The dispute machine

Disraeli's comment that there are "lies, damned lies and statistics" has been brought bang up to date with the publication of some interesting survey results. Much commentary since the decision in Macob vs Morrison would lead us to believe that, since the advent of the Construction Act, there have been fewer disputes in the industry. These new statistics tell a different story.

In 1996, the Technology and Construction Court in London issued 1090 claims, whereas only 325 were issued in 2000. On the face of it, that looks like a reduction of two-thirds. However, as Disraeli spotted, there are limitations to statistics.

By 28 April 2001, at least 3300 adjudicators had been appointed. The figure is probably higher as certain nominating bodies have not provided figures and some adjudicators will have been appointed by agreement. So the number of disputes requiring resolution by adjudication alone is three times the high-water mark of TCC claims issued in London in 1996.

Furthermore, mediation and arbitration are private, and figures for arbitrator appointments are difficult to come by. Certain adjudicator nominating bodies have not released figures and even parties to adjudication may be reluctant to provide full information.

What's more, the number of adjudication disputes is rising steeply. Cumulative adjudicator appointments to 28 February 2000 were 1108.

In slightly over a year since then, 2192 adjudicators have been appointed, twice the number. More significantly, the rise in the number of adjudicators between 28 February 2000 and 28 April 2001 was more than twice the total for the period from the implementation of the act in May 1998.

All of this suggests that the Construction Act is creating disputes that otherwise would not have occurred

So what of the theory that adjudication has reduced claims in the TCC? Again, this is flawed. Since the act came into force, 410 claims were issued in London. Some 336 claims were issued in 1999, followed by 325 in 2000. This is a reduction of 20% over two years, and only 3% last year. The really significant reduction in TCC claims came much earlier – between 1996 and 1997 they fell by more than half, from 1090 to 480.

That reduction is unrelated to the Construction Act. More importantly, even after enactment in May 1998, the adjudication provisions were little used until Macob was decided in February 1999.

Nor do the other reasons given for the reduction in TCC claims add up. For instance, some point to the Civil Procedure Rules. The pre-action protocol process under these new rules has led to more parties resolving their disputes before the proceedings get under way, and has meant a significant drop in the number of civil cases. But they were introduced in April 1999, too late to explain the large drop in TCC claims between 1996 and 1997.

Alternative dispute resolution has been rising in popularity steadily over the past 10 to 20 years, but it is doubtful that it has played anything other than a minor part in the reduction of TCC claims.

The answer to the drop in TCC claims might be that disputes are connected to the health of the economy. When times are good, parties are unlikely to devote money and management time to fighting cases. Better to strike a deal and move on. But this explanation is flawed by the increase in adjudication appointments between February 2000 and April 2001. Perhaps adjudication makes formalising and resolving a dispute easier, cheaper and quicker – in other words, an attractive prospect.