OK, they're not the most prestigious accolades, but the prize ceremony for concocting those ways to wriggle out of the Construction Act can still reduce you to tears
The fourth anniversary of the Construction Act has arrived and so I thought I would devote this column to awarding some prizes. The awards are for the most notorious scams designed to get around the act. Without further ado, I start off with the fourth-placed scam in my list.

  • Suspension scam: The act states that a payee wishing to suspend its contract is required to give at least seven days' notice. But many in the industry have decided to rewrite the statute by insisting – in contracts – that the notice period should be much longer – say, 42 days. Why stop at 42 days? Why not make it a million days? My advice is to ignore the contractual period and insist on relying on the terms of the statutory provision.

  • Indemnity scam: One worthy of Darth Vader.

    "The subcontractor shall indemnify the contractor in respect of any … losses resulting from or in connection with compliance with an adjudicator's decision by the contractor, which is subsequently changed, revised or amended by a decision of an arbitrator or the court."

    So, if an adjudicator decides that a subcontractor is entitled to £100 and an arbitrator subsequently awards the subcontractor £110, the subcontractor will have to pay all the costs involved in complying with with the adjudicator's decision; even though the arbitrator's award is still in the subcontractor's favour.

    A court is likely to strike out, or substantially reduce, the scope of this clause. However, clauses that require a party to meet the costs of the other party in an adjudication (win or lose) are – it seems – compliant with the act.

    The submission must be in “sufficient detail” for the contractor to understand. But what if the contractor has an IQ of 10?

  • The "Final And Binding" scam: At number two, a nasty little scam. Here is an example: "The decision of the contractor on the following shall be treated as final and binding, unless and until revised in arbitration or by the court: granting or withholding of extensions of time; determination of the employment of the subcontractor; set-off or abatement; valuation of the works."

    One is left wondering what is left to be referred to adjudication. On the face of it, such provision would be non-compliant since it is tantamount to denying the statutory right to refer disputes to adjudication. The fly in the ointment is paragraph 20a in the adjudication provisions in the Scheme for Construction Contracts. This enables adjudicators to decide disputes arising under the contract, save where any decision or certificate is expressed (in the contract) to be final and binding. I have always taken the view that this provision goes well beyond the scope of the act and, in fact, could be "ultra vires" the act.

  • The No Dispute scam: Top prize goes to the Civil Engineering Contractors Association for the adjudication provisions in its subcontract for use with the ICE 7th Edition. These ensure that the subcontractor will never get a whiff of the adjudicator; there can be no dispute until the subcontractor has passed through at least seven hoops. The contract does not address the situation where the subcontractor has a purely domestic dispute between the main contractor and subcontractor. It only addresses those matters which the main contractor opines are a "matter of dissatisfaction" under the main contract.

    The bit I like is the reference to the subcontractor making a written submission to the main contractor if it is dissatisfied with the latter's acts, decisions, etc. The submission must be in "sufficient detail" for the main contractor to understand. What happens if the main contractor has an IQ of 10? Why not have an adjudication to determine whether he is sufficiently intelligent to understand the subcontractor's written submission? Needless to say, this nonsense does not comply with the act.

    • Postscript

    Rudi Klein is a barrister and chief executive of the Specialist Engineering Contractors Group.