RIGHT TO REFER DISPUTES TO ADJUDICATION (Hansard, 8 July 1996)

§ Mr. Raynsford
I beg to move amendment No. 133, in page 61, line 5, after first 'under', insert 'or in connection with'.

§ Mr. Deputy Speaker
With this, it will be convenient to discuss the following: Government amendment No. 84, in page 61, line 8, at end insert— '( ) enable a party to give notice at any time of his intention to refer a dispute to adjudication;'. Amendment (a) to amendment No. 84, leave out 'at any time' and insert 'within the time period prescribed in the contract'. Amendment (b) to the amendment, after 'time', insert 'within the period prescribed in the contract.' Government amendment No. 85.
Government amendment No. 86, in page 61, line 13, at end insert— '( ) allow the adjudicator to extend the period of 28 days by up to 14 days, with the consent of the party by whom the dispute was referred;'. Amendment (a) to amendment No. 86, leave out '14' and insert '28'.
Amendment (b) to the amendment, leave out from `days' to the end.

§ Mr. Raynsford
Amendment No. 133 relates to a small point, but one that may have considerable significance. It simply seeks to insert the words "or in connection with" after the reference to construction contracts in clause 108.
The technical issue that has prompted the amendment was raised by a barrister with considerable experience in construction matters, who regularly writes for one of the best-read magazines in the industry. He has written to me—he also wrote to the Minister—to express concern that the Bill's wording might leave a loophole. He said in his letter: The reason is that the words 'arising under a contract' have been held by the Court of Appeal"— he quotes the case of Fillite Runcorn Ltd. v. Aqua-Lift in 1992—might be construed to exclude jurisdiction for such matters as negligent misstatement and misrepresentation. 'Arising under a contract' is not an all encompassing phrase. If there is a risk that the wording of the legislation is defective and it is necessary to include the words "or in connection with" in order to remedy that defect—as the barrister recommends—that is a modest change that will ensure that the purposes of Parliament are not frustrated. I hope that the Minister can give a response to the matter, as he has also received the letter to which I referred.

§ Mr. Robert B. Jones
I distinctly remember the hon. Member for Greenwich beginning his speeches on this 97 part of the Bill in Committee by saying that he wanted to keep lawyers out of the matter, but he is now citing barristers in support of his argument.
Amendment No. 133 would widen the scope of adjudication from disputes under the contract to disputes under or in connection with the contract, which would be a huge step. The adjudicator is appointed under the contract and must be guided by its terms. He cannot turn his attention to matters that are not covered by the contract or that are the subject of other contracts, even between the same parties. The amendment would give the adjudicator an horizon different from the one that has been subject to debate in the past few months, and we cannot even begin to consider such a change at this stage.
Even if we could be persuaded that such a dramatic adjustment were necessary, it would be a major task to give him the new powers to tackle his new role. He would need statutory powers, and he might ultimately become almost an arbitrator. The industry is keen to avoid that, so I hope that the hon. Member for Greenwich will think again.
The hon. Gentleman should be happy with the Government amendments in the group, and I commend them to the House.

§ Mr. Raynsford
The Minister said that he thought that we wished to keep lawyers out of the matter. We do wish to keep lawyers out of the matter—but once the legislation has been decided. At that stage, we want the adjudication procedure to be so smooth, swift and clearly advantageous that people will prefer it to the more time-consuming and expensive procedures of litigation. We certainly do not want to allow any opportunities for lawyers to get in on the act after the Bill has been enacted, but in the meantime we want to take the best advice.
I hear what the Minister says about the possibility of widening disputes to an extent that would undermine adjudication. I am concerned, however, that loopholes may emerge if the concerns that have been expressed prove to be better founded than the Minister believes. If it transpires that the procedures simply cannot cope with a range of issues because of the Bill's technical definition, we shall have to reconsider the matter. Many issues arising from the Latham report have not been covered by the Bill and may need to be reconsidered by a future Government.
Amendment (b) to Government amendment No. 84 deals with the time period for matters referred to adjudication. It has been brought to our attention that the wording of Government amendment No.84, which enables a party to give notice at any time of his intention to refer a dispute to adjudication, could be very open-ended—a fear that the Minister expressed in opposing amendment No. 133.
For that reason, amendment (b) seeks to add the rider within the period prescribed in the contract to avoid any such open-ended commitment. Perhaps the Minister will see merit in that restriction, to ensure that we avoid loopholes in the legislation. I beg to ask leave to withdraw the amendment.