RICS experience of adjudication
Martin Burns BA (Hons) LL.B (Hons) Barrister
Head of ADR Research & Development
RICS Dispute Resolution Services
www.rics.org/drs
February 2014
rics.org
RICS’ experience of adjudication 1998 to 2014
How the process works
How the panels work
Standards expected of adjudicators
Standards expected of RICS members acting on behalf parties
The involvement of the courts
February 2014
rics.org
John Fletcher
Global ADR Products Group
Director
Martin Burns
Head of Research &
Development
Sophia Goddard
Quality & Training Manager
Hannah Collins
PA to ADR Product Group and
Head of R&D
Rajbinder Sohal
Product Development Manager
Gemma Beasley
Appointments Service Manager
Paul Taylor
Product Manager
Mushtaq Ahmed
Deputy Appointments Manager
Anthony O’Kane
Administration Assistant
Lee Calloway
Case Officer
DRS managers – global markets
Karen Read
Quality and Training Executive
Alex De Beer and Craig Hudson - South Africa
Yasmine Nashawati - UAE
Kimberly Payne
Case Officer
Ysella Jago – Scotland
Geoff Athorpe – Australia
Chloe Duffy
Administration Assistant
RICS Dispute Resolution Services – organisational chart
rics.org
How frequently are Adjudicators appointed by RICS?
•
1st May 1998 to December 31st 1998 - 23
•
1st January1999 to December 31st 1999 – 377 (Macob v Morrison and Outwing v Randall)
•
1st January 2000 to December 31st 2000 – 1013
•
Current average is 70 per month
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Adjudicator nominations (all nominating bodies) – 1998 to 2012
Period
Number
1998 - 1999
1999 - 2000
2000 - 2001
2001 - 2002
2002 - 2003
2003 - 2004
2004 - 2005
2005 - 2006
2006 - 2007
2007 - 2008
2008 - 2009
2009 - 2010
2010 - 2011
2011 - 2012
187
1309
1999
2027
2008
1861
1685
1439
1506
1432
1730
1538
% growth on previous year
600%
50%
1%
-1%
-7%
-9%
-15%
5%
-5%
21%
-11%
1064
1093
-31%
3%
Source: www.gcal.ac.uk
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What is the nature of the majority of disputes – sub-contractor/main
contractor, main contractor/employer, sub-contractor/sub-contractor?
Source: www.gcal.ac.uk
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Spread of nominations across the professions (%)
Source: www.gcal.ac.uk
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Costs involved in Adjudication
RICS charges a fee of £382 per each appointment
Adjudicators are entitled to a “reasonable” fee. (“Reasonable” is not defined in the Act)
In practice most adjudicators charge an hourly rate (RICS does not set rates)
Hourly rates usually depend on:
-Seniority of the adjudicator
-Complexity of the dispute
-Value of dispute
Fees of RICS adjudicators range between C.£150-£350 per hour
Across all ANBs c.39% of adjudicators charge £176 - £200 per hour. C.33% of
adjudicators charge over £200 per hour
(Source: www.gcal.ac.uk)
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How the process works
Claimant issues adjudication notice
on respondent
Claimant applies to RICS for a
nomination
RICS communicates identity of
adjudicator to both parties
Day 1
From this point the claimant has 7 days to refer the
dispute to an adjudicator
We recommend
this is done on Day RICS has to communicate identity of adjudicator to
1, after claimant
referring party within 5 days (inc. weekends)
has issued notice
of adjudication
RICS must select an adjudicator who is qualified to
Must be within 5
deal with the specific dispute, is free from conflicts
days after
and can deliver in timescales prescribed by
receiving request
statute/contract, all within 5-days
Claimant refers dispute to
adjudicator
By day 7
Adjudicator’s jurisdiction begins when he receives
referral, not when he is nominated
Adjudicator determines procedure
and makes decision in 28 days
By day 35
Timetable can be extended by up to a further 14 days
with the agreement of the claimant
Documents only has been the most common and preferred procedure (c.70%).
Numbers of oral hearings has increased from c.3% in 2000 to c11.5% in 2012
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How do Adjudicator panels operate in the UK?
•
Panels are managed by Adjudicator Nominating Bodies (ANBs).
•
In 1998 there were c.30 ANBs. They offered different levels of service and
varying quality of adjudicators.
•
In the current market there are probably 5-6 ANBs that could be described as
reasonably active.
•
RICS is the largest nominating body in terms of numbers of referrals, though it
does not have the largest panel (c.115).
•
RIBA, ICE, TecSA, ACA and CIArb are active ANBs and, in terms of numbers
of cases (They are probably in that order).
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How the RICS Panel works
Getting on to the Panel
Complete a DRS12 Skills form
Complete the Diploma in Adjudication
Complete a decision within 28 days
Attend a rigorous interview assessment
Invited onto the panel when vacancies arise
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Maintaining the quality and standards
Normally panel members are reassessed every five years to ensure:
• Continued competence
• Maintaining/improving knowledge (CPD)
• Skills review and update
• Practising in the interest of the public (RICS imperative)
Occasionally a panel member maybe invited to reassessment earlier because:
• RICS has received adverse feedback from a number of parties
• A recommendation is made by an independent review following a complaint
• Failure to comply with CPD requirements (which is routinely monitored)
• Evidence of failure to demonstrate regular involvement in the market
• Discretion of the President (a catch all)
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Maintaining the quality and standards
Reassessment process
Complete an up-to-date skills form (with references)
Review of standard Letters/Directions (to demonstrate
appropriate case management)
Review of 3 anonymised decisions
Review of complete record of CPD for previous 5 years
(which must include adjudication/ADR topics
Attend and pass interview
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The interview process for adjudicators
•
New recruits to the panel are required to submit a decision based on
an adjudication exercise. This will form the basis of the interview
•
Current panel members are reassessed based on review of 3
decisions and are tested on current knowledge
•
All interview boards comprise of:
• Chair – (senior member of the adjudicator panel)
• Professional member – (working in the sector – not on the
panel)
• Independent member – (non related to the profession e.g.
retired Police Chief Superintendent )
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Criteria assessed
Primary professional skills and experience
Knowledge and understanding of involvements and conflicts
Ability to manage the timetable and process
Knowledge, application and understanding of the law
(including dealing with jurisdictional challenges)
Decision-making (including identifying issues and analytical reasoning)
Knowledge and understanding of how to deal with costs
CPD
General suitability
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Outcomes of assessment and interview
The assessment board will make a decision based on the assessment
and face-to-face interview
The possible outcomes for candidates are:
Pass – On the panel for five years subject to compliance with criteria
Refer – Improvement is required in one or more areas. Candidates
currently on the panel who are referred at reassessment will remain on
the panel but must complete further training and demonstrate s/he has
addressed the deficiency highlighted
Fail – Will not be included on the panel or, if currently on panel, will be
removed from the panel. In either case the candidate can appeal
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Involvement of the Courts
Macob v Morrison and Outwing v Randall (“gave the process teeth”)
Hundreds of cases have been referred to the TCC and adjudication in 2014 is much
changed from 1998.
Some issues reviewed by courts:
• Effect of failure to comply with statutory/contractual timetables
• Clauses that attempt to circumvent the right to adjudication “at any time”
• Clauses that attempt to make claimants liable to pay for adjudication if they start it
• Issues around the applicability of HRA and rules of natural justice
• Technical breaches – enforcement - ability to pay –contractual exclusions – etc.
Useful website for UK and international case law: www.adjudication.co.uk
rics.org
Involvement of the Courts
Macob v Morrison and Outwing v Randall (“gave the process teeth”)
Hundreds of cases have been referred to the TCC and adjudication in 2014 is much
changed from 1998.
Some issues reviewed by courts:
• Effect of failure to comply with statutory/contractual timetables
• Clauses that attempt to circumvent the right to adjudication “at any time”
• Clauses that attempt to make claimants liable to pay for adjudication if they start it
• Issues around the applicability of HRA and rules of natural justice
• Technical breaches – enforcement, ability
Useful website for UK and international case law: www.adjudication.co.uk
rics.org
Differences between the UK and the Irish legislation
•
Scope of adjudicator jurisdiction is limited to payment disputes (Australian model)
•
Appointments to be made, in default of agreement, from the “Ministers Panel”
•
Greater prescription around excluded contracts (Q: is it available “at any time”? See S.7)
•
S13 Publication of decisions (to be made available to “interested parties”)
•
S.22 Parties must try to agree an adjudicator of their own choice
•
S.30 Adjudicator can decide jurisdiction
There are other differences, but by and large the UK and Irish processes are similar
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Summary
•
Between 01st May 1998 and 31st December 2013 there have been around 22,000
adjudications in the UK
•
In this period RICS nominated c.9,500 adjudicators c.43%
•
Numbers of adjudications has ebbed and flowed over the years. The numbers seem to
be affected by macro-economic factors. Typically, numbers increase over a short period
of time leading into a recessionary period, before dropping off over a longer period.
(Interestingly, a sustained increase in numbers of adjudications would appear to be a
viable sign of economic recovery)
•
Quantity Surveyors and Lawyers each represent 35% of the total number of
adjudicators on all panels. RICS panel is mainly QSs (c.80%). Half of the RICS panel is
dual qualified e.g. surveyor/lawyer
•
The Claimant has been the more successful party in adjudication
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Summary continued
•
The primary subject in most disputes has been interim payments closely
followed by value of work, and value of final account.
•
The value of disputes in C30% of adjudications has been in the value range
£10,000 to £50,000.
•
Main Contractor v Employer and Sub-Contractor v Main Contractor disputes
account for c.75% of all adjudications.
•
The majority of adjudications are conducted on a ‘documents only’ basis,
however, the use of full hearings has increased since 1998 from c.3% of total
cases to c.11.5%.
•
Adjudicators are charging more now than in 1998 (unsurprisingly). Hourly fees
charged by c.40% of adjudicators is currently in the range of £175-£200 and
c.30% charge over £200.
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The UK construction industry pre and post Adjudication
•
Adjudication was originally perceived in 1998 as a temporary fix
•
In practice adjudicator’s decisions have by and large come to be permanent
•
One reason perhaps is the requirement for adjudicators to provide reasons for their
decisions
•
Another reason is perhaps the development of professional adjudicators, who are highly
trained and experienced and are also accountable
•
The use of arbitration in the construction sector has declined dramatically (RICS
appointed c.400-500 construction arbitrators in 1996. This number was down to c.20 in
2013)
•
Adjudication has been a great success in the UK. It is not perfect and there are currently
a number of live issues that will probably require regulatory or judicial intervention
rics.org
RICS experience of adjudication
Martin Burns BA (Hons) LL.B (Hons) Barrister
Head of ADR Research & Development
RICS Dispute Resolution Services
www.rics.org/drs
February 2014
rics.org