All change? New pre-action protocol for Construction & Engineering disputes released

After consultation between TeCSA, TECBAR and members of the senior judiciary, the new Pre-Action Protocol for Construction and Engineering Disputes has been released, incorporating a brand new Referee Procedure. The Protocol will come into force as of 9 November 2016 and a copy is available via the TeCSA website – click here to view.

The major new addition to the Pre-Action Process is the introduction of a voluntary Protocol Referee Procedure.

Provided both parties have agreed from the outset that the Referee Procedure will apply, it is open to either party to make an application to TeCSA (along with payment of a fee of £3,500 + VAT) for a referee to be appointed and for that referee to provide a set of directions to which the parties should adhere during the pre-action stage of the claim. Any such directions will be binding upon the parties.

The rationale behind the Referee Procedure is clearly to provide effective case management of claims and to encourage the parties to engage to a greater extent during the Pre-Action stage, which should hopefully reduce the likelihood of proceedings needing to be issued.

However, as can be seen with other voluntary case management schemes, such as the Professional Negligence Adjudication Scheme, we would predict that take up is likely to be low whilst parties on both sides of the fence are notoriously cautious in engaging with new schemes.

Other key changes

Generally the robustness of the Pre-Action Protocol could be said to have been watered down under this new scheme. However, these changes have seemingly been made with the over-riding principle of keeping costs proportionate. We would also assume, given the introduction of the Referee Procedure, that the focus of the Pre-Action Protocol is to encourage disputes to be settled at an ever earlier stage.

Other key changes include:

  • The parties being capable of agreeing to dispense with the Protocol.
  • A requirement to keep the letter of claim as simple as possible for low and modest value claims. The requirement for parties to provide 'full' information has been removed. The obligation is simply to provide sufficient information to enable the parties to understand each other's position and to take steps to resolve the dispute.
  • Costs consequences of failing to adhere to the Protocol will only be imposed in exceptional circumstances.
  • Parties are now required to 'normally' meet following exchange of Letters of Claim and Response within 21 days (previously 28 days) and the Protocol period will automatically complete at the end of the pre-action meeting, or 14 days after the last date the meeting should have taken place.

If you would like to discuss the Pre-Action Protocol and how this could affect you and your business please contact our Construction & Engineering team on 01392 688688.