Local Democracy, Economic Development and Construction Bill [HL]

I shall respond to the noble Lord on the question of cost allocation, which he discussed in the latter part of his contribution. As well as trying to prohibit all adjudication costs, the noble Lord’s proposed new Section 108 seeks to prohibit any provision requiring a party to provide security for the other party’s adjudication costs. In our view, this extra limb is simply not necessary, as such a provision would be an agreement on the allocation of costs and should already be caught. In any case, such a provision cannot exist in the absence of an agreement on the allocation of costs. I am sorry if my robust response seemed to be too robust, but I made the point, which I repeat, that the matter is to be discussed at the construction umbrella body’s adjudication task force meeting this month. The Government wait to see whether there will be consensus, or whatever other collective noun the noble Lord wants to use, at that meeting to ask the Government to review this matter further. So the matter is not absolutely closed. The noble Lord reminded me of the amendment tabled by the noble Baroness, Lady Hamwee, which I have not addressed. I shall now do so. The noble Baroness is concerned that, in the absence of a cost-sharing agreement, not allowing the adjudicator to recover his costs from both parties will act as a disincentive to adjudication. At the moment, the referring party may be disinclined to refer a dispute to adjudication, as he alone would be responsible for the costs. Likewise, there may be some reluctance on the part of the adjudicator to proceed if he is concerned that he may not get paid because he cannot look to both parties for payment. The noble Baroness would like to introduce an amendment that provided for the adjudicator to award his costs where the parties have not addressed the issue in a valid agreement: in other words, where they have not entered into an agreement after a dispute has arisen about costs. Interestingly, the draft Bill that the Government published in June 2008 contained a provision broadly similar to that now proposed. However, it was overwhelmingly rejected by the industry because, among other reasons, it was complicated. We found that the original provision had to address other issues beyond the narrow cost-awarding power and, in doing so, it became necessarily complicated. Given the scale of this rejection by stakeholders, the Government decided to keep the policy simple and transparent. I therefore resist the noble Baroness’s amendment. However, we accept that it is current industry custom and practice for the adjudicator to award his fees and expenses and we will write to the noble Baroness to see if we can identify a way forward. I hope that, with that, the noble Lord will withdraw his amendment.