Can we fix it?

The Technology and Construction Court celebrated its 150th anniversary last year. It was originally the Official Referees’ Court, named after the judges who heard construction and engineering cases. In 1998, the right to refer construction disputes to adjudication required new procedures, and the TCC was relaunched in its current format. Cases in the TCC in London are heard by High Court judges and currently 11 are nominated, including Mr Justice Waksman who is the Judge in Charge.

While the TCC specialises in high-value construction cases, it also handles prominent IT disputes and public procurement cases. Cases include construction and engineering claims; IT and energy disputes; adjudication enforcement; claims around environmental damage and fire safety; and challenges to arbitrators’ decisions.

The TCC’s technical prowess and innovative approach to process and case management make it a world-leading forum for dispute resolution. And its workload is increasing. In 2022/23, the number of applications heard increased by 38%, reflecting the parties’ use of case management tools and early disposal procedures. Some 1,967 applications were dealt with electronically through the CE-filing system.

Specialist judges

Roberta Downey, who leads Vinson & Elkins’ international construction team, explains that the main advantage of the TCC is the knowledge and experience of its judges: ‘They understand how engineering and construction projects work, how costs are incurred and critical path analysis is used to understand delays. And because the big construction cases involve long trials, multiple witnesses, technical experts from several disciplines and huge numbers of documents, they are in the vanguard of innovation when it comes to case management.’   

Neal Morris, head of Pinsent Masons’ construction advisory and disputes team, agrees: ‘They were the first to introduce Scott Schedules [to summarise key issues for the judge at the outset of a case] and ‘hot-tubbing’, when two or more expert witnesses are questioned concurrently. The TCC was the first court that accepted written witness statements. TCC judges have been at the forefront of active case management, and other courts are following their lead.’

‘The judges are high-quality and examine cases rigorously. Most people look up to them,’ says Adrian Bell, co-head of CMS’s infrastructure, construction and energy disputes group. For example, Lord Justice Peter Fraser, who was Judge in Charge of the TCC between 2017 and 2020, was the judge in the first class action case against the Post Office in relation to the Horizon IT scandal. ‘He got into the detail,’ Bell recalls. ‘Without that, the case would not have progressed.’

Many former TCC judges go on to more senior positions in the judiciary and international dispute resolution forums. Lady Chief Justice Baroness Carr is a former TCC judge. Lord Justice Fraser was promoted to the Court of Appeal and appointed chair of the Law Commission. And former TCC judge Sir Vivian Ramsey was appointed to the Singapore International Commercial Court following his retirement from the UK bench.

The TCC’s international standing also attracts major international cases. Samuel Townend KC, barrister at Keating Chambers and Bar Council chair, says: ‘Whereas a lot of countries have a commercial court, very few have construction judges let alone a whole court. There is nothing like the TCC anywhere in the world. It is pioneering and sets an example, and it helps specialist English barristers get instructed in foreign construction cases.’

Townend, who is a strong proponent of gender diversity at the bar, also highlights that the TCC was the first of the higher courts in England and Wales to have an equal number of female judges; currently, four of the 11 TCC judges are women.

Navigating complexity

Barrister Sean Brannigan KC is a joint head of chambers at 4 Pump Court, which specialises in construction disputes. ‘People see the TCC as a gold standard of case management and quality of decisions on issues that require technical expertise, ranging from construction to AI software,’ he says. Brannigan also acts in cases in the Dubai International Financial Centre Courts and confirms that ‘other courts are looking at TCC for examples of multi-defendant cases arising from cladding disputes’.

Indeed, as many construction disputes tend to be contract-based, and construction contracts are commonly based on standard documents, TCC decisions set new precedents beyond its jurisdictional reach. Downey explains: ‘The construction industry has standard forms such as New Engineering Contracts (NEC), FIDIC (International Federation of Consulting Engineers), and JCT (Joint Contracts Tribunal). So when a decision on those contract terms comes out of the TCC, it doesn’t just affect that project or litigation, it sets precedents across industries. FIDIC and NEC contracts are used elsewhere in the world, so although decisions in other jurisdictions are not bound by TCC decisions, they will have a wider effect because terms are standardised or similar.’

Technology and procurement

The TCC is seeing an increasing number of disputes related to computer software and IT infrastructure systems. Pinsent Masons litigation partner Michael Fletcher explains that these disputes follow similar patterns to construction disputes. ‘A solutions architect designs and builds a system to meet the customer’s needs, or what it thinks the customer’s needs are,’ he explains.

‘IT disputes often arise when there is a misunderstanding at the start. The system is designed, built, tested, integrated into other systems and eventually goes live. It follows the same pattern as a construction project, although issues often arise because the technology is new and innovative, so when something doesn’t work as expected it tends to become a mutual blame game.

‘Like construction, IT disputes are multi-layered with technical experts, delay experts, quantum experts. And virtual software adds another layer of complexity. The TCC judges have a technical background and understand that these disputes need careful and early case management.’

Most IT disputes are about people rather than technology. ‘While a lot of disputes are ostensibly about technology, they are really about communication,’ says Fletcher. ‘Did the customer know what they wanted and communicate that to the supplier, and did the supplier properly understand those requirements? A huge factor in technology disputes is how to present complex systems – and what went wrong – to the court. The better the presentation, the stronger the case.’

He adds that there are specialist companies that create ways of presenting expert evidence using visualisation. Mediation is often a good option for tech disputes, partly for privacy and partly to maintain commercial relationships by settling a dispute and moving on.

A significant portion of TCC work concerns procurement challenges, usually brought under Procurement Regulations. These often relate to public sector procurement. Fletcher notes these normally involve three parties: the challenger, the procuring authority, and the winning bidder which wants to protect commercially sensitive information on pricing.

He says: ‘This is procedurally complex, and time-sensitive because the authority cannot award the contract to the winning bidder until the claim is resolved – it has an injunctive effect.’

The TCC guidance note – Appendix H – sets out procedures for public procurement cases. ‘This is a good example of a court deciding that certain types of dispute need to be handled differently and creating guidance for doing that,’ Fletcher says. Following the Procurement Act 2023, the TCC is working with procurement groups to develop a new procedural framework for these claims.

Litigation or arbitration?

While alternative dispute resolution (ADR) is prevalent in construction disputes, the TCC’s structured approach offers clear advantages. Downey explains: ‘The fact that litigation is public will put some clients off, but you can get a trial in the TCC faster than you can get an arbitration because there are normally three arbitrators to coordinate, in addition to lawyers and expert witnesses, whereas if you go to the TCC there is one judge and you normally have the same judge for the whole case. And it doesn’t cost more, because while the parties share the cost of an arbitrator, the TCC judge is paid by the taxpayer and you get all the court infrastructure for a modest fee.’

For international cases, however, enforcement considerations might lead a claimant to choose arbitration. Downey explains that enforcing an arbitration award in a country that is a signatory to the New York Convention is relatively straightforward, whereas enforcing a court judgment abroad will depend on the relationship between the UK and the foreign court.

‘Enforcement and confidentiality are the main reasons a client might choose arbitration,’ she says. ‘But if you had a dispute between UK parties over a project in the UK and they were robust enough to take any publicity, the TCC is quicker, cheaper and you get a good-quality decision.’ And, Downey adds, there is no cancellation fee. ‘In arbitration, if you manage to settle, quite often the arbitrators will still expect a proportion of the fee because you have blocked out their time, but if a court case settles you don’t have to pay for the time you didn’t use.’

ADR as an efficiency tool

ADR is not necessarily an alternative to litigation – it can be used before the case is heard or concurrently. Matthew Rushton, the former EMEA director of JAMS, and now a consultant with Opus 2, highlights another TCC efficiency measure – the effective use of ADR procedures to help cases settle before they reach court.

‘The TCC has led the way in deploying the broadest range of procedures to dispose of litigation before trial offering mediation, early neutral evaluation, alongside pre-action protocols,’ Rushton says. ‘[These are] adopted enthusiastically in the construction industry including contractual provisions for dispute boards (increasingly the norm in infrastructure and large-scale construction) and adjudication mechanisms.’

Morris appreciates the TCC’s flexibility: ‘As a construction dispute resolver, I have various tools, one of which is litigation. But there’s also ADR, adjudication, expert determination – you apply different tools at different times to get the best resolution. The TCC has always been open to that. Adjudication is specific to construction. It is provided for by statute for most construction contracts to deal with disputes quickly and temporarily. The TCC makes that work by enforcing decisions and making sure the process is not abused.’

Mandatory mediation

The TCC’s work has recently been affected by new legislation and a judgment. The Building Safety Act 2022, which was enacted in response to the Grenfell Tower tragedy, introduced a retrospective 30-year limitation period for defective cladding claims. This, together with new fire safety regulations has led to an increase in claims.

Another recent development relates to the court’s ability to order compulsory mediation. While dispute escalation procedures often require parties to try processes like mediation, in November 2023 the Court of Appeal held in Churchill v Merthyr Tydfil County Borough Council [2023] that even without having agreed to such a procedure, the courts may order parties to engage in ADR if it does not impair the claimant’s right to proceed to a trial and is proportionate.

Rushton says: ‘The effect of Churchill is an open question, but given the already extensive use of ADR in the TCC, I’d be surprised if it led to a tangible fall in hearings even if mediation numbers rise significantly. What seems more likely is a Californian approach in which early settlement talks between lawyers and parties are deferred as a matter of routine until mediation has commenced.’

Morris, on the other hand, believes that ‘the TCC will be at the forefront of encouraging some of the first orders forcing recalcitrant defendants to go to mediation and understand the case much earlier’.

A victim of its own success?

While the TCC is generally recognised as forward-thinking and innovative, its expanding workload also brings challenges, not least the time it takes to get a hearing. ‘Most of our cases take at least a week, but the waiting time for a two-week hearing is around 18 months, which isn’t great access to justice,’ says Bell.

‘The consensus is it’s taking too long to get a hearing, but the TCC is probably a victim of its own success because it’s really good quality judges for free – compared with arbitration – so everyone wants to get into court. If you compound that with recent legislative changes as a consequence of Grenfell, which means that everyone is going to court, it is understandable that the court is struggling to keep up with the massive demand for its services.’

Also, backlogs in other parts of the justice system are having a knock-on effect. Bell explains: ‘TCC judges are increasingly used for criminal and other cases. The TCC guidance says you should be allocated one judge at the outset of a case so that the first case management conference should be with the judge who ends up doing the hearing. But that doesn’t always happen. While all the TCC judges are good, that continuity helps cases to run efficiently.  

‘A lot of TCC cases settle before the hearing. We had a four-week hearing settle two days before it was due to start, which was obviously quite disruptive as the judge had set aside four weeks that no one else could use. I understand that this makes it difficult for the court to manage its diary.’

Anna Wood, a partner in Michelmores’ construction and engineering team, highlights a challenge that is unrelated to the TCC but affects its proceedings – the shortage of experts. ‘Construction disputes turn on expert opinions on engineering and design choices as well as cost analysis and delays,’ she says. ‘Since the pandemic, we have seen a shortage of experts as people have retired or changed direction, and while the TCC understands that we might have to wait for an expert, the fact that we are arguing over tangible things means we need a specialist when we are trying to unpick where something went wrong. While witnesses are important, the experts can make or break your case.’

Some multinational businesses are looking to fill the gap by having an expert witness department, but it is important to recognise that the experts have a duty to the court.

Another succession challenge arises from the TCC’s successful strategies in relation to ADR. Townend explains that the high settlement rate means that ‘smaller value cases tend not to get to trial, so [there are] fewer opportunities for young barristers to develop their advocacy skills.

‘Another challenge is to ensure enough big, complex, difficult cases are heard in open court,’ Townend concludes. ‘Exporting legal services is a major success for the UK, and has given us a pre-eminent position in the world. One of the reasons we have that is the quality of judgments issued by commercial courts like the TCC. If not enough trials are heard, and there is a reduction in published judgments, there is a worry that we won’t keep attracting the most important cases. We need litigation in court, not arbitration or mediation, to retain our pre-eminent position.’

 

Joanna Goodman is a freelance journalist