UK: One Step Closer: The Current Status Of The Adjudication Reforms

Last Updated: 28 October 2009
Article by Claire King

On 13 October 2009 the Local Democracy, Economic Development and Construction Bill 2008 (the "Bill"), which amends the Housing Grants, Construction and Regeneration Act 1996 (the "Housing Grants Act") passed its third reading in the House of Commons. The Bill has now returned to the House of Lords, where it originated, so that the amendments made by the House of Commons can be approved. If no further amendments are made to the Bill by the Lords it can then become law on receiving Royal Assent. It still remains unclear as to exactly when this is likely to occur.

So what amendments were proposed by the House of Commons and what made it through to the House of Lords? The key amendments proposed were set out in an Amendment Paper, which was also published on Parliament's website on 13 October 2009, and included:

  • The introduction of a right for a payee to request adequate payment security (for example a bond) from a payer for the contract price (including variations) and suspend performance of its obligations under the Construction Contract if such security is not provided;
  • A proposal for the reduction of the "verbiage in clauses 139 and 140 by more than 50 per cent"1 so that only a payee can issue a payment notice rather than the payee, payer or a specified third party as provided for in the Government's proposals. The payer must then serve a counter-notice within 14 days of the due date for payment (i.e. within a fixed period). It was also proposed that the level of detail required in the counter-notice would be higher with a requirement that "precise reasons" are given to justify the difference between the contractor's notice and the sum the payer considers due being provided;
  • The deletion of the insolvency exception for conditional payment provisions and the enhancement of Section 110 (1a) and (1b) provisions making it clear that an "adequate mechanism" for payment must be for the making of payments not just assessing when they are due and can not be by reference to any third party contract;
  • That adjudication be conducted solely in accordance with the Scheme;
  • Clarification of the adjudication of costs provisions so that the parties can now give the adjudicator jurisdiction to allocate his fees and expenses between them and restrictions on the parties right to allocate legal costs in adjudication and can not prevent the adjudicator claiming his own fees and expenses.
  • Enhancing the Secretary of State's power to create an exclusion order providing that part or all of the Housing Grants Act as amended may apply to any particular Construction Contract rather than all or nothing.

The only two amendments supported by the Government were the latter two and both of these were passed by the House of Commons. They are both uncontroversial and inherently sensible.

The only other amendment that even reached a vote, rather than being withdrawn, was the controversial proposal that a contractor and/or subcontractor be given the ability to ask for adequate security in respect of payments of the contract price including for variations.

The Government opposed the insolvency protection proposals pointing out that if a main contractor were to fail its other creditors, which were quite possibly not construction firms, would be in a much weaker position then constructions firms who have been able to demand security. Therefore the "ability to demand security would put the construction subcontractor in an unjustifiably strong position."2

The proposals on the provision of security are in any event ill thought through. The ability to demand security arises at "any time" and the right would therefore exist even if payments have been made regularly and on time throughout the currency of the Contract. The contract could be signed and security requested the next day - a clear infringement on the right to contract freely and price in accordance with the terms agreed. The proposal would also be extremely costly for an employer and/or contractor especially in the current market where security can be difficult to obtain. Finally what is "adequate" would undoubtedly generate much case law. Is this to be judged by the contractor/subcontractor or the employer/contractor? No doubt those requesting security would insist that it covers the entire amount and perhaps use this as a bargaining chip against any claims made by the employer.

Not surprisingly the amendment was voted on and rejected by 265 to 195 but it is thought that the idea may raise its head again in the House of Lords.

The removal of the insolvency exception to conditional payment provisions was also abandoned with the Government using the same justification i.e. that it would treat creditors from the construction industry preferentially when compared to other trade creditors. There were also concerns that removing the exception may lead to a waterfall effect of insolvency down the supply chain creating more damage not less. The proposed simplification of the payment provisions was also abandoned with the Government supporting the flexibility allowed by their proposals albeit with a risk of confusion attached.

Finally, the idea that there should only be one Scheme was, once again, rejected by the Government. The Minister for Region and Economic Development & Co-ordination, Ms Winterton commented that:

"what we introduce must work in a broad range of commercial relationships...we continue to believe that the flexibility for adjudication procedures inherent in the 1996 Act represents the right approach"3.

This represents, in the author's opinion, another missed opportunity to implement "best practice" uniformly, in the form of an amended Scheme, and prevent unnecessary case law being generated as to the meaning of extracts from the wide variety of rules currently in use. It may be that there is still an opportunity to push for this amendment in the House of Lords but it seems increasingly unlikely that a single Scheme will be provided for in the final Bill.

On the bright side, assurances were given by the Government that it will now turn its attention to amending the current Scheme. Ms Winston promised that it will be "reviewed in light of the responses to consultation"4 most likely early next year. Whether the new Scheme is finalised before the Bill becomes law remains to be seen.


1. Julia Goldsworthy, (MP for Falmouth and Cambourne), Hansard, 13 October 2009, Column 177

2. Ms Winterton, The Minister for Regional Economic Development and Co-ordination, Hansard, 13 October 2009, Column 185

3. Ms Winterton, The Minister for Regional Economic Development and Co-ordination, Hansard, 13 October 2009, Column 173

4. Ms Winterton, The Minister for Regional Economic Development and Co-ordination, Hansard, 13 October 2009, Column 185

To see further articles on matters relating to construction, engineering and energy projects, please visit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Claire King
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.