The Pre-Action Protocol for Construction and Engineering Disputes: the Protocol Referee Procedure (Part 3)

In part one of our series exploring the Pre-Action Protocol for Construction and Engineering Disputes (the Protocol) we considered the application of the Protocol, its time limits, proportionality requirements and insurance requirements. In part two, we considered contractual requirements, document management, and jurisdiction.

In part three, we consider the Protocol Referee Procedure (the PRP) and potential obstacles to its effective operation.

Background

One of the key changes implemented by the Protocol when it was updated in 2016 was the introduction of the PRP.

The PRP is designed to assist parties who need guidance on complying with the Protocol. It allows parties to refer their dispute to a Protocol Referee for directions and/or a decision on whether one of the parties has failed to comply with the Protocol.

The PRP was introduced in response to a survey of the previous version of the Pre-Action Protocol (the Previous Protocol) in which a significant proportion of respondents stated that access to guidance from judges in the Technology and Construction Court (TCC) would be beneficial. When the Protocol was launched, Mr Justice Coulson (the then head of the TCC) indicated that the court should not get involved in pre-action disputes regarding non-compliance with the Protocol, due to the absence of jurisdiction where no proceedings were issued. The PRP was therefore introduced as a means of assisting parties where the court cannot do so.

Procedure

  • The PRP relates only to procedural issues and requires agreement from both parties to engage with the procedure, in order for it to apply.
  • The claimant is required to state in its letter of claim whether it wants the PRP to apply. If the claimant so elects, the defendant is required to confirm in its letter of response whether it agrees that the PRP should apply.
  • If the parties agree that the PRP should apply, either party may apply to the chairman of the Technology and Construction Solicitors’ Association (TeCSA) for the appointment of a Protocol Referee for a fee of £3,500 plus VAT. Protocol Referees are drawn from senior members of the bar and solicitors experienced in construction and engineering matters, appointed by TeCSA and the Technology and Construction Bar Association (TECBAR).
  • The applicant should set out details of the directions sought and / or of the respondent’s non-compliance with the Protocol.
  • Following the Protocol Referee’s appointment, the respondent may submit a response, which is followed by the applicant’s reply. The Protocol Referee’s written decision is due within ten working days of the notice of appointment, although the parties can agree to extend this.
  • The Protocol Referee can give directions and find whether or not there has been non-compliance with the Protocol and if so, whether non-compliance demonstrated a “flagrant” or “significant” disregard for the terms of the Protocol. The Protocol Referee has jurisdiction to direct that the respondent reimburse the applicant with the application fee. In subsequent court proceedings, the application fee shall be costs in the case.
  • The Protocol Referee’s decision is binding on the parties until the dispute is settled by agreement or in court proceedings. It is not binding in subsequent court proceedings but will be given “due weight”. An aggrieved party can, therefore, seek to challenge or review the decision of the Protocol Referee in subsequent court proceedings.

Implications

If parties disagree as to the progress of the Protocol and / or need direction, then both may see advantages in referring the dispute to a Protocol Referee for a decision on the future management of the dispute. However, obtaining agreement from both parties to engage with the procedure may not always be possible, and may be a bar to its effective operation.

Strict compliance with the Previous Protocol tended to result in the frontloading of work and therefore costs at the pre-action stage. The Protocol is designed to be simpler, more efficient and cost effective, and gives parties greater flexibility in pre-action disputes. Only in exceptional circumstances, such as “flagrant” or “very significant” disregard of the Protocol will the court impose costs consequences for non-compliance. This is in contrast to the position under the Previous Protocol, where it was more common for parties failing to comply with the Previous Protocol to be penalised on costs.

With greater flexibility under the Protocol and fewer pre-action disputes being referred to court, it is perhaps more difficult to assess the value of the PRP under the Protocol. Its greatest value may have been under the Previous Protocol.

This article was co-authored by Helen Cottrell, Trainee Solicitor, London.

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