New Pre Action Protocal for Construction Disputes

Before commencing any litigation, parties are required to comply with relevant pre-action protocols. Broadly speaking, the pre-action protocols are intended to help potential litigants to resolve their disputes without having to issue Court proceedings or, if that is unavoidable, to make the litigation more efficient.

There is a specific Pre Action Protocol for Construction and Engineering Disputes, which many readers will be familiar with.  However, on 2 November 2016 a new revision of that protocol was unveiled at a launch event in the Technology and Construction Court.  The new protocol, which is expected to come into force on 9 November 2016, contains some interesting changes which those in the industry will want to take note of.

Key changes include:

• The ability for parties to consent not to use the protocol.
• More emphasis on simplicity (“sufficient” rather than “full” information to be given by parties, simple letters of claim to now be used not just in lower value cases but in “many cases including those of moderate value” and brief and proportionate letters of response).
• The imposition of costs sanctions for non compliance with the protocol only in extreme circumstances (such as flagrant or very significant disregard of it).
• Changes which emphasise enabling parties to settle their cases not just early and fairly but also inexpensively.
• Pre-action meetings should now normally take place within 21 (as opposed to the current 28 days) days after the Letter of Response (or response to counterclaim).
• The parties may agree longer periods to comply with relevant steps but the maximum extension for any step shall not exceed 28 days in aggregate. There is new provision for the protocol action to be concluded automatically at the completion of the pre-action meeting, or 14 days after expiry of the period within which the meeting should have taken place.
• A new optional Protocol Referee Procedure (whereby a nominated referee oversees the pre action protocol process and gives appropriate directions as required).

The Pre Action Protocols almost certainly allow a huge number of potential parties to litigation to resolve their disputes at a nearly stage and without ultimately needing to issue any Court proceedings.  However, the system is open to abuse.  Parties who wish to stall for time can often be heard citing the need to comply with Pre Action Protocols and threatening their opponent with potential costs sanctions if they fail to do so.

In my view, the proposed changes to the Pre action Protocol for Construction and Engineering seem to strike a good balance between setting a framework to help parties avoid litigation where possible, but not making compliance with the protocol so onerous that it can be used as a weapon to stifle the progress of a genuine claim. 

Anyone seeking advice on compliance with the new protocol should seek specialist legal advice from a solicitor experienced in dealing with construction disputes.