THOUSANDS OF contracts may need to be rewritten and numerous adjudication processes could fall apart following a ruling in the Technology and Construction Court (TCC), a leading construction lawyer warned last week.
A section of the Construction Industry Council's (CIC) adjudication procedure, used extensively to settle disputes throughout the industry, was struck out last Friday, leading to speculation that the whole CIC procedure could be rendered invalid.
'If I had a client that was on the end of an unfavourable adjudication decision using the CIC procedure, I would advise them to not pay and argue that the process was invalid, ' said Cameron McKenna solicitor Rupert Choat.
In the TCC last week, Judge Richard Havery QC ruled in the case of Epping Electrical vs Briggs and Forrester that paragraph 25 of the CIC Model Adjudication Procedure (MAP) was invalid because it was inconsistent with the requirements of the Housing Grants, Construction and Regeneration Act 1996.
Paragraph 25 of the CIC model says that a late adjudicator's decision is still effective if it is reached before the dispute is referred to a replacement adjudicator.
However, the Construction Act states that the adjudicator's decision is only valid if delivered within 28 days (plus any extension if agreed by both sides).
In Epping Electrical vs Briggs and Forrester the adjudicator's decision was delivered two days later than the last agreed extension.
'The judge suggested that the entire set of MAP rules stood or fell as one. They fell and the adjudication rules in the statutory scheme applied instead.
'The case is of significant concern because other adjudication rules in construction contracts that say that a late decision may be effective in certain circumstances are almost certainly invalid too, ' said Choat.
However, Howrey partner Melanie Willems played down the signifiance of the case.
'The case does not seem to me to be revolutionary, ' she said.
'The CIC rules - as any adjudication rules - must comply with the legislation (Housing Grants Act) if they are to be valid in law. Timing is mandatory in the Act.
'The parties in this case were found by the judge to have agreed an extension of time for the decision to be issued. It was not in fact issued in time.
'That does not render the rules invalid. It simply means that the time permitted in paragraph 25 of the CIC must be taken to mean the time either validly agreed by the parties under the Act or the original timeframes envisaged by the Act.' The CIC was unavailable for comment.