Arbitration and the civil engineer, Arbitration 1987, 53(2), 77-84, 120

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Arbitration and the civil engineer
John Derrington

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Arbitration

Arbitration 1987, 53(2), 77-84, 120

Subject
Arbitration

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Professions

Keywords
Arbitration; Civil engineers

*Arbitration 77 The Alexander Lecture was delivered on 3 February 1987 at Glaziers' Hall, London by John Derrington,
CBE, F Eng. Past President the Institution of Civil Engineers, Past President the Institution of Structural Engineers, FCIArb.

MR CHAIRMAN it was a great compliment to receive your kind invitation to give this evening what I calculate to be the
Ninth of the Chartered Institute's Alexander Lectures, although it is with some hesitation, even some trepidation, that I stand
to deliver it - for three main reasons.

It is a great honour to be invited to present one of the highlights of the Chartered Institute's annual programme, which
commemorates a man whose work was fundamental to the high standing of the Institute today. This is the first Alexander
Lecture to be given since the death of John Alexander who was President of the Institute from 1952 to 1955. He was active in
its affairs, since he became a member in 1926 and when he retired from the Council in 1969 at the age of 70, after four decades
of service, he was presented with an Illuminated Address to mark the esteem, affection and regard of his fellow members. Truly
a difficult man to do justice to in a commemorative lecture.

My second reason is because I speak not as an eminent man of law but as a simple civil engineer. I note that in 1978 Lord
Diplock reminded members that previous Alexander Lectures had all been given by members of the Judiciary, on aspects of the
law of arbitration. He went on to suggest that the practice of restricting Alexander Lectures to members of the Judiciary was a
pattern that should not be perpetuated. Nevertheless, my searches show that no radical change was made for his successors in
1979, 1980, 1982 and 1984. With John Alexander, no longer alive, it would appear that Lord Diplock's advice has now been
followed and I trust that you will not regret this change.

My third reason for concern is because I am no ordinary civil engineer, but have for nearly 45 years worked as a poor but honest
contractor's man, eschewing the higher flights of intellectual endeavour for the more satisfying ones, to me, of earning a simple
crust of bread. Not for a contractor the flights of oratory such as an Alexander Lecture, but more suitably that of following the
paths of virtue set out by our great patron saint, St Francis of Assisi - of honesty, poverty and obedience.

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Arbitration and the civil engineer, Arbitration 1987, 53(2), 77-84, 120

But assured that the speaker on this occasion enjoys the happy state which I understand you, my Lords and gentlemen, describe,
as "privileged', and that no special indemnity is needed for speaking my mind, I wish to discuss the general understanding of
the practice of arpitration in the eyes of the civil engineering industry and profession - or at least of one humble member of it
- and to explain why, in my opinion, there has only recently been a general acceptance of the advantages offered by arbitration
in settling the inevitable disputes simply, quickly, and fairly.

It will, I believe require reminding you of the development of the civil engineering profession over the last two centuries, which
made it a little suspicious and generally reluctant to follow the normal procedures of litigation to settle the areas of dispute. I
trust that those of you not already familiar with the history of the profession will find it of some interest.

If we try to define civil engineering, it is probable that we would seek to link it with providing the basic infrastructure of
civilisation, the buildings which provide shelter, the supplies of water, the drainage and reclamation of land and the roads and
bridges for providing communications and transport for goods and people. Works dating from the dawn of civilisation (even
into the 18th century), depended on the disciplined labour forces of the standing armies of a country's rulers, the prisoners they
enslaved, and in some cases the members of the various religious communities who sought to civilise them.

Early steps to understand the great natural sources of power, and to study the mechanical philosophy and mathematics of
controlling them, developed in the 15th century with Leonardo da Vinci and saw in Britain the foundation of the Royal Society
in 1660. By the beginning of the 18th century, the French had produced a number of men academically trained in engineering
science, and in 1746 the École des Ponts et *Arbitration 78 Chaussees was founded to educate and train suitably qualified
recruits to the practice of "La Genie Civile'.

It was many decades before engineering science penetrated the universities of this country, so steeped were they in the classical
tradition. Standard reference books on properties of materials, machines and hydraulics were written by French authors. It is
interesting to realise that the great founders of civil engineering in Britain - Smeaton, Telford and Rennie - all learned French
in order to read such books, when our difficulty today is to teach young engineering graduates to communicate in English with
their colleagues.

The "Society for Civil Engineers' founded in Britain in March 1771, was the first formal association of the profession,
distinguishing its members from the military disciplines. They met fortnightly at the Kings Head Holborn. It was a period when
large public works such as turnpikes, canals, etc, needed statutory powers, and the engineers concerned, involved in the designs
and as witnesses during the Parliamentary and legal procedures, met to share ideas and experiences. The society now called
the Smeatonian Society of Civil Engineers, still meets regularly. It restricts its membership to 48 engineers and 12 gentlemen.
Although membership is understandably prized among the 250,000 professional engineers in this country, it would be more
correct to consider it as an engineers' dining society than a learned society.

The Institution of Civil Engineers is a very different body, founded on 2 January 1818, and the first engineering Institution in the
world. Its objective "the General Advancement of Mechanical Science' was a counterpart of the Royal Society's "the General
Advancement of Natural Science' and its founders were not qualified practitioners but pupils. Six in number they ranged in
age from their leader Henry Palmer who was 23 to the eldest who was 27. Their aim was "the acquisition of that species of
knowledge which constitutes the profession of civil engineer', and one can understand their impatience with the Smeatonian
Society which included their masters, who they thought concerned themselves more with the legal procedures, and possibly
even with their monthly dinners than with the art and science of civil engineering and the teaching and training of the young
men entering the profession.

The Institution meetings took place weekly on Tuesdays opposite St Brides Church in the Strand in Kendall's Coffee House.
The ordinary meetings of the ICE are still held on Tuesdays, although other less formal meetings take place most evenings of
the week. Over the first two years, although statisticians could record a satisfactory 66 per cent growth in membership, to a
total of 10, progress was disappointing and at the beginning of 1820, Palmer was persuaded to ask his boss, Thomas Telford, to
take the office of President. Telford at first refused, but after further thought he agreed and on 21 March, 1820, he was elected
the first President of the Institution which he remained until his death in 1834. The ICE's future was assured and it moved to
its own headquarters in 15 Buckingham Street Adelphi.

In 1828, when the membership had increased to 156, and the annual budget to £446 16s, a Royal Charter was granted by George
IV forming it into a Society for the general advancement of Mechanical Science - "one body Politic and Corporate by the name

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Arbitration and the civil engineer, Arbitration 1987, 53(2), 77-84, 120

of the Institution of Civil Engineers by which name they shall have perpetual succession and by the same name shall sue and
be sued, implead and be impleaded, answer and be answered unto …' etc. For the purposes of the Charter it was necessary
to define the profession of civil engineering and the famous definition drafted by Thomas Treadgold was adopted. Generally
quoted in abbreviated form as "the art of directing the Great Sources of Power in Nature for the use and convenience of Man',
this was embodied in the Royal Charter.

Now in 1987, the membership of the Institution has increased to over 72,000 and nearly one third of the members live and work
overseas. The annual budget is now about £10 million. The general objective of the Institution remains unchanged since 1818
- the advancement of the knowledge and practice of the art of civil engineering although the scope of its activities has widened
considerably. One important part is the protection of the public through the qualification procedure, and of more relevance to
our subject tonight, the responsibility for the Standard Conditions of Contract for Civil Engineering Works.

The early years of the Institution were exciting years for civil engineers, as the Industrial Revolution in Britain reached its
heyday. Prior to that, Britain was lamentably deficient in public works - no canals, railways or artificial harbours, and public
roads were little better than tracks across the country. There was little commercial traffic except by water, and roads away from
the main towns were in terrible condition, passenger coaches drawn by six-horse teams sometimes foundering in the mud.

After a flurry of canal building at the end of the 18th century, when at one time over 30 projects were underway, the pattern was
repeated for railway development. No proper engineering profession existed before the railway age and it was often the local
landowners, or their legal advisers, who were responsible for the surveys and the designs prepared to obtain the permissions
necessary through the Parliamentary route. In the early days, the same men often assumed responsibility for managing the
gangs of local labourers involved in the works, so that without *Arbitration 79 formal contracts, and with direct relationships
between the parties involved, the solution of any dispute that occurred presented little difficulty.

The development of the railways, brought a great increase in activity, and some formalisation of relationships. The first public
railway in the world, the Liverpool-Manchester line, was opened in 1830 and there George Stephenson, assisted by his 19 year
old son Robert was appointed the Engineer. He not only designed and managed the work, but also employed the labou'r and
supplied the materials for construction. Thomas Brassey, owned the quarry which supplied stone for the Manchester-Liverpool
railway, and he was persuaded to try his hand at building 10 miles of the Wolverhampton-Stafford Railway. He enjoyed the work
and proceeded to build the Basingstoke to Winchester line and then on to Paris-Rouen and other railways all over the world.
The contracts were often negotiated, owing to the almost complete absence of competition and in due course, to maintain his
workload, he began to build railways on his own initiative, and to organise the companies that operated them. Weetman Pearson
- the first Viscount Cowdray - constructed at a cost of £2 1/2 million the underground line linking the London termini of the
Great Northern and Great Eastern Railways, and after completion, operated it for three years before selling it to Metropolitan
Railways.

The role of the engineer was ill defined whether he be operator or designer or manager. Some of his work lay in the role of expert
witness, arguing his case through the Committee stage of the Parliamentary Bills necessary. Those who advocate a preference
for the Public Inquiry, now apparently preferred to the Parliamentary Bill, may be reminded that when Robert Stephenson
attended the House to give evidence to the Select Committee on the third bill to permit the construction of the Stockton and
Darlington Railway, his attendance for 34 days gave rise to an account for £35 14s. The keener mathematical minds will work
this out at one guinea per day and the more cynical minds will question how long that sum would have kept the Sizewell B
Inquiry in paper clips.

A close connection between contractors and engineers existed; sometimes they preferred to secure their return from the profits
on a good contract; sometimes, where the risk was higher or the competition more fierce, they were content with the certainty
of a smaller salary or fee as a designer. There was continual interchange between the two sides of industry and frequently there
was a close association, not always harmonious. Engineers and contractors both depended on native ability and gusty energies.
Both were intensely individualistic even for the Victorian age. Yet while engineers could afford to be uncompromising in their
attitudes, contractors had to be willing to bargain and compromise.

Joseph Locke, one of the great triumvirate of railway builders, exercised a great influence on our present day contracting system.
He believed in writing his specifications in clear unambiguous language, allowing contractors to prepare their competitive
tenders with less risk. His specifications and drawings were prepared in great detail, and he was able not only to estimate
accurately the cost of his works, but also to obtain prices which were strictly comparable with and close to his own estimates.
For already problems were occurring with the final costs of the great capital works. And the criticisms of British engineers in

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the public mind was not about the adequacy, the safety or even the elegance of the great engineering works, but with the final
cost in relation to the original budget and the final completion time. Tous ca change - Tous c'est la meme chose.

Today, young civil engineers who are concerned with their standing in society in relation to other professions, may look back
with envy to those early Victorian days. The London Times reported - "When Robert Stephenson died in October 1859, within
months of the deaths of the two other giants of the great engineering triumvirate Joseph Locke and Isambard Kingdom Brunel,
the entire nation went into mourning.…' In his biography of Brunel, L. T. C. Rolt wrote "Never again would a British engineer
command such esteem and affection, never again would the profession stand so high.'

As years passed, the engineer's skills came to depend more and more on the possession of expert knowledge, even though
there were often long and bitter disagreements between experts, whereas the contractor's skills were more varied, requiring
knowledge of bricks and mortar and iron and steel, ability to handle a heterogeneous and often foreign labour force, financial
expertise to assess the cost and risk, and managerial competence measured not only by the winning of contracts, but by the
orderly and profitable completion of them. A contractor could fail because he was deficient at the vital moment in any one
aspect, but could succeed only if he displayed them all.

The rapid development of mechanical plant in the second half of the 19th century brought change, as the contractor found it
necessary'to build up resources of plant and equipment to carry out building operations which became increasingly mechanised.
At the same time a better understanding of statics and methods of mathematical analysis had evolved and new building materials
of reinforced concrete and structural steelwork had come into use. The cycle of change from the designer managing the works, to
the gradual *Arbitration 80 development of engineering design and construction management as two separate skills, resulted
in the foundation of the Association of Consulting Engineers in 1913 and of the Federation of Civil Engineers Contractors
Association soon after. A primary objective of agreeing a standard form of contract for Civil Engineering Works took several
years to achieve.

The well-known paper on "The Conditions of Engineering Contracts' presented to ICE in 1939 by Edward Rimmer distinguished
clearly the difference between construction industry contracts with those in modern manufacturing industry. In Rimmer's words,
"The fact that contract works are to be constructed in or erected and fixed on land, and cannot be rejected and sent back to the
contractor if they prove unsatisfactory; that the works are to be carried out in open air under unstable conditions with material
and labour of varying quality; that the conditions of excavation and foundation cannot be entirely foreseen until the ground is
opened up; that excavation of the works may result in damage to property belonging to other persons; that works of specialists
may have to be carried out concurrently with work done by the general contractor; that the period of the contract may extend
over several years and the employer may desire the use of parts of the work before final completion of the whole; that the
amount of money involved is often such as to imperil the financial resources of a contractor who has made an unwise tender
necessitate that terms should be inserted in engineering contracts which would be superfluous to ordinary commercial contracts
of purchase or sale'. Rimmer's words written nearly half a century ago are relevant today.

Prior to the Second World War, the strong managerial position held by the engineer, was not under pressure and the many
and varied forms of contract used for engineering works, needed to take little account of the settlement of disputes. Disputes
were generally generated because conditions arising during the works had not been foreseen at the time of tendering, or delays
developing for completion. In the much less legally aware environment that existed in the early years of the 20th century,
settlement of such disputes could generally be affected directly by the engineer concerned, or by direct compromise between
contractor and employer. Rather than recourse to litigation, the procedure of agreeing on the appointment of an independent
referee whose judgment would be binding, was not uncommon.

The agreement of a Standard Form of Contract for Civil Engineering Works - known as the ICE Conditions - was first made by
the Association of Consulting Engineers (ACE), the Federation of Civil Engineering Contractors (F C E C), and the Institution
of Civil Engineers (ICE) in 1945. At about the same time a different standard form for building works was agreed by the RIBA,
RICS and others. The ICE Conditions strongly supported the engineers' role, not only as the designer and controller of the
works, but also further, as an unbiased referee should a dispute occur.

Subsequent editions of the I C E Conditions were published in 1950, 1951 and 1955. The current Fifth Edition was issued
in June 1973, and modelled very closely on the Fourth Edition. Subsequently it was revised in January 1979 and even more
recently in 1983 although these amendments are not considered to be of sufficient importance to warrant it being called the Sixth
Edition. The document is long and complicated in some parts; guides to the contract have been published to provide a simple
explanation to the non-legal minds in firms of contractors and engineers. The Conditions of Contract need additional documents

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including the Form of Tender, Form of Agreement, the Contract Drawings, the Specification and the Bill of Quantities. Unlike
a commercial contract, the cost of the Works is not specified as it is calculated on completion of the Works and remeasurement.

The construction contract differs from normal commercial contracts, in that the engineer has a role under the contract although he
is not a direct party to it. The engineer's functions include designing the works, drawing up the specifications and other contract
documents, obtaining tenders for the works and advising the employer on the placing of the contract. When the contract has been
signed, he must carry out numerous other duties on behalf of the employer, in ensuring that the works (as constructed) conform
to the specifications, in making such alterations or variations to his design as may be required, in certifying payment certificates
for the contractor, in considering and making judgment on any claims for variations or extras claimed by the contractor, in
granting extensions of time and generally issuing the necessary directions and instructions to ensure that the works are completed
satisfactorily and on programme. In all these actions, the engineer must act in an impartial and independent manner, ensuring
that a fair balance between employers' and contractors' interests are maintained. This, what one might call balancing role, has
been upheld in the courts where Lord Morris can be quoted "The engineer is not employed by the employer to be unfair to the
contractor.' In fact the I C E Conditions of Contract would be unworkable unless the engineer was independent, impartial and
possessed a high degree of professional integrity.

Clause 66 Section (1) has reduced considerably the amount of litigation or arbitration arising from the inevitable disputes
occurring under the contract. Where a decision involving payment for work done, or *Arbitration 81 an extension of time
claimed, is unacceptable to the contractor, and a dispute is thereby established, the matter is referred back to the Engineer. He
then has to settle it in a fair manner and his decision is final and binding. The quasi judicial role of the engineer is sometimes
difficult to explain to the legal mind, trained to the presentation of arguments covering both sides of the case by opposing
counsel, and the analysis and the judgment of these by a completely independent party.

On construction works generally it is common that the parties disagree between themselves quite frequently and it is
commonplace that these disagreements are resolved as the work proceeds. The general obligation placed upon the contractor
to offer proposals for the works procedures for approval by the engineer often leads to discussion and, where amendments to
proposals are required, to claims for extra payment. Equally, where sub-standard work is rejected by the engineer, there can
be argument and bargaining regarding the removal or retention of the faulty works. The industry is quite accustomed to these
procedures, and does not accept that a dispute exists, unless the engineer has, under Clause 66(1) given a judgment that the
contractor still finds unacceptable. The ICE Conditions of Contract then specify the option of arbitration as an alternative to
litigation.

Until recent years the use of arbitration, although common in the fields of Commercial and Marine Law, was not used commonly
as a preference to litigation in the Construction Industry. The reason for this probably lies in the historical role of the engineer
as manager of the works as well as designer, and the general acceptance of his powers to solve arguments on the part of the
contractor. The need to carry on with the site operations whilst discussions took place, and the understanding that at the end of
the contract, it was essential to have a satisfied customer exert a strong influence.

Once a dispute has been established, by the refusal of the contractor, or the employer to accept the decision of the engineer when
referred to him in his Clause 66(1) role, it is in everybody's interest that a fair solution should be found with minimum delay
and cost to all parties. It is worth remembering this objective in considering the arbitration procedures of the ICE Contract. If
litigation is not to be preferred, in spite of its lengthier and more rigorous examination of the evidence offered, arbitration must
clearly be seen to be the most successful route. Although disputes sufficiently fierce to require the President himself to appoint
the arbitrator under Clause 66 of the Contract occur several times each year, it is worth asking ourselves why the construction
industry often resorts to litigation, even though in the majority of cases, settlements appear to be reached almost on the steps
of the court.

There is no doubt that in recent years the increased demand for competition in the industry has generated the conditions leading
to more disputes. I, with many of my fellow contractors, approve the client who seeks keen competition on the quality of the final
product. High standards are after all the main selling point of the majority of British industry. We also welcome the requirement
of the client for competition of an early completion or delivery of the finished product. We see the Department of Transport
setting a pattern for other parts of Government, with its "lane rental' programme for motorway maintenance and its more recent
policy in evaluating the relationship between price and construction time where the bidder himself sets the contract period.
Thirdly, we understand the client who places minimum cost as the prime or only consideration in placing a contract, on the
probable assumption that quality and construction programme can be achieved by adequate supervision, or redress obtained
by legal action.

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Increasingly today, we see the client who appears to believe that he can obtain by the skills of his advisers not only the highest
quality and the fastest completion and handover but also the cheapest possible price and one wonders why it appears that only the
construction industry is considered in this light. Certainly society itself gives little support for this policy as a general approach.
The results of this misunderstanding are already appearing to an increased degree in our engineering and building works where
more and more disputes relate not to overspend of the original budget or completion long after the contract programme but to
the adequacy of the works and supporting structures themselves. The problems of latent damage in the industry have reached
a level at which the support of professional indemnity insurances, so liked by Government for providing fall-back support, is
becoming increasingly difficult to obtain generally.

As the changes in the law, arising from certain well-known latent damage cases, have worked their way through into the system,
so the causes of dispute have increased from the obligations under contract to those dealing with alleged negligence under
common law. The statute of limitations effective under the contract has been by-passed and the role of the engineer under the
contract has become less relevant. Frequently, cases arising from alleged defects have been settled out-of-court. In some cases,
the sums on which settlement is reached allocate the major part of the settlement to professional fees incurred rather than to
putting: right the causes of the action, whereas in others, the settlements reached are only a small part of the professional fees
incurred.

*Arbitration 82 So we return to our objective of obtaining a just and fair settlement for the injured party as cheaply and as
quickly as possible and ask ourselves why arbitration does not find greater favour in the world of civil engineering. In works
where latent defects are found, during the early years of a structure's life, undoubtedly the easiest and most direct method is to
call back the original parties to the contract, the engineer and the contractor, and ask them to put right the deficiency. Why, one
may ask is this becoming an exception rather than the rule? Too often nowadays, a request for full detailed drawings for a part
of the structure appears from an independent firm to be followed in due course, by a claim for damages based on a report by an
expert, whose main knowledge of the work is an examination of those parts of the working drawings and design details that are
available. It is little wonder that to an increasing extent those original requests for information meet with a blunt refusal. And in
the eyes of the engineer, the practice of distancing the expert witnesses on the separate sides of the case, so that they are unable
to agree the basic data, except in the court through the client's legal representatives cannot help to achieve our stated objective.

Sadly as we see it, the recent legislation of Latent Defects has missed a golden opportunity to simplify the law on this point,
and has increased the possibility of legal actions arising long after the completion and acceptance of a building. The date of
accrual of a cause of action has been left as the date when the damage occurred and this can often be a matter of great doubt and
needing extensive discussion by the expert witnesses involved. The series of tests needed to establish when plaintiffs may bring
an action are cumbersome and opportunity to clarify the law by substituting the completion date - about which there can be no
doubt - was rejected. The so called long stop period of 15 years from the breach of duty appears to be a compromise between
the 20 years under Scottish law and the ten years under the draft directive for product liability in the EEC. A period of 10 years
not only applies on the Continent and elsewhere but is also already in use by the house-builders and is more realistic, taking
into account the increasing risk of defects developing with the passage of time. Apart from the difficulty of establishing the
date, the Act also defines as deliberate concealment the commission of a breach of duty in circumstances in which it is unlikely
to be discovered for sometime. So that the backfilling of a foundation, the concreting of an R C beam or the plastering of a
wall all amount to the deliberate concealment of a defect. Our understanding of the differences arising from obligations under
contract and those under common law remains as wide as ever and the growing practice of trying to obtain damages outside any
contractual obligations on buildings after many years of serviceable use will be assisted. It is hoped that the use of arbitration
in such disputes will at least reduce the length and cost of cases in which the cost of repair, and in some cases the total cost of
original construction are only a small part of the total sum involved. The problems of the roof of the Cathedral of Christ the
King in Liverpool may serve as an appropriate example.

Faced with the problems appearing on many buildings erected in the last two decades, the engineer is impatient to tackle the
cause at the source. The demolition of Ronan Point is reported to show the lack of proper supervision, of good detailing and
good workmanship both in the original construction and in the subsequent repairs. Consulting engineers and local authorities
who are today faced with competition on fees and cuts in staff, are under considerable pressure to reduce the time spent on
supervision. Quality assurance procedures proposed as a remedy are even more expensive in staff time and money. Detailing is
a highly skilled job needing both office and site experience. It is not taught at university and the technicians, once the backbone
of the profession, are fast disappearing. Standards of workmanship on site are under tremendous pressure due to the ever more
cutthroat competition for contracts, the absence of older craftsmen, the disastrous drop in the number of apprentices in the
industry and the greater increase in the use of labour only sub-contractors and lump labour. So there must be no complacency
about current standards of work.

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The ICE Procedure for the Settlement of Disputes by Arbitration under Clause 66 of the I C E Conditions was introduced with
the Fifth Edition in 1973. With the passing of the 1979 Arbitration Act some changes became necessary to the I C E Procedure,
particularly as some criticism was developing of the increasing legal activity in arbitration. In some cases it was suggested
that formal litigation through the courts was preferable to arbitration. In civil engineering cases, the task of preparing detailed
pleadings, the discovery and inspection of documents, the growing practice of bringing in expensive legal representatives
and other experts to argue the case, when the issues could lie within the powers of judgment of an experienced professional,
contributed to this opinion.

The opportunity was taken in the revision to encourage arbitrators to exercise greater control over proceedings and make more
use of their own professional ability. The arbitrator would thus be able to get to the heart of a dispute at the soonest possible time,
and propose solutions to the parties involved. Under the Fifth Edition of ICE Conditions, arbitration is an optional solution,
but when an arbitrator is *Arbitration 83 appointed by the President of ICE, there are powers, normally used nowadays, to
direct that the Procedure shall be followed. In fact, many arbitrators themselves request the parties involved to agree this at
the outset. I must say that the task imposed on the President ICE, twenty or more times a year, to appoint an arbitrator where
the parties otherwise fail to agree is generally tackled with relish, although the necessary study of the papers to decide on a
suitable arbitrator can be time consuming.

At a seminar held at the Institution when the 1983 Standard Procedure for Arbitration was introduced, Sir John Donaldson who
was President of the Institute at the time stated "In this country, both judges and arbitrators recognise that they are engaged in
the same exercise - trying to settle or determine disputes as quickly, economically and satisfactorily as possible', and he warmly
welcomed the new rules as a means of cutting the enormous expense and delay of resolving the disputes in a construction
industry. At that meeting, four aspects of the new procedure were singled out for comment.

Rule 14 of the 1983 Procedure sets out express powers to give a summary judgment or award, where a claim is not being
defended, or where appropriate, to order an interim payment representing a reasonable proportion of the expected final award.
This should prevent the offending party from profiting from any delay and do much to overcome the cash-flow problems which
on a large construction contract affect any system for settling disputes.

There are many disputes where an examination of the documents is really all that is necessary and the short procedure (Clause
F) is devised so that a settlement can be reached without further delays. Each party is required to produce a complete statement
of their case which may require amplification by the arbitrator. A meeting is then held for both parties to allow them to make a
verbal submission and to answer any questions which the arbitrator may wish to put. The arbitrator may then make his award,
which may not include costs, his own fees being shared equally by the parties concerned. The whole procedure is expected to
be reasonably speedy, although either party has the right, subject to paying all the incurred costs, to serve notice requesting a
reversion to the conventional procedure. The so-called "Short Procedure' has proved popular although some concern has been
expressed that it may lead to the pressing to arbitration of somewhat dubious claims.

The special procedure for experts where the settlement of the dispute depends principally on expert evidence is a further change
in the 1983 Procedure which could reduce considerably the time and expense of reaching the kernel of a dispute. In this the
reports of the two parties and their expert witnesses are submitted to the arbitrator who arranges a meeting at which the experts
may question each other and address the arbitrator. Although legal advisers may be present, they may only take part as far
as the arbitrator allows, and consequently this process is much closer to the engineer's heart than normal legal processes. The
arbitrator makes an award based upon the case offered by the expert witnesses, and may also award the costs of these experts,
although this is not usual.

One problem that the 1983 Procedure attempted to deal with was that arising during the course of a large contract where the
making of an interim award, was seen to be fair. Initially, it was suggested that this procedure could set the arbitrator in conflict
with the engineer, whose responsibilities for ensuring the timely completion of the works would remain. The fact that the
completion of the contract could affect the interim arbitration is however accepted, and the danger foreseen, that such measures
could lead to every decision of the engineer being challenged, has not arisen in practice.

Originally there was a strong feeling that the President ICE should be most careful, when appointing an arbitrator, over using
his powers to direct that the new procedure should apply, but this has largely been overtaken by events and the specification
for use of the 1983 Procedure has been written into many contracts. The problem envisaged of the arbitration setting out to
replace the normal legal processes has not arisen.

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Arbitration and the civil engineer, Arbitration 1987, 53(2), 77-84, 120

In 1983, the British Property Federation produced their own solution to the problem. This system was designed, as have so
many others, to remove the final stages of many a construction contract - the sifting through masses of paper establishing claims
for extra payment, for extensions of the contract time, variations etc. The BPF did not propose any particular form of contract
although perhaps that of the Association of Consulting Architects was most suitable for its method, but it did recommend the
appointment of an adjudicator before the commencement of works; in fact he would be named in the Invitation to Tender,
although the BPF decline to state whether a price should be set against any individual name. His terms of reference would be
confirmed when the contractor was appointed and when any dispute occurred, he would promptly investigate the cause, give
his decision and evaluate the award which would be settled forthwith. It suggested that he should act as a conciliator where
possible. Where the adjudicator's decision does not satisfy either party, the dispute may be referred to arbitration. Time has not
allowed the role of the adjudicator to be fully tested, but the possibility exists that his appointment could actually increase the
*Arbitration 84 number of disputes that would arise, by reducing the authority of the architect or other person given executive
authority under the contract. As a civil engineer, I would not expect that the hope expressed of providing a very simple and
quick means of resolving such differences of opinion would fit the tradition of the industry, and I will be interested to hear the
outcome of this proposed solution. However, where the adjudicator, who must make a decision within five days of receiving a
request from either party, fails to make an acceptable decision, the dissatisfied party has a further 20 days to call for arbitration
before the decision becomes binding. This arbitration will be deferred until the works have been taken over by the employer.

Although the term conciliation, per se does not appear in the 1983 procedure, the rules encourage the possibility of negotiation.
This may in effect be a process of conciliation and the ICE is at present setting such proposals into a more formal shape. The
ICE seeing the attractions of conciliation where possible, hopes to issue shortly its draft rules for a conciliation procedure. The
conciliator, having been agreed between the parties, would have a less formal approach to hearing the conflicting cases than an
arbitrator and the time scale for the conciliator to prepare his opinion and possible recommendation would be shorter and he
may, at his discretion, express his preliminary views upon the dispute. He would not normally be appointed arbitrator for any
subsequent arbitration except at the express wish of both parties. Conciliation is obviously of growing interest in the industry and
the ICE hopes that formalising the procedure by the publication of rules will help to reduce delays and costs of dispute solution.

The popularity of the 1983 ICE Procedure is now becoming apparent and evidence that other bodies are following the same
pattern is not unwelcome to the civil engineer. A brave effort by the London Common Law Bar Association to counter a growing
criticism that arbitration is all too often cumbersome, lengthy and costly was seen by Construction News in August 1986 as
having derived some inspiration from the ICE document. The LCLBA has initiated an arbitration scheme enabling the disputing
parties to ensure that the arbitrator is a barrister with special knowledge of the law relevant to the matter in dispute. It claims
that the common sense, analytical skills, judgment and specialist legal knowledge and experience that their scheme promotes,
taken in conjunction with the reduction in time and legalistic procedures will be helptful to the disputing parties.

There can be no argument that the procedures proposed by LCLBA can lead to a speedier and less costly settlement of disputes,
and many of their suggestions are common to the ICE Arbitration Procedure. The relative importance of legal expertise or
technical expertise on the part of the arbitrator can well be a matter of opinion.

If, in certain construction industry circles, the view is taken that lawyers, mindful of the fact that they cannot beat arbitration,
have joined it, there can be no doubt that any development which leads to more simple and speedy resolution of disputes is
welcome. The LCLBA scheme will obviously be more relevant to disputes arising where standard forms of contract are not in
use, for the RIBA, the RICS, the ICE and IMech E between them effectively make the majority of appointments of arbitrators
in construction disputes..

The role of the Chartered Institute of Arbitrators is still sadly underestablished in this function. The launching of the LCLBA
scheme does show the growing preference for arbitration, in the settlement of disputes, and the generally common approach to
the procedures used. The natural modesty of the profession concerned for claiming the principal role, can lead to some healthy
competition.

The 1983 ICE Procedure has, since publication, enjoyed a steadily increasing acceptance in the construction field, although
no readily accessible figures are available for its use. The number of cases in which reference is made to the President ICE
to appoint an arbitrator, because of lack of agreement by the disputing parties, should be an indication of such use although
obviously it has no absolute value. In the calendar year just ended, the previous level of about 20 references per annum has
trebled. Certainly, the tendency for the short procedure. to be used has increased, and indeed, in many contracts in the private
sector, the short procedure has been written into the contract documents in case of dispute. In January 1986, the ICE published
Guidance Note 7 which incorporated the revisions to the Standard Form of Contract agreed between the sponsoring bodies which

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Arbitration and the civil engineer, Arbitration 1987, 53(2), 77-84, 120

dealt mainly with the settlement of disputes and specify *Arbitration 120 a reference to arbitration conducted in accordance
with the ICE Arbitration Procedure (1983).

The use of arbitration for solving disputes in the construction industry has often followed dissatisfaction with the time and costs
entailed in previous cases of litigation, to be followed in turn by a return to litigation for similar reasons. The customer's search
for a simple quick and fair resolution of any dispute in civil engineering has for too long been unrewarded and although the
growing interest and use of arbitration is evident, it is a brave man who would claim that we have now got it right. It is possible
that further steps to perfect the new Procedures could complicate them and disappoint potential users of arbitration. The climate
in the industry for ever keener competition and the action of many public authorities to reduce the management role of the
engineer and replace it with powers vested in the executive, gives concern for the future relationship in the industry.

The civil engineer seeks a greater understanding between the profession and the law, and it is worth noting the increasing
number of short legal courses now being included in engineering studies at many universities. Already mock arbitration cases
have been included and have been of great interest. The engineering profession is conscious of the problems caused by too
much specialisation in engineering education and we support a number of attempts to increase the graduate's understanding
of Contract Law in either fourth year undergraduate or postgraduate courses. I welcome the role of the Chartered Institute of
Arbitrators as a meeting place for the several professions concerned with the law of construction contracts and the solution of
disputes. In the ICE we have tried to improve such contacts. At each of our Council dinners members are asked to invite their
colleagues from a particular kindred profession to dine informally; we are now entering our fourth cycle of these dinners and
we have found them thoroughly successful, particularly those with our colleagues in the law.

Civil engineers are concerned that the present trend for public authorities and other bodies to restrict the engineer's traditional role
in the contract could aggravate the occurrence of disputes within the industry, which has already increased with the demand for
greater competition. They have learned in practice that arbitration can be a suitable procedure for solving disputes satisfactorily,
quickly and cheaply and they welcome the widespread agreement by the different professions on simplified procedures to
achieve this objective. They congratulate the Chartered Institute of Arbitrators on providing an essential meeting point for the
many professions interested in arbitration and welcome the installation this year of a civil engineer as Chairman of the Institute
as a sign of this co-operation.

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