The Report published on the 3rd of November 2022 can be downloaded from the Adjudication Society website.
It is the product of the research undertaken on behalf of the Society until 2019 to be continued for the next 3 years with King’s College London' The Dickson Poon School of Law.
The document consisting of 87 pages and 10 Chapters is a well-produced and substantial document building upon the traditions of the earlier reports. The research method, based upon questionnaires sent to persons involved in adjudication and to the adjudicator nominating bodies (ANBs), has produced much to consider. The number of responses from individuals has increased from previous years to 257. The breakdown of responses identifies that 47 of those responses came from individuals who identify primarily as adjudicators, the balance coming from those who are involved more broadly in adjudication.
The questionnaire sent to ANBs was responded to by 10 ANBs which is down on previous years and there are some notable absences.
The data collected is very dependent on the response the researchers receive. Although we refer to users of adjudication when discussing such material, it is often the case that the parties to disputes do not respond to these questionnaires. The nature of the responses is considered by reference to professional background, and it appears it is the representatives of parties who are the authors of the views captured.1
Notwithstanding their vital role in providing adjudicators for parties there is no requirement for ANBs to respond to research. It is encouraging that most of them do respond giving some of the most valuable information about the health of the adjudication process.
From the responses received the research has highlighted some surprising and many useful features of the current adjudication landscape. It also looks forward to further engagement, building upon the information gathered and views expressed to date.
To that end the Adjudication Society is holding further discussions between the authors of the research and members of the Society and others who wish to contribute to the direction of the future research.
Given the substance of the document it would not do it justice in a short article to seek to review all the issues which it raises or to fully examine how further research might build on this or confirm findings which may seem surprising.
The report should be read and considered in full to do it justice, but the executive summary provides a good overview of the findings and what they suggest about the state of adjudication.
I have not repeated the executive summary, but the following thoughts are reflections which are my personal views with which you may disagree (if you have read the report).
I have taken these in no particular order. They are the areas that I found of interest.
Part of the title of the Report is “Tracing trends and guiding reforms”.
Trends in numbers of adjudications
Chapter 1 looks at various data from ANBs that has been collected over many years by the Adjudication Society and the new data.
The Report suggests that the level of adjudication has not changed significantly but there had been an incremental increase until 2021/2022 when there was a decrease.
The data is based upon those ANBs which responded and suggests that after a high point in Year 23 referrals dropped back in year 24. See figure 3 page 19 reproduced in part below.
Year 23 (May 2020 – April 2021) *2,171 12%
Year 24 (May 2021 – April 2022) *1,903 -14%
The asterix refers to the note which explains the sample on which the data is based.2 The current sample does not include the following ANBs that were included in the latest Adjudication Society report but did not respond to the present questionnaire: Centre for Effective Dispute Resolution (‘CEDR’), Chartered Institute of Arbitrators (Scottish Branch) (‘CIArb Scot’), Chartered Institute of Building (‘CIOB’), Institution of Chemical Engineers (‘IChemE’), Chartered Institute of Arbitrators Dispute Appointment Service (‘CIArb-DAS’), CLG/ConstructionAdjudicators.com (‘CLG’), Law Society of Scotland.
The Adjudicators
In terms of the identity of adjudicators there is a broad picture of the professional background but limited data on personal characteristics3 . Annex A of the report gives the breakdown by professional background and location.
Similarly, the lack of consistency and transparency as to the qualifications for becoming a member of a panel is highlighted by the research that is confined to a general statement about current requirements. “Most ANBs require an application from an aspiring adjudicator to join its panel. Although ANBs differ in their approach, most require a CV and supporting documents such as an application form outlining the experience in construction law or memberships with other ANBs”4
Access to appointments and diversity
Chapter 9 of the Report considers diversity and the measures taken by ANBs to ensure diversity. The picture is patchy and the data incomplete.
Despite these limitations the report is clear that there is still an under-representation of persons with protected characteristics. What is less clear is the reason for that and to what extent that can be rectified by changing the panels or the criteria for entering the panels.
Fig 28 of the Report represents the responses to “Obstacles to underrepresented groups and people with protected characteristics becoming adjudicators”. The leading three causes were unconscious bias at 37%, poor or opaque hiring/selection process of adjudicators at 36% and lack of vacancies or capped panel numbers at 35%.
Without a clear understanding of the routes to joining panels it is difficult to consider how this can be addressed and whether the makeup of panels is a feature of the historic route to membership or whether current routes are discriminatory.
The problem may not be with the gateway to panel membership as such but simply poor communication of the routes. A barrier for anyone wishing to become an adjudicator is the cost which is itself significant both in terms of time committed and financial outlay. The returns are also uncertain.
This raises the broader question of what we expect from an adjudicator or from becoming an adjudicator. Are we entitled to expect that the adjudicator nominated will be one of the cadre of “professional adjudicators” whose main business is adjudication and for whom multiple panel membership and recognised status ensure a steady flow of work and are in a sense “professionals” of adjudication or, is there still a place for those whose main business is not sitting as an adjudicator but can accommodate the occasional adjudication when their other commitments permit.
The data does not provide any information as to the distribution of appointments within panels but only 47 of the Respondents identified themselves as Respondents acting mainly as adjudicators, as opposed to other. It is also still the case that the research cannot capture the actual number of adjudicators as many adjudicators are on multiple panels. The data simply provides the number of people that the panels contain.
In the absence of clear qualification requirements, the Report does raise the question of what qualifications an adjudicator should have.
Figure 19 at page 32 shows the answers to a normative question. Respondents were asked what minimum standards adjudicators should meet before an appointment.
Almost all respondents stated that knowledge of construction law or adjudication is essential, suggesting that respondents expect adjudicators to meet a certain level of experience. Technical knowledge was a requirement by 59% of respondents. 69% of respondents took this a step further and said that adjudicators should have a fixed number of years of relevant experience. 70% said that adjudicators should complete relevant preparatory courses or qualifications.
22% of questionnaire respondents stated that there are other standards that adjudicators should meet before an appointment, other than the ones listed in Figure 19. Five respondents expected adjudicators to obtain membership of a professional body, such as the Bar, and abide by a code of ethics.
Other suggestions included adjudicators to undergo ongoing competency checks by organisations other than ANBs. Four respondents replied that they expect adjudicators to have real-world adjudication experience. Two suggested that adjudicators could join a mentoring or shadowing scheme through which they observe an adjudicator.5
Low Value Dispute Panels or Procedures
A previous initiative of the Society led to collaboration on Low Value Dispute Procedures with the hope that increasing the availability of adjudication for such disputes would also increase the opportunity for new entrants.6
Some ANBs responded directly to this initiative but the Report has not directly addressed whether this has provided a route for new entrants.7 The Report does suggest that it is not the cost of the nomination or the level of adjudicator fees that are a barrier to low value disputes or determinative of panel choice but rather it is the costs of the process for the parties.
The challenge of prescribing the process in order to reduce cost sits at the heart of the debate as to how the cost of adjudication can be managed.8 A second edition of the CIC LVD model procedure is currently under production and may provide a basis for other ANBs to engage with the opportunity it provides. The 2nd edition of the procedure may also provide a better basis for those appointed under such procedures to control the costs of the process.
The RICS provided specific training for adjudicators who wished to join the LVD panel. A similar initiative by other ANBs might help improve accessibility of panel membership to new entrants. The limit for low value disputes rules or panels varies but is in the range of £50,000 to £100,000.
Future research could seek to quantify the number of appointments under such rules or panels. Data quantifying the number of disputes referred by claims value suggests that the number of disputes below £125,000 is significant.9
It might also be possible to collect information as to whether membership of such panels is used as a steppingstone to other panels either within or between ANBs.
Conflicts of Interest
A related issue is the suggestion in the Report that there may be a failure on the part of adjudicators to disclose conflicts of interest and a possible related suggestion that some responders encounter a degree of bias or a perception of bias. This suggestion is commented upon by Sir Peter Coulson in his foreward to the report where he states.
“The second (feature to jump out from the Report) suggests a potential problem with construction adjudication which has been lurking close to the surface for quite a while now. Section 11, and figures 23 and 24, pull no punches on the issue of perceived bias. 40% of users have suspected that, on at least one occasion, an adjudicator was biased towards one party, and the vast majority of those based their suspicion on the adjudicator’s relationship with the parties or the parties’ representatives. That is a truly startling message, and it is to be hoped that the comprehensive and authoritative nature of this Report will mean that it is promptly and fully addressed."
The section of the Report referred to is Figure 22 which illustrates the perceptions towards adjudicators disclosing information and asks respondents the frequency of adjudicators voluntarily disclosing information, facts or circumstances that might give rise to an appearance of bias in the eyes of the parties.
Based on 199 responses (adjudicators were excluded) only 7% of respondents answered that adjudicators do so most of the time. In fact, 68% of all participants stated that adjudicators never, rarely or only sometimes disclose such information. The above findings suggest a perception of non-disclosure on behalf of adjudicators of facts or circumstances that might give rise to an appearance of bias in the eyes of the parties, despite the Scheme requiring them to declare any interests, financial or otherwise, in the matters relating to the dispute.
Most ANBs, if not all, do have rules which require the disclosure of conflicts during the nomination process and so it is not clear from the research whether the disclosure is not happening or whether it is happening at the point of the selection and so the parties or their representatives are not aware of it.
The Report suggests that so far as conflicts of interest are concerned there could be greater transparency and uniformity of the procedures to be followed by adjudicators.10
Figures 23 and 24 deal with suspicion of adjudicator bias. The finding from figure 23 is that 40% of users have suspected that, on at least one occasion, an adjudicator was biased towards one party, and the vast majority of those based their suspicion on the adjudicator’s relationship with the parties or the parties’ representatives”.
Figure 24 analyses the reason for the suspicion in more detail and the most common cause of the suspicion is the adjudicator’s relationship with the parties or the parties’ representatives.
The small pool of adjudicators and party representatives is a challenge faced not just by adjudication. It is often the case that there will be professional connections.
The data dealing with formal complaints does not suggest that actual bias or an appearance of bias is as common as the 40 % figure might suggest.
The Report makes suggestions as to how the perceived shortcomings could be responded to and draws a distinction between a soft law approach and regulatory control.11
Reform
The Report considers broader issues such as potential reform of the payment legislation and the exclusions which would be matters for parliament.
The Report does investigate the appetite for reform. Chapter 10 deals with Reform taking as its source the research. As explained in the report “the questionnaire asked whether the questionnaire respondents would make any changes to the Construction Act, insofar as relevant to adjudication. 65% of all questionnaire respondents said that they would".
The 65 % figure is the sum of all the reforms suggested. However, each of the potential areas of reform is supported by a very small number of responders.
To further understand the responses the questionnaire also invites comments which give further detail but have the limitation that these are to some extent anecdotal and subjective. Some interesting comments are made but care needs to be taken in considering whether these represent widespread views or are generally true of adjudication. Comments based on impressions do not provide a basis for an agenda for reform but are a starting point for further investigation.
There is no indication that the adjudication rules either in the Construction Act12 or the Scheme should be amended apart from a suggestion from some responders that ANBs should be regulated, or a single centralised nominating body should be set up (which is only a suggestion in the comments not a clear call for reform.)
The current position regarding ANBs is that they are outside of the purview of the courts unless there is an appearance of bias13 and so long as they are responsive to indications of problems with process and are transparent in their workings then it would seem there is no demand for reform from users.14
There is always the need for ANBs to maintain the trust of the users they serve and to respond to wider societal changes. Sir Peter’s warning is that there cannot be complacency and that those institutions and individuals who are involved in the nomination process have a vital role to play in ensuring that the trust and confidence of users and other participants are maintained.
The overall findings of the Report are that adjudication is a success and continues to provide an effective form of dispute resolution. The number of complaints against adjudicators remains low and adjudication in most cases resolves the dispute. As the Report states in the words of Lord Justice Coulson.
“I rather cavil at the suggestion that construction adjudication is somehow ‘just a part of ADR’. In my view, that damns it with faint praise. In reality, it is the only system of compulsory dispute resolution of which I am aware which requires a decision by a specialist professional within 28 days, backed up by a specialist court enforcement scheme which (subject to jurisdiction and natural justice issues only) provides a judgment within weeks thereafter. It is not an alternative to anything; for most construction disputes, it is the only game in town. Coulson LJ John Doyle Construction Ltd (In Liquidation) v Erith Contractors Ltd [2021] EWCA Civ 1452, [2021] Bus LR 1837, [2021] WLR(D) 516”
The Report has the potential to alert the adjudication community to perceived problems so it can respond to change and ensure that the current success of the process is built upon, and the process responds to wider societal changes.
Tim Willis MA FCIArb AMICE
Solicitor and Former Chairman of the Adjudication Society
The author was involved in the CIC LVD MAP First Edition and is the Adjudication Society representative on the CIC ADR Board
- 1For any of us who have had to respond to previous consultations regarding the legislation and to review the government response it is a real problem that “users” in the sense of the construction industry do not respond. It would be of interest if there is more data about the source of the responses.
- 2* Based on a smaller sample of ANBs than in previous years. This Report measured adjudication referrals in Years 23 and 24. As Figure 3 demonstrates, the number of adjudication referrals increased by 12% between Years 22 and 23, up to a value of 2,171, despite the current Report involving fewer ANBs than the previous empirical reports produced by The Adjudication Society. Therefore, the total number of adjudication referrals in the UK in Year 23 was certainly higher, making it the year with the most construction adjudication referrals in history. That number, however, fell by 14% in Year 24.
- 3The two largest panels RICS and UK Adjudicators do not publish data against any standard format and some significant ANBs have not responded. There is limited information on personal characteristics.
- 4Page 31
- 5The CIC Adjudication Board is reviewing the landscape regarding the qualification of adjudicators.
- 6CIC LOW VALUE DISPUTES MODEL ADJUDICATION PROCEDURE FIRST EDITION https://www.cic.org.uk/uploads/files/old/cic-low-value-disputes-model-a…
- 7The initiative is in part referenced at page 25 of the Report in the context of lower value disputes. Other nominating bodies other than RICS have low value dispute appointments panels or rules such as TECSA, UK Adjudicators and ICE
- 8TECSA take an appointment approach the RICS use a combination of rules and appointment
- 9Fig 11 page 25
- 10See page 37
- 11See page 37
- 12Housing Grants Construction and Regeneration Act 1996 as amended.
- 13Sprunt Limited v London Borough of Camden [2011] EWHC 3191 (TCC) at paragraphs 47,48
- 14https://willisconsultancy.co.uk/2017/11/17/nobbling-the-nomination-or-t…-