7 December 2018
New disclosure rules are to be trialled in the Business and Property Courts as from 1 January 2019 in an attempt to reduce the excessive cost associated with litigation in the English courts.
Read on to see how these new rules will affect construction disputes.
Adjudication is the dominant form of resolution of construction disputes. The Civil Procedure Rules (CPR) don't apply to adjudication, even in the case of the most complex of disagreements, so there are no hard and fast rules about what a party needs to present as evidence in an adjudication.
The fact that there are no formal disclosure rules is one of the positive points of adjudication and one of the main reasons why adjudication allows construction disputes to be resolved (on an interim basis) more quickly and cost effectively than resolution through arbitration or litigation.
It is common practice in adjudications for the referral notice to be accompanied by the documents that the referring party intends to rely upon. Unless there are provisions in the relevant contract limiting the number of documents that can be referred, the referring party would be expected to include all the relevant contracts and any other documents it relies on. In contrast to litigation, the referring party is not obliged to disclose documents which undermine its case but might assist the responding party (unless ordered to by the adjudicator). Under the Scheme (paragraph 13, Part 1), the adjudicator can take the initiative and can request documents which the adjudicator thinks may be reasonably required. However, a party may not know that a certain document exists and may not know what it should be requesting to support its case.
In the modern world of email, CPR disclosure on any project can easily run to millions of documents; whilst there are now algorithms that can be used to filter out some documents which are obviously irrelevant, a huge amount of man power is still required to review huge amounts of data. This is therefore making the process of litigation even more expensive and time consuming meaning that more parties may be inclined to resolve their disputes through adjudication. Both parties are likely to have sufficient documentation, or know the classes of documents they should request from the other party to support their case. On most projects it is unlikely (although not impossible) that there will be a smoking gun which the other party would have no idea about.
Perhaps as a result of parties' hesitation to resolve disputes through litigation on account of the huge time and cost, news that completely new rules and guidelines are being introduced to address excessive costs and complexity of disclosure in English litigation should not be ignored. After all, summary judgment applications to enforce adjudicator's decisions will still take place in the courts and the court process is also available for final resolution of an adjudication (which of course, is only an interim solution).
The Disclosure Pilot Scheme will operate in the Business and Property Courts, including the TCC, from January 2019 under a two year trial. The new rules will be mandatory for the majority of cases within the TCC and will replace standard disclosure with Basic Disclosure or one of 5 models of Extended Disclosure.
Read further details of the Disclosure Pilot Scheme.
Much of the success of the Disclosure Pilot Scheme will depend on the ability of the judiciary to enforce the cultural change that these proposals require. But given that construction litigation is often document heavy, these new rules could have a significant impact on the way construction disputes are handled.
In summary, its business as usual for construction adjudications – unless and until the parties need to make use of the court system for summary judgment or final resolution of their dispute.