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Graham Watts The Christmas present no-one wants

Twas the week before Christmas and all through the House not a creature was stirring, not even a . . . But wait minute, here is the Construction Minister, Nick Raynsford MP, stirring the House from slumber by laying an Order to give effect to the Scheme for Construction Contracts.

Well done, Nick. This is just the Christmas present the industry has been eagerly awaiting: the final piece of the jigsaw to implement the Latham reforms to resolve disputes quickly and establish a fair payment regime. Or so we thought.

Governments have an unfortunate habit of consulting the world and his dog about what they propose to do and then throwing in unseen last minute proposals. There was significant consultation on the Construction Bill and its Scheme, but at the last knockings of the parliamentary process in summer 1996 three simple words ('at any time') were added without any consultation.

The unfortunate effect of these words was to invalidate the New Engineering Contract from meeting the requirements of the Act. Understandably, the ICE was 'up in arms' over the great irony that the one form of contract praised by Latham, as meeting all of his principles for a fair contract, suddenly fell foul of the very Act which was designed to implement his reform.

Nick Raynsford's Scheme was not a surprise but it certainly contains some shocks. Both the ICE and the CIC have already held meetings to consider the Scheme, as laid before Parliament, and both groups have concluded that there are significant defects in the drafting. Solicitor David Miles told the CIC meeting that the Scheme was a 'Lawyers' Charter . . . a recipe for disaster!'. The ICE group concluded the Scheme would lead to confusion and even more disputes which would end up in the courts.

One clause is causing particular angst. Clause 20(a) introduces the concept that the adjud- icator may not open up, revise and review decisions (etc) if the contract states the decision or certificate is final and conclusive.

I am not a lawyer and, in any event, I understand that lawyers' views are divided on this matter (surprise, surprise) but it seems to me that the wording of the Scheme can now be used to prevent the adjudicator from reviewing the very matters which are the subject of the adjudication! There are some now saying that Clause 20(a) of the Scheme may even give contract writers the opportunity to 'contract out' of the statutory right to adjudication. I cannot see how a piece of secondary legislation can possibly contradict the primary legislation in this way but no doubt there will be some interesting legal discussions in the months to come.

It is becoming increasingly fashionable to criticise the Latham process and the legislation it has spawned. Just before Christmas, the Construction Law Press published a series of essays from leading construction silks such as Professor John Uff QC and Professor Ian Duncan Wallace QC. It is a massive tome, aptly summarised in the few words of its title, Construction Contract Reform: a plea for sanity. The authors attack what has been described as 'the sycophantic and thoughtless following that Latham has attracted to his proposals' and they urge a campaign to stop the legislation's implementation.

'A plea for sanity' is a valuable addition to the debate on the Latham recommendations. It is also, however, three years too late. The Act is on the Statute Book and the Scheme is before Parliament. MPs cannot amend the Scheme. They have to approve or reject it, and there is no way that 170 Labour back-benchers will disagree with their minster about Clause 20(a).

We are stuck with this legislation and will have to live with it. If the Scheme is as flawed as some are now suggesting we should remember that it is, in any event, simply a fall-back mechanism.

If the industry and its clients get their own houses in order by writing contracts that say what they want and conform with the basic requirements of the Act then the Scheme can be safely consigned to the wastebin.

Graham Watts is the chief executive of the Construction Industry Council

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