The RICS is consulting on the fourth edition of its guidance note on surveyors acting as adjudicators in the construction industry. While the guidance is aimed at those who act as adjudicators, it will also be of interest to those who are involved in adjudication and their representatives.
The guidance note is a good source of information to inform parties of the procedures likely to be followed in an adjudication.
The note applies to RICS members who are either nominated by RICS or another adjudicator nominating body (ANB), or appointed directly by the parties, to adjudicate disputes relating to adjudications arising out of:
- Works carried out under a construction contract as defined in Part II of the Housing Grants, Construction and Regeneration Act 1996 as amended by Part 8 of the Local Democracy, Economic Development and Construction Act 2009 (the ‘Construction Act’).; and
- Works carried out under a contract to which the Construction Act does not apply but where the parties have agreed a contractual mechanism to enable them to adjudicate disputes.
- The section on "Responsibility, disclosure and disqualification" has been expanded, particularly with regard to conflicts of interest. The test for what constitutes a conflict of interest is an objective one. It is not restricted to conflicts that the particular prospective adjudicator may have, and it extends to others in their firm or organisation. Adjudicators are required to "have regard to" the RICS guidance note on Conflicts of interest, which includes a hierarchy of conflicts with examples.
- Whilst the guidance note accepts that each adjudicator will have their own way of working, a new section has been added (section 3.6.3) which suggests a suitable way that an adjudicator may decide on issues and sub-issues.The section notes that it is good practice for an adjudicator to set out their findings on each issue in the body of their decision, or alternatively in a schedule attached to, and forming part of, the decision. Schedules can be particularly useful where multiple variations and/or defects are in dispute.
- New guidance has been provided (in section 3.6.6) on section 108A of the Construction Act 1996, which deals with cost recovery.There is some uncertainty as to the correct interpretation of this section. The narrow interpretation is that the only permissible contractual provision relating to the allocation of adjudication costs is one that allows the adjudicator to allocate his or her fees and expenses (only) between the parties. The wide interpretation is that any contractual provision relating to the allocation of adjudication costs, including the parties’ own costs, is permissible, provided that it allows the adjudicator to allocate his or her fees and expenses.The RICS considers that the narrow interpretation is correct, but alerts adjudicators to the fact that this provision has not yet been subject to detailed consideration by the courts and adjudicators should therefore be mindful of any future case law on the topic.
It is worth noting that the guidance applies only to law and practice in England and Wales and readers should be aware that the law and practice in Scotland and Northern Ireland differs somewhat.