Article - Construction Law

Pre-Action Protocol for the Construction and Engineering Disputes

I'm a builder and I've heard that I have to do a number a steps before I commence proceedings in the County or High Court.  What are they?

The Pre-Action Protocol for the Construction and Engineering Disputes ('the Protocol') came into force on 2 October 2000.  It should be noted that the Protocol does not apply to applications to enforce the decision of a construction adjudicator, applications under Part 24 of the Civil Procedure Rules 1998 ('CPR') (summary judgements) and claims for interim injunctive relief.  Additionally, it does not apply to disputes where the issues are substantially the same as those in a recent adjudication as exchange of information has already taken place.

The Protocol encourages the parties to:

  • exchange information early on;

  • negotiate a pre-action settlement; and

  • enables the action to be run efficiently if proceedings are commenced.

The Protocol also sets out a specified procedure which must be followed.  If it is not, then a party found to be in breach of the Protocol is liable to be penalised by the Court when the question of costs falls to be decided.

The first step for a proposed Claimant is to forward a formal 'Letter of Claim' with full details of the Claimant's claim.  Within fourteen days of this letter, the proposed Defendant must acknowledge the letter.  If no acknowledgement is received within fourteen days then the proposed Claimant may immediately commence proceedings.

If the proposed Defendant wishes to contest the Court's jurisdiction, refer the matter to arbitration or the claim that the letter is addressed to the wrong Defendant, then the proposed Defendant must inform the proposed Claimant of this within twenty eight days.

The proposed Defendant has twenty eight days following receipt of the letter (or later if agreed with the proposed Claimant up to a maximum of four months) to provide a full response to the Letter of Claim  If the proposed Defendant raises any counter-claim, then the proposed Claimant will have a similar period to respond to any counter-claim.

It should be noted that the Protocol encourages the parties to meet after receipt of the Defendant's response to the Letter of Claim.  The aim of the meeting is for the parties to agree the issues and identify the cause of the dispute on each.  The parties must then consider how the issues might be resolved without litigation or, if litigation cannot be avoided, the steps necessary to ensure that the litigation is conducted in accordance with the overriding objective of the CPR.  In that context, they should consider the appointment of joint experts, disclosure of documents and how litigation costs might be kept to a minimum.  The possibility of a joint expert is, therefore, not given the prominence it has in other protocols, perhaps a recognition of the complexity of the type of claim falling within the protocol.

The conduct of the meeting between the parties is not prescribed by the Protocol but the Court expects the attendees to include representatives with a mandate to settle or recommend settlement.  The expectation of the Court is that insurers and lawyers will also attend.  If the parties do not agree they should specifically consider an alternative dispute resolution procedure.

Finally the Court may be told by any party who attended the meeting that it took place, with whom and when.  If a party didn't attend, why not and if the meeting didn't happen, why it didn't happen.  They may also report on any agreements reached.  Other than that, anything said at the meeting is entirely 'without prejudice' and therefore inadmissible in Court.  This allows both parties to speak openly about the issues in order to resolve them quickly.

The Protocol enshrines what ought to have been occurring at the pre-litigation stage in any event.  If the 'real' issues are identified promptly, early and cost effective settlement becomes a realistic prospect.  Anyone who does not comply with the Protocol runs a risk of being criticised by the Court at a later date.

Article First Published: 4 April 2005

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