The General Prognosis
The advent of Statutory Adjudication under HGCRA seems to have driven thoughts of arbitration out of everyone’s mind - or has it? The rough and tumble of adjudication suits some disputes but there has definitely been a resurgence of interest in both conciliation and arbitration under the civil engineering forms of contract. Conciliation has a lot to offer but only if both parties have a will to settle. However, what happens when they don’t?

Where there is a single dispute 28 day adjudication is fine, but what happens where there are several high value matters of dispute? With all due respect to adjudicators there is little chance of properly disposing of disputes of this nature within 28 or 42 days. That may be a sweeping statement but I have a genuine concern that HGCRA has led to a spate of grotesquely inflated claims mounted on a global basis endeavouring to attract a sympathy vote. Rough and ready justice ought not to spring from rough and ready claims. Complex claims need another procedure and in most civil engineering forms of contract that procedure is arbitration.

The 1996 Arbitration Act
In England and Wales there was a common perception of arbitration as being a slow and expensive process dominated by court practices. The Act made arbitrators accountable to the courts with speedy and efficient conduct of cases. It had been said that arbitrators were toothless and could impose no sanction where a party was being dilatory.

The Act allows the arbitrator to affix dentures and then sanctions can be effected against a party causing inordinate or inexcusable delays. The Arbitrator has the ability to set limits on recoverable costs but there has been a degree of misunderstanding over this point. The arbitrator cannot cap how much a party spends but he can set a maximum that will be paid to the winning party. The effect of sealed offers will have the potential to affect the status of the parties but notwithstanding, recoverable costs can be limited.

Procedural difficulties are common in arbitration resulting in the adoption of court style pleadings and procedures. Whilst properly particularised pleadings do bring clarity their universal adoption was not always required. Schedules, tables and diagrams can replace many words. The 1996 Act imposes a duty on arbitrators to adopt appropriate procedures appropriate to the type of dispute.

The 1996 Act is not a panacea for all ills but it is an important start to modernising the arbitration process. Most arbitrators are aware of the new procedures but based on personal experience their adoption is not universal. It may be that training has lagged behind but as the years go by since the Act came into place this excuse is wearing a bit thin. Some old school arbitrators still give the impression of hesitating to be proactive and this may be as a result of intimidation by Barristers or solicitors.
However, the day of the proactive arbitrator ought to be with us and the general consensus among my colleagues is one of gradual, if not meteoric, progress towards proactive arbitrators.

The Scottish Arbitration Code
In contrast to England, Scotland has been relatively free of statutory provisions. The leading statute dates from 1695 being updated in 1894, 1972 and 1990. In the absence of a new statute from a devolved Parliament the combination of the Scottish Council for International Arbitration, the Chartered Institute of Arbitrators (Scottish Branch) and Scottish Building Contracts Committee produced the Scottish Arbitration Code. ICE has substantially adopted the Code for arbitration in Scotland.
This has been achieved with the introduction of the Appendix (2001). The Appendix is restricted to two brief sections. The first sets out procedural and evidential matters and the second a short procedure and an expert procedure. This is incorporated by revision into the main ICE forms.

It is too early to tell how this will affect Scottish arbitration but the overall consensus seems to be that the introduction of the Code is a step in the right direction. However, there is a strong body of opinion that says the Code should have been adopted without any amendment. There is insufficient space to discuss this in more detail but anyone using the Code is advised to look at the wide ranging powers bestowed by Sections 15 and 16.

Some Recent Cases on Civil Engineering Arbitration.
Reported cases in civil engineering are few and far between and the recent cases relate mainly to sub-contract arbitrations. (It might be helpful if the reader had the FCEC and CECA Forms of Sub-contract to hand)

Case 1
In Dredging and Construction Ltd. -v- Delta Civil Engineering Co. Ltd the new CECA bluish form of sub-contract applied with its heavily altered Clause 18. The sub-contractor Delta issued a notice to concur on Dredging Construction who within 4 days requested an engineer’s decision in the terms of the main contract. They also served a notice under the new Clause 18(8). Delta had an arbitrator appointed regardless.

Unsurprisingly Dredging and Construction challenged his jurisdiction. The main contract referral progressed with Dredging and Construction serving another Clause 18(8) notice. The Construction and Technology Court held that under the circumstances Clause 18(8) had been successfully invoked. Under these circumstances the contractor could rely on the protection of a tri-partite arbitration.
Score Subbies 0
Contractors 1

Case 2
In the House of Lords case Lafarge Redlands Aggregates Ltd. -v- Shepherd Hill Civil Engineering Ltd the main contractor sub-contracted under the FCEC Blue Form. Clause 18(2) of this form provides that where a dispute in regard to the main contract touches on or concerns the sub-contract then the main contractor can require the sub-contract dispute to be dealt with jointly by the same arbitrator, provided that the main contract arbitrator has not been appointed. Lafarge gave notice calling for arbitration under Clause 18(1) but Shepherd Hill applied giving notice under Clause 18(2) however they did not give notice of arbitration under the main contract.

Lafarge’s patience grew thin and eventually dummy and teddy exited pram and they set off to court. At first instance the provisions of Clause 18(2) were held to effectively block the sub-contract arbitration but this was overturned in the Court of Appeal. This was upheld by the Lords finding that Shepherd Hill were not permitted to stall the progress of the sub-contract arbitration indefinitely by relying on Clause 18(2). This poses double moral problems to the main contractor. Not being able to rely on Clause 18(2) and not having the sub-contract being bound by the main contract arbitration will result if the sub-contract claim is not forwarded expeditiously.
Score Subbies 1
Contractors 1

Case 3
In Loudenhill Contracts Ltd. -v- John Mowlem the sub-contractor (Loudenhill) was employed under an FCEC Blue Form. Mowlem terminated the sub-contract under Clause 17(1). At that stage the sub-contractor had not submitted claims but subsequently tried to. The provisions of Clause 15(6) preclude claims after the Engineer has issued a maintenance certificate. The sub-contractor argued that the clause was ineffective and the arbitrator appointed to hear the dispute agreed. The main contractor requested a stated case for the opinion of the Court of Session. The courts disagreed with the arbiter and found that the provision of Clause 15(6) applied to all claims.
Score Subbies 1
Contractors 2

The theme that runs through all of these arbitration cases is the importance of adhering to timescales. For small disputes adjudication may have overtaken arbitration. Arbitration has an important role to play in major disputes improperly handled. Arbitrators North and South of the border now each have a vehicle in civil engineering contracts to help them to make civil engineering arbitration a more efficient process and a sensible alternative to adjudication in appropriate circumstances. In summary, arbitrators do your stuff and arbitrating parties watch your timescales.

David Carrick is a Director of Trett Consulting based in the Stirling office. He sits as arbitrator, adjudicator, conciliator and mediator and has been active as an expert witness for some time. David is a past president of ICES, sits on their Council of Management, chairs their Commercial Management Practices Committee and also chairs the Joint ICE/ICES Commercial Management Board and sits on the ICE Arbitration Advisory Panel.