments v Waters on 2 April 2020. But as a party representative and adjudicator, it’s not business as usual. What he is seeing is very much the opposite. However, whilst conditions are challenging, they are not impossible. Bill predicts the adjudicator’s timetable will likely extend from 28 to 42 days. He also thinks there may be issues with meetings – can they be held on site? Virtually? Typically meetings can only be held if everyone can attend so could be future issues of natural justice.

The CIArb have released a guidance note on remote dispute resolution proceedings which could be quite helpful. Jonathan’s colleague Matt Molloy has also written a useful piece with some pragmatic advice for anyone going through the adjudication process at the moment.

Bill’s advice is to try to work together, whatever your role in the dispute resolution process. Try to be reasonable and collaborate or cooperate where you can.

From an adjudicator’s perspective, Jonathan agrees with Bill that we are likely to see timetabling challenges. Not just as a result of difficulties interviewing witnesses remotely etc., but also due to people getting ill with COVID-19. He has already experienced that on one case, albeit an arbitration rather than adjudication. But, is this much different to normal circumstances? Jonathan doesn’t think so and has experienced witnesses being taken ill before. It may be more likely at the moment, but the impact it will have will depend on how important that person is to the issues in hand.

Another change that Jonathan is seeing is a move towards electronic only bundles. Most adjudicators prefer to work from hard copy bundles.At the moment it’s not realistic or reasonable to expect parties or their representatives to print, what can sometimes be thousands of pages, from home and courier them over in the way they might have done from the office. Getting used to working with electronic bundles could be particularly difficult for the older generation of adjudicators, who are not so used to working electronically or remotely. For those preparing bundles, Jonathan has some useful tips:

  • Pagination and cross refencing are essential when people are looking at an electronic bundle.
  • Use PDF software with text recognition.
  • Highlight where you refer to things on the page.
  • Make it clear what data you are sharing – avoid large spreadsheets with multiple tabs
    All the kinds of things that will help adjudicators get to the point quickly.

Gordan Exall has a useful guide for preparing e-bundles on his blog.

Jonathan has found online meetings have worked well so far for him. But for some they are taking more getting used to. Having a young family and working from home also has its challenges, as many across the industry have discovered. Once restrictions are lightened, we could see a situation where the over 65s/70s may have to stay home indefinitely. This could cause issues if you need to conduct a site visit. Although some parties do have the technology in place to conduct walkarounds virtually. There will no doubt be times where you are trying to assess something, and there is no way you can do it without being on site.

Jonathan also points out that there has been a 46% rise in the number of adjudication appointments made by the RICS when comparing March 2019 to March 2020. This may not all be down to COVID 19 and it is certainly premature to conclude that. But the pandemic will most certainly be an influence. In some cases, we may also be seeing parties who need the money quickly, so may have instigated adjudication when in normal circumstances they may have held off a month or two.

Since the arrival of adjudication in Ireland in 2016, Niav has seen the take up increase year on year. Conciliation is still a very popular method of dispute resolution in Ireland at contractor level. But increasingly, sub-contractors are moving towards adjudication as their preferred method.

The Construction Contracts Adjudication Service, the administrative arm of the ministerial panel, and which appoints adjudicators in Ireland closed at end of March and said they would not be making appointments as a consequence of COVID-19. But the industry was quick to react – adjudication is a vital tool and right now parties may need it more than ever. This decision has been reversed and since 14th April the panel is appointing adjudicators, but it may take longer than the 7 day target. Anecdotally, Niav is seeing adjudications continuing and the current situation is giving rise to issues and claims particularly at sub-contract level, a trend which is likely to continue.

Shane thinks it will be interesting to see the results of claims of de facto force majeure from emergency legislation. These are unprecedented times, and nothing is certain. He’ll certainly be watching very closely. There is a concern that public sector contracts may have some bias towards the client and that even with extraordinary measures, we might see adverse results for contractors due to the nature of the Irish Public Works Contract.

CIF are Encouraging members to engage with clients as much as possible. Delays may arise from huge changes on site, the effect on timelines and delivery will be massive and really important for the industry. It is important for clients to note that when faced with the choice between a client who is collaborating and burden sharing or one which is playing ‘hard ball’, you can guess which way contractors will go in the future.

When it comes to the rumours that sites could open from 5th May in Ireland, Shane thinks nothing is set in stone. The Standard Operating Procedures have given the government some comfort. However, we don’t know what a partial reopening will look like. CIF are talking to the government about the plan which will be announced on Friday. There is likely to be an element of social venues opening, particularly for younger people. For construction CIF have made the case that we can open safely, and government are keen for work to restart. Nevertheless, the underlying principle must be safety. The industry should be mindful of not just following the rules, but considering the court of public opinion which will inevitably hold us to account.

Join us for the next #ConstructionCast – they take place on Wednesday, each week at 2pm. You’ll find details on our social media feeds and emails.

NB:
The above is our summary of comments made during the cast. We’ve tried to ensure the summary is as accurate as possible. However, this page should not be construed as legal advice or the formal advice of the participants or their respective organisations and employers.