Legal & Business

Sam O’Callaghan

is an Associate in the Construction, Energy & Projects team at Capital Law, with expertise in complex contentious construction matters. Sam has expertise in all forms of dispute resolution relevant to large construction/ commercial disputes, with a notable focus on construction adjudication.

IS THE CONSTRUCTION INDUSTRY BECOMING LESS LITIGIOUS?

According to the 2020 Global Construction Disputes report by Arcadis, the length of time to resolve a construction dispute in the UK has increased by 28% since 2018, taking just over a year. Sam O’Callaghan, a Lawyer in Capital Law’s construction, energy and projects team, explores why it is taking longer and how the COVID-19 pandemic is impacting the industry’s attitude towards disputes.

Resolving disputes can be a complicated process with many moving parts. Exacerbated by the measures and restrictions taken to tackle COVID-19, it has made an already slow and technical process even more cumbersome. Physical court closures and postponement of hearings have undoubtedly extended the length of time it takes to resolve commercial disputes. It is an unavoidable reality that COVID-19 has placed, and will continue to place for some time, a heavy burden on the already over-stretched court system.

Construction, however, is an entirely different story from general commercial disputes. Taken purely in isolation, construction as an industry has continued to operate throughout the pandemic – and has continued to refer disputes to tribunals. The Technology & Construction Court quickly pivoted to allow for video hearings. With adjudication business being dealt with just as rapidly by the courts as pre-pandemic, only large court cases took the brunt of delays in waiting for physical hearing dates. The court’s focus on pushing through adjudication business lines up with a growing trend for the past 15 years, and the introduction of the Housing Grants, Construction and Regeneration Act 1996, for the parties to rely solely on adjudication and to avoid the courts – resulting in lower referrals to court (and supposedly quicker resolution to disputes).

As the Arcadis report indicates, the rise of adjudication has not necessarily resulted in an equivalent decrease in the duration of resolving disputes. Anecdotally, when serious disputes do happen on a contract, the parties tend to engage in serial adjudications, before eventually ending up in litigation or arbitration. This means that adjudication has only served the purpose of extending the duration of the dispute. Even if adjudication is ultimately accepted by the parties without going to court, it is becoming less common for there to be only one adjudication.

In an effort to move away from the traditional arguments and practices, “collaboration” has been pushed as a solution and it is amazing when it works. Even when it doesn’t work, it should, at least, limit the legal and contractual points in issue and, therefore, the cost of resolving differences.

Perhaps counter-intuitively, this collaborative approach can extend the period in which parties are in dispute. This is largely due to the fact that time is spent attempting to work a solution between the parties before referral to a tribunal. Given the pressure of low-profit margins, and the desperate need for cash flow in the supply chain, COVID-19 has reinforced the benefits of choosing to settle or engage in alternative forms of dispute resolution, rather than litigate or arbitrate.

What is clear is that construction will, at least for the short term, remain a contentious industry. 

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