As head of the construction and projects division, Fenella Mason advises on all aspects of construction law from procurement routes and contract drafting through to dispute resolution. She regularly conducts adjudications, mediations and litigations and has handled numerous arbitrations for both national and international clients. She speaks with us today on the construction sector in Scotland and how the Scottish Courts are evolving.
Construction Litigation In Scotland: Paving The Way To A More Efficient System
Most clients want the same thing - a cost effective and quick resolution of their dispute, whether the dispute is to be resolved in Scotland or England. However, if the Scottish Commercial Court, rather than the Technology and Construction Court (TCC), is the location of the battlefield the implications for cost and speed can vary significantly. Differences in practice (and sometimes law) can impact the time and cost of resolving the dispute. Can recent changes in the Scottish Commercial Court limit the differences?
Same Building, Different Building Blocks
In Scotland, the equivalent court to the TCC is the Commercial Court of the Court of Session. The underlying law may be similar in most – but not all – respects. However, the differences in processes are significant, even if they often seek to achieve the same outcome.
What is new in Scotland?
The good news is that the litigation landscape in Scotland is changing. One of the most relevant changes for construction disputes is the new Commercial Court Practice Note and Guidance. The court is now embracing the digital age but it will be a steep learning curve for judges and practitioners alike. The cost burden of complying with technology requirements in construction disputes can not be underestimated. Construction disputes, with their voluminous documents, are most likely to bear the brunt of any expenses incurred as both judges and practitioners grapple with the impact of the new rules. The embracing of technology by the courts will not necessarily reduce the client’s costs at this early stage. Consistency of judicial approach will be key, as well as an appreciation of the implications - financial and logistical - of any judicial requests.
The new rules also promote Alternative Dispute Resolution (ADR) but do not go so far as to give a Court of Session commercial judge a mandatory power to compel ADR. The sanctions are tied to expenses but historically there has been a reluctance of Scottish judges to engage with costs/expenses, albeit this may change in the future.
Another, not so welcome, change is a recent increase in Court costs - many of the Court fees have doubled. This will have a substantial impact on long running, multi-party litigation which are a feature of so many construction disputes.
Do the changes serve construction sector users?
There is one recurring point which clients are making: litigation simply takes too long. Do they have a point? Adjudication enforcement actions are probably the biggest issue. The Scottish Courts recognise that adjudication is a “novel and unusual legal beast” but there are no bespoke rules for this process. The Commercial Court rules do not lend themselves to enforcement actions. Although, in theory, an enforcement hearing could take place within six weeks of failure to pay an adjudicator’s award, it is not uncommon for at least four months to pass between an adjudicator’s award and a hearing. Contrast this with the TCC’s stated objective of a hearing within 28 days. This difference in timescales and varying judicial approaches to the necessary procedures is difficult to explain to clients who are used to the speed of adjudication enforcement in the TCC.
A related issue is the time it takes to produce judgments. Whilst this is an issue common to construction disputes in general, it is felt most acutely in adjudication enforcement actions. Advising clients on the timescale for delivery of a judgment can be a lottery, not a commercially attractive proposition to put to an experienced CEO, particularly given that adjudication is only ever a temporarily final answer.
Time and money
Shortening and standardising litigation timescale, and as a consequence reducing cost, are challenges that the Court of Session appears to be alive to. Court fees are rising but so too are expectations of service delivery from the Court service. The TCC has set a high standard in relation to adjudication processes in particular; a bespoke process for construction disputes, and adjudication enforcement would be a welcome addition to the Commercial Court reforms.
