Revised construction and engineering pre-action protocol to come into force

In force from 9 November, the new protocol will govern the actions and conduct of parties in dispute in construction and engineering cases before formal court proceedings begin.

The changes include the introduction of a new, optional, 'protocol referee procedure', which will allow parties that have opted in to seek advice on compliance from an independent referee. Parties will also be able to opt out of using the protocol altogether, providing that they all consent to this.

Construction disputes expert Benjamin Smith of Pinsent Masons, the law firm behind Out-Law.com, welcomed the changes.

"By reformulating and simplifying the requirements of the protocol – for example, limiting the volume of information exchanged between the parties to 'brief summaries' which are 'proportionate' to the nature and value of the dispute - the updates should allow for a more streamlined and efficient pre-action process," he said. "Albeit such limitations are by their nature subjective, it will undoubtedly give parties and their legal representatives pause for thought when preparing submissions in order to ensure they are compliant with the new protocol."

"In this respect, given the parties will have to opt in to use the new protocol referee procedure, it  will be interesting to see whether parties agree that the procedure should apply – and if they are willing to implement the procedure in the event of non-compliance with the protocol by the other party. It is also worth mentioning that the parties can also agree that the pre-action protocol will not apply to the dispute, although it is hard to see circumstances in which the parties would agree to this except for in the most straightforward of cases," he said.

The new protocol will apply to all construction and engineering disputes including building and construction disputes; claims by or against engineers, surveyors and architects; and claims relating to the quality of materials used or work undertaken. These claims are typically heard by the Technology and Construction Court (TCC) division of the High Court.

The protocol was developed jointly by specialist bar association the Technology and Construction Bar Association (TECBAR) and TeCSA, the Technology and Construction Solicitors' Association. It replaces the previous pre-action protocol, which came into force in October 2000 and was amended in 2007.

Once in force, parties will no longer be required by the wording of the protocol to provide each other with "full" information as part of the pre-action process, but rather "sufficient information broadly to allow the parties to understand each other's position and make informed decisions about settlement and how to proceed". The requirement to keep the letter of claim simple, and costs modest, has been broadened from merely lower value claims to "many cases, including those of modest value".

The general aim of the protocol has also been modified so that only the "outline" of parties' cases must be made known, and to amend the meeting requirements so that the parties only "usually" should meet. The aim is to put parties in a position where they may be able to settle cases not merely early and fairly, as at present; but also inexpensively.

The new protocol emphasises alternative dispute resolution (ADR) as a possibility in several places, including as a part of any settlement discussions. In addition, the protocol makes it possible for parties to replace the meeting requirement 21 days after letter of response or response to counterclaim to be in the form of an ADR process, for example mediation.

In its response to the first letter of claim, the defending company must now confirm whether it wishes the new protocol referee procedure to apply. If it agrees, either party may apply to the chairman of TeSCA for the appointment of a protocol referee. Protocol referees will be chosen from among the senior members of TECBAR and TeCSA. Their role will be to assist parties in complying with the protocol, or to settle issues of non-compliance; and the referee will be required to reach a written decision no later than 20 working days after receipt of the notice of appointment.

The new protocol also limits the ability of the courts to impose costs consequences for non-compliance to exceptional circumstances, such as "flagrant or very significant disregard" of the protocol.