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Commercial reasons for form's complexity


Sir, In Guy Cottam's review of the fourth edition of the Institution of Chemical Engineers' Red Book (Construction News, January 17, 2002) he comments that the complexity of procedures for dispute resolution 'belies' the institution's claim that there are fewer disputes in the process industries than in mainstream construction.

As a construction and engineering lawyer specialising in the IChemE Model Forms (having had 10 years' responsibility for the forms within the institution), I have to disagree.

The various methods of dispute resolution in this and other IChemE contracts are there because of the number of disciplines involved in designing and building a process facility, the different practices appropriate to them and the widespread use of the contracts across the world.

Development adjudication is a statutory requirement for the civils and building part of a UK manufacturing facility and is no worse on such a site than anywhere else.

For the process parts, which are extremely complex and multi-disciplinary in both design and execution, the short timescales of adjudication are inappropriate and impractical.

The institution's Working Party quite rightly avoids imposing the problems of adjudication where they are not a legislative requirement, presumably looking to its records of disputes, which show that the majority are concerned solely with the civils and building elements of process projects.

Where problems do arise, the process sector has good commercial reasons for avoiding disputes requiring third party resolution, and the threat of binding, final and what Mr Cottam elegantly calls 'almost impervious' expert determination.

This avoidance has proved to be a useful way of concentrating parties' minds in negotiation.

On the rare occasion that commercial good sense has not prevailed, and the expert clause has not applied, arbitration is still the tribunal of choice for process disputes because of the confidentiality it offers.

Furthermore, non-UK use of the IChemE contracts is widespread, so the institution is right to prefer to provide appropriate and geographically mobile arbitration and expert determination.

An appointing body that in a busy year is asked to make three presidential appointments for dispute resolution - and in an average year, none or one - is an appointing body that can legitimately say there are few disputes in its industry.

I would, however, agree with Mr Cottam that the new notice periods in the Red Book are ridiculously short and are liable make the president noticeably busier in the future.

Derryn Rolfe Shoosmiths Solicitors The Lakes Northampton