The new proposals include:

 

• introducing a requirement that certification of the sum due, by one of the contracting parties or a third party, becomes an essential feature of contractual payment mechanisms;
  
• removing the section 110(2) requirement for a payer notice;
  
• introducing a right to apply for payment where a certificate is not issued by the due date;
  
• making certain payment mechanisms including pay-when-certified clauses ineffective.

Announcing the proposals, Alun Michael said, "These changes will improve the existing framework which clearly makes a valuable contribution to fairness in the way construction contracts are agreed and operated.

 

"The responses to the consultation demonstrate the high level of interest and support from the construction industry and its stakeholders. This shows that continued regulation of construction contracts is needed. I welcome this support and am very grateful to all those who responded.

 

"They have had to consider some difficult and complex issues, which have required careful analysis and innovative solutions. Launching this consultation last year, my predecessor as Construction Minister, Nigel Griffiths, observed that 'Fair payment practice is something everyone agrees with and a fair payment culture underpins any progressive and modern industry'. That is something all the responses have recognised."

 

These proposals form part of the analysis of responses to the joint consultation "Improving Payment Practices in the Construction Industry" held last year. The consultation proposed a number of amendments to Part II of the Housing Grants Construction and Regeneration Act 1996 and the Scheme for Construction Contracts (England and Wales) Regulations 1998.

 

Other proposals are to enhance the existing right of suspension under the Construction Act to allow the suspending party to claim for loss and expense; prohibit use of trustee stakeholder accounts for awards made by adjudicators; make "final and conclusive" clauses unenforceable where they apply to decisions under the contract that are of substance to interim payments only.

 

The Government's existing commitment to make contractual agreements on adjudication costs unenforceable and to provide a statutory framework for allocating them is being taken forward, including cases where adjudicators resign in response to a challenge to jurisdiction.

 

The Department of Trade and Industry says that the next step in the process will be to work with the construction industry over the coming months to ensure that, when amendments are published for further consultation, they are based upon a clear and thorough understanding of all the issues.

 

Key figures in the industry are to act as a sounding board to assist  DTI in  developing the proposals to ensure they match the needs of the industry and its clients, as well as the strict requirements of the Regulatory Reform Order framework. A "post-consultation event" in February will gain further insight from the industry on the way forward.

 

To develop the proposals further, DTI will be working with a ‘sounding board’ over the coming months.  The members are:

Richard Bayfield - Immediate past chairman of the Society of Construction Law, a chartered civil engineer and project management consultant specialising in dispute avoidance and resolution. He is an adviser on the DTI sponsored Constructing Excellence programme.

 

Chris Dancaster - chairman of the RICS Dispute Resolution Faculty Board and an adjudicator, arbitrator and mediator. Both he and Richard Bayfield were members of the adjudication group during Sir Michael Latham's review of the Construction Act.

 

Richard Haryott who chaired the payment working group during Sir Michael Latham's review of the Construction Act. He is chairman of the Ove Arup Foundation, having been a director of Arup for over 20 years with extensive experience of design and implementation of major projects.

 

Sir Michael Latham - chaired the review of the Construction Act, which led to the DTI/Welsh Assembly Government consultation last year.

 

His Honour Humphrey LLoyd QC - barrister and arbitrator specialising in construction law until he became a judge of the Technology and Construction Court in 1993. Having retired from the bench in 2005, he continues to act as an arbitrator.

 

Peter Rogers - director and cofounder of Stanhope plc and chairman of Constructing Excellence. He has recently stepped down as chairman of the Strategic Forum for Construction and is chairing the taskforce on the construction industry's contribution to the 2012 Olympics.

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