Changes to the Pre-Action Protocol for the Construction and Engineering Disputes

From 6 April 2007, changes to the Pre-Action Protocol for the Construction and Engineering Disputes (the "Protocol") will come into effect.  The Protocol, which applies to cases that can be heard before the English Technology and Construction Court (the "TCC"), first came into force in October 2000.  Any disputes that are operating under the Protocol before 6 April 2007 will not have to comply with these changes.

The purpose of the Protocol, as stated in the TCC Guide, is to encourage frank and early exchange of information about the prospective claim and any defence that may exist.  It is also designed to help parties avoid litigation by encouraging the settlement of claims through alternative forms of dispute resolution and where litigation is unavoidable, to ensure efficient management of proceedings.  

The TCC expects all parties involved in construction and engineering disputes to have substantively complied with the Protocol, both in the pre-action stage and once proceedings are commenced.  For the year ended 30 September 2006, there were approximately 752 new claims brought in all of the TCC centres in England and Wales, compared to 655 in 2005.  In London alone, there were 392 new claims in 2006, 364 in 2005 and 341 in 2004.

A working party interim report first proposed changes to the Protocol in January 2006.  A consultation period followed, as well as a final report that was considered by the Civil Procedure Rules Committee.  The main impetus for change stemmed from the fact that whilst parties were satisfied with being able to articulate and evaluate the strengths and weaknesses of their case at an early stage, there was concern over the length of time and cost of complying with the Protocol.  The report noted it could take parties 12 months or more to comply with the Protocol, which not only represents a significant investment of time and money, but is contrary to the overriding objective in the Civil Procedure Rules.   

There was also concern over the Protocol being exploited by a party to its tactical advantage, specifically with regards to costs, as well as a party feeling compelled to enter into mediation or another alternative dispute resolution process where, for certain cases, it would be more appropriate and cost-effective not to. 

In response to these concerns, the Protocol will incorporate the following changes:

• Defendants will have 3 months to issue their Letter of Response;
• The pre-action meeting should normally be held within 28 days of receipt of the Letter of Response;
• Costs incurred in the Protocol must be proportionate to the complexity of the case and the amount of money which is at stake;
• Parties are not required to gather and disclose all their supporting details and evidence during the pre-action stage;
• Parties will be asked to agree to define the relevant issues to be considered by experts and how such expert evidence will be dealt with;
• There is express recognition that no party shall be forced to mediate or participate in any other alternative form of dispute resolution; and
• The Court may require a party who attended a pre-action meeting to disclose whether or not they considered or agreed an alternative means of resolving the dispute. 

These changes demonstrate that the TCC, in consultation with the construction industry, is working hard to develop effective procedures to resolve construction and engineering disputes speedily and efficiently.

If you would like more information on these changes to the Protocol, please contact Stuart Nash or Juman Kubba.

	Stuart Nash Associate Construction & Engineering Team			Juman Kubba Assistant Construction & Engineering Team
McGrigors, 5 Old Bailey, London, EC4M 7BA, DX 227 London Chancery Lane Tel: +44 (0)20 7054 2500 Fax: +44 (0)20 7054 2501

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