The CIC’s adjudication rules are invalid and others may be too

On Friday the Technology and Construction Court held that paragraph 25 of the latest edition of the Construction Industry Council's Model Adjudication Procedure (MAP) is invalid. Paragraph 25 (which appears in all three editions of MAP) says that a late adjudicator’s decision is effective if reached before the dispute is referred to a replacement adjudicator. Judge Havery QC said that this was inconsistent with the requirements of the Housing Grants, Construction and Regeneration Act 1996. He suggested that the entire set of MAP rules stood or fell as one. They fell and the adjudication rules in the statutory Scheme applied instead.

The case is of significant concern because:

1. Other adjudication rules in construction contracts that say that a late decision may be effective in certain circumstances are almost certainly invalid too. Obvious candidates include the ICE Adjudication Procedure (1997) and the GC/Works rules.

2. Decisions in adjudications held under invalid rules (rather than the statutory Scheme) may be unenforceable.

3. Only last February the head of the TCC, Mr Justice Jackson, said that MAP was compliant with the 1996 Act.

All of this only highlights the conflicting cases on whether a late adjudicator's decision is enforceable. Within the last year alone we have had Mr Justice Jackson say that "a slight delay is not fatal" (following the decisions of two former TCC judges) and Judge Coulson and, now, Judge Havery effectively say the opposite.

It is too early to say if there will be an appeal, but in the meantime we recommend the following:

1. Those currently negotiating construction contracts or using standard forms that incorporate a provision similar to paragraph 25 of MAP (like the ICE, GC/Works and ACE forms) should reconsider.

2. If you already have construction contracts in place incorporating paragraph 25 of MAP (or a similar provision) it might not be too late to agree with the other party to delete it or substitute a new set of rules.

3. Those involved in adjudications conducted under MAP (or similar rules) should treat the Scheme as applying instead.

4. Those who have been on the receiving end of an unfavourable adjudicator’s decision in which MAP or similar rules were used might have a new ground for defending its enforcement.