A report prepared for the Technology and Construction Solicitors’ Association (TeCSA), published in January 2016, reveals what users really think of the Pre-Action Protocol for Construction and Engineering Disputes (the protocol).

Implications

A key aim of the Jackson reforms was to encourage pre-action settlement of disputes. Significantly for clients, of the 677 disputes subject to the protocol noted in this report, 41% were settled pre-action and 8% went to trial. However, that still leaves 51% of claims that could potentially have been resolved pre-action, so there is still some room for improvement.

Almost all respondents agreed that the protocol should either be amended or retained. There was little appetite for dispensing with the protocol altogether. This will no doubt send a clear message that, as far as practitioners and clients are concerned, the protocol should not be abandoned.

Whilst 75% of respondents thought that recourse to the Technology and Construction Court (TCC) would improve the protocol, the research also found that 36% thought that the protocol generates unnecessary costs. Recourse to the courts is usually expensive. If permitted in the protocol, it would potentially lead to even more costs, front-loading of cases and increased work for the courts. These outcomes would be counterintuitive when considering the post-Jackson environment, where saving court time and reducing costs are increasingly important factors in litigation.

However, other suggested amendments, such as extension of time frames, involving alternative dispute resolution (ADR) or compulsory exchanges of all information disclosed with expert evidence may be seriously considered. These are likely to provide more opportunities for pre-action settlement, whilst also keeping disputes out of the courts.

There has been speculation that the protocol might be abandoned altogether or made voluntary. This research, thought to be the most comprehensive survey on the usefulness of the protocol to lawyers and clients, should aid in informing the debate on its future.

Background

The protocol was introduced in October 2000. Following a report in 2006 of a review by Mr Justice Jackson, the rules committee of the TCC implemented a revised protocol, which is still in force today.

TeCSA’s research aims were to establish:

  • The extent to which the protocol meets its objectives.
  • Whether it adds value to construction clients by assisting them to manage costs and risk.
  • Whether it should be amended or made voluntary.

The survey analysed data from 216 disputes that had involved the protocol in the last three years. This data was supplemented by 39 in-depth interviews with construction lawyers and leading construction clients, who had a combined total experience of 677 disputes that had used the protocol in the last three years.

Key findings

  • The importance and effectiveness of the key protocol objectives were considered:
    • 98% thought it important for the protocol to encourage early and full information exchange. Only 71% agreed it was effective in doing so.
    • 98% considered it important that the protocol enables parties to avoid litigation by settling the claim before issue of proceeding. Only 68% thought it was effective in doing so.
    • 48% thought it important for the protocol to support efficient management of proceedings where litigation is unavoidable. Only 32% thought it effective in doing so.
    • 95% were of the view that the protocol was nevertheless a valuable pre-action mechanism.
  • Law firms thought the protocol encourages parties to consider their dispute, promotes settlement, narrows issues, creates structure, promotes communication and saves costs. Construction clients thought that it encourages early consideration of the issues, prevents litigation, promotes communication, provides structure, gives options and saves time and costs.
  • 87% of respondents considered that the protocol increased access to justice. However, 13% thought it acts as a barrier because it slows the process, increases costs or penalises a less well funded party to litigation.
  • 98% agreed that the protocol should either be amended or retained as it is (with an even 49% split for each option). In summary, the suggested changes were:
    • Law firms: provide access to the TCC so the parties can enforce the protocol, create flexibility as regards time frames, provide guidance on the documents required, prevent front end costs, allow flexibility on the application of the protocol so it suits the litigation and encourage early settlement.
    • Construction clients: 40% said that there should be no change. However, of those who wanted change, the proposed changes were to extend time frames, encourage more ADR, only use the protocol for specific types of disputes, be more informal and encourage all expert witness evidence to be disclosed.