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Professional Negligence – New requirement to consider adjudication

  • United Kingdom
  • Financial services disputes and investigations

16-05-2018

At the meeting of the Civil Procedure Rules Committee on 2 February 2018, it was concluded there was sufficient evidence, following two pilot schemes on adjudication in professional negligence cases, for the requirement to consider adjudication in professional negligence cases to become enshrined within the Pre-Action Protocol for Professional Negligence (‘the Protocol’). As a result, the Civil Procedure Rules Committee published amends to the Protocol which are now in force as of 30 April 2018.

Amendment

The Protocol now requires claimants to state within their Letter of Claim whether they wish to refer the dispute to adjudication.  If they do, they must propose three adjudicators or seek a nomination from the nominating body.  If the claimant does not wish to refer the dispute to adjudication, they should give reasons.  There is no additional requirement on Defendants.

Comment

The justification for the amendment is of course the potential time and cost benefits of parties entering into adjudication at an early stage.  Adjudication is a streamline process concluded by a final decision by an appointed adjudicator. It has proved successful in other areas, including in construction disputes, where the appointment of an adjudicator with specific expertise can be of significant benefit.  Adjudication can be flexible and a decision as to how the issue of costs will be determined at conclusion can be agreed at the outset.  

However, as a result of the amendment, claimants will now have to spend some time and cost considering adjudication at the earliest possible stage, without sight of the Defendant’s response and clarity as to the issues that are in dispute. Adjudication is also possibly unattractive for claimants who wish to have a right to appeal or who must heavily rely on expert evidence, as will often be the case in claims for professional negligence. Additionally, there is no requirement on a Defendant to provide reasons for a decision not to engage in adjudication.  Generally with reference to these factors claimants may therefore take the view that making any proposal at the very outset is premature.

Practical implications

Claimants should consider at the outset whether adjudication is a method of ADR which is potentially suitable, and if so, will need to build their knowledge of the process and experience of those potentially suitable to act as adjudicator.  Failure to consider adjudication, or failure to give detailed reasons as to why it is not considered suitable could be considered a failure to comply with the Protocol and this can result in sanction, delay and cost at a later stage.

There is no express requirement within the Protocol on Defendants to provide a response to the Claimant’s position on adjudication but it would seem sensible to do so.  ADR is and always will be encouraged by the CPR and forms a significant part of the Protocol generally and Defendants may be asked why they did not consider it appropriate by the Court, at which point they should have an explanation or otherwise they may face sanctions too.

For more information contact

Ashley Davies, Senior Associate

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