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Statutory Instrument 1998 No. 687
(S.34)
The Scheme for Construction
Contracts (Scotland) Regulations 1998
© Crown Copyright 1998
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STATUTORY INSTRUMENTS
1998 No. 687 (S.34)
CONSTRUCTION CONTRACTS
The Scheme for Construction Contracts (Scotland)
Regulations 1998
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Made |
6th March 1998 |
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Coming into
force |
1st May 1998 |
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The Lord Advocate, in exercise of the powers conferred on him by
sections 108(6), 114 and 146 of the Housing Grants, Construction and
Regeneration Act 1996[1] and of
all other powers enabling him in that behalf, having consulted such
persons as he thinks fit, hereby makes the following Regulations, a
draft of which has been laid before and has been approved by resolution
of each House of Parliament:
Citation, commencement and extent
1. - (1)
These Regulations may be cited as the Scheme for Construction Contracts
(Scotland) Regulations 1998 and shall come into force at the end of the
period of 8 weeks beginning with the day on which they are made.
(2) These Regulations extend to Scotland only.
Interpretation
2. In
these Regulations, "the Act" means the Housing Grants,
Construction and Regeneration Act 1996.
The Scheme for Construction Contracts (Scotland)
3. Where
a construction contract does not comply with the requirements of
subsections (1) to (4) of section 108 of the Act, the adjudication
provisions in Part I of the Schedule to these Regulations shall apply.
4.
Where-
(a) the parties to a construction contract are
unable to reach agreement for the purposes mentioned respectively in
sections 109, 111 and 113 of the Act; or
(b) a construction contract does not make provision as required by
section 110 of the Act,
the relevant provisions in Part II of the Schedule
to these Regulations shall apply.
5.
The provisions in the Schedule to these Regulations shall be the Scheme
for Construction Contracts (Scotland) for the purposes of section 114 of
the Act.
Hardie
Lord Advocate
Edinburgh
6th March 1998
SCHEDULERegulations
3 to 5
THE SCHEME FOR CONSTRUCTION CONTRACTS (SCOTLAND)
PART I
ADJUDICATION
Notice of intention to seek adjudication
1. - (1) Any party to a
construction contract ("the referring party") may give written
notice ("the notice of adjudication") of his intention to
refer any dispute arising under the contract to adjudication.
(2) The notice of adjudication shall be given to
every other party to the contract.
(3) The notice of adjudication shall set out
briefly-
(a) the nature and a brief description of the
dispute and of the parties involved;
(b) details of where and when the dispute has arisen;
(c) the nature of the redress which is sought; and
(d) the names and addresses of the parties to the contract (including,
where appropriate, the addresses which the parties have specified for
the giving of notices).
2. - (1)
Following the giving of a notice of adjudication and subject to any
agreement between the parties to the dispute as to who shall act as
adjudicator-
(a) the referring party shall request the person
(if any) specified in the contract to act as adjudicator;
(b) if no person is named in the contract or the person named has
already indicated that he is unwilling or unable to act, and the
contract provides for a specified nominating body to select a person,
the referring party shall request the nominating body named in the
contract to select a person to act as adjudicator; or
(c) where neither head (a) nor (b) above applies, or where the person
referred to in (a) has already indicated that he is unwilling or
unable to act and (b) does not apply, the referring party shall
request an adjudicator nominating body to select a person to act as
adjudicator.
(2) A person requested to
act as adjudicator in accordance with the provisions of sub-paragraph
(1) shall indicate whether or not he is willing to act within two days
of receiving the request.
(3) In this paragraph, and in paragraphs 5 and 6
below, "an adjudicator nominating body" shall mean a body (not
being a natural person and not being a party to the dispute) which holds
itself out publicly as a body which will select an adjudicator when
requested to do so by a referring party.
3. The request referred to in paragraphs
2, 5 and 6 shall be accompanied by a copy of the notice of adjudication.
4. Any person requested or selected to
act as adjudicator in accordance with paragraphs 2, 5 or 6 shall be a
natural person acting in his personal capacity. A person requested or
selected to act as an adjudicator shall not be an employee of any of the
parties to the dispute and shall declare any interest, financial or
otherwise, in any matter relating to the dispute.
5. - (1) The nominating body
referred to in paragraphs 2(1)(b) and 6(1)(b) or the adjudicator
nominating body referred to in paragraphs 2(1)(c), 5(2)(b) and 6(1)(c)
must communicate the selection of an adjudicator to the referring party
within five days of receiving a request to do so.
(2) Where the nominating body or the adjudicator
nominating body fails to comply with sub-paragraph (1), the referring
party may-
(a) agree with the other party to the dispute to
request a specified person to act as adjudicator; or
(b) request any other adjudicator nominating body to select a person
to act as adjudicator.
(3) The person requested
to act as adjudicator in accordance with the provisions of sub-paragraph
(1) or (2) shall indicate whether or not he is willing to act within two
days of receiving the request.
6. - (1) Where an adjudicator
who is named in the contract indicates to the parties that he is unable
or unwilling to act, or where he fails to respond in accordance with
paragraph 2(2), the referring party may-
(a) request another person (if any) specified in
the contract to act as adjudicator;
(b) request the nominating body (if any) referred to in the contract
to select a person to act as adjudicator; or
(c) request any other adjudicator nominating body to select a person
to act as adjudicator.
(2) The person requested
to act in accordance with the provisions of sub-paragraph (1) shall
indicate whether or not he is willing to act within two days of
receiving the request.
7. - (1) Where an adjudicator
has been selected in accordance with paragraphs 2, 5 or 6, the referring
party shall, not later than seven days from the date of the notice of
adjudication, refer the dispute in writing ("the referral
notice") to the adjudicator.
(2) A referral notice shall be accompanied by
copies of, or relevant extracts from, the construction contract and such
other documents as the referring party intends to rely upon.
(3) The referring party shall, at the same time
as he sends to the adjudicator the documents referred to in
sub-paragraphs (1) and (2), send copies of those documents to every
other party to the dispute.
8. - (1) The adjudicator may,
with the consent of all the parties to those disputes, adjudicate at the
same time on more than one dispute under the same contract.
(2) The adjudicator may, with the consent of all
the parties to those disputes, adjudicate at the same time on related
disputes under different contracts, whether or not one or more of those
parties is a party to those disputes.
(3) All the parties in sub-paragraphs (1) and
(2) respectively may agree to extend the period within which the
adjudicator may reach a decision in relation to all or any of these
disputes.
(4) Where an adjudicator ceases to act because a
dispute is to be adjudicated on by another person in terms of this
paragraph, that adjudicator's fees and expenses shall be determined and
payable in accordance with paragraph 25.
9. - (1) An adjudicator may
resign at any time on giving notice in writing to the parties to the
dispute.
(2) An adjudicator must resign where the dispute
is the same or substantially the same as one which has previously been
referred to adjudication, and a decision has been taken in that
adjudication.
(3) Where an adjudicator ceases to act under
sub-paragraph (1)-
(a) the referring party may serve a fresh notice
under paragraph 1 and shall request an adjudicator to act in
accordance with paragraphs 2 to 7; and
(b) if requested by the new adjudicator and insofar as it is
reasonably practicable, the parties shall supply him with copies of
all documents which they had made available to the previous
adjudicator.
(4) Where an adjudicator
resigns in the circumstances mentioned in sub-paragraph (2), or where a
dispute varies significantly from the dispute referred to him and for
that reason he is not competent to decide it, that adjudicator's fees
and expenses shall be determined and payable in accordance with
paragraph 25.
10. Where any party to the dispute
objects to the appointment of a particular person as adjudicator, that
objection shall not invalidate the adjudicator's appointment nor any
decision he may reach in accordance with paragraph 20.
11. - (1) The parties to a
dispute may at any time agree to revoke the appointment of the
adjudicator and in such circumstances the fees and expenses of that
adjudicator shall, subject to sub-paragraph (2), be determined and
payable in accordance with paragraph 25.
(2) Where the revocation of the appointment of
the adjudicator is due to the default or misconduct of the adjudicator,
the parties shall not be liable to pay the adjudicator's fees and
expenses.
Powers of the adjudicator
12. The adjudicator shall-
(a) act impartially in carrying out his duties and
shall do so in accordance with any relevant terms of the contract and
shall reach his decision in accordance with the applicable law in
relation to the contract; and
(b) avoid incurring unnecessary expense.
13. The
adjudicator may take the initiative in ascertaining the facts and the
law necessary to determine the dispute, and shall decide on the
procedure to be followed in the adjudication. In particular, he may-
(a) request any party to the contract to supply him
with such documents as he may reasonably require including, if he so
directs, any written statement from any party to the contract
supporting or supplementing the referral notice and any other
documents given under paragraph 7(2);
(b) decide the language or languages to be used in the adjudication
and whether a translation of any document is to be provided and, if
so, by whom;
(c) meet and question any of the parties to the contract and their
representatives;
(d) subject to obtaining any necessary consent from a third party or
parties, make such site visits and inspections as he considers
appropriate, whether accompanied by the parties or not;
(e) subject to obtaining any necessary consent from a third party or
parties, carry out any tests or experiments;
(f) obtain and consider such representations and submissions as he
requires, and, provided he has notified the parties of his intention,
appoint experts, assessors or legal advisers;
(g) give directions as to the timetable for the adjudication, any
deadlines, or limits as to the length of written documents or oral
representations to be complied with; and
(h) issue other directions relating to the conduct of the
adjudication.
14. The parties
shall comply with any request or direction of the adjudicator in
relation to the adjudication.
15. If, without showing sufficient
cause, a party fails to comply with any request, direction or timetable
of the adjudicator made in accordance with his powers, fails to produce
any document or written statement requested by the adjudicator, or in
any other way fails to comply with a requirement under these provisions
relating to the adjudication, the adjudicator may-
(a) continue the adjudication in the absence of
that party or of the document or written statement requested;
(b) draw such inferences from that failure to comply as may, in the
adjudicator's opinion, be justified in the circumstances; and
(c) make a decision on the basis of the information before him,
attaching such weight as he thinks fit to any evidence submitted to
him outside any period he may have requested or directed.
16. - (1)
Subject to any agreement between the parties to the contrary and to the
terms of sub-paragraph (2), any party to the dispute may be assisted by,
or represented by, such advisers or representatives (whether legally
qualified or not) as he considers appropriate.
(2) Where the adjudicator is considering oral
evidence or representations, a party to the dispute may not be
represented by more than one person, unless the adjudicator gives
directions to the contrary.
17. The adjudicator shall consider any
relevant information submitted to him by any of the parties to the
dispute and shall make available to them any information to be taken
into account in reaching his decision.
18. The adjudicator and any party to the
dispute shall not disclose to any other person any information or
document provided to him in connection with the adjudication which the
party supplying it has indicated is to be treated as confidential,
except to the extent that it is necessary for the purposes of, or in
connection with, the adjudication.
19. - (1) The adjudicator
shall reach his decision not later than-
(a) twenty eight days after the date of the
referral notice mentioned in paragraph 7(1);
(b) forty two days after the date of the referral notice if the
referring party so consents; or
(c) such period exceeding twenty eight days after the referral notice
as the parties to the dispute may, after the giving of that notice,
agree.
(2) Where the adjudicator
fails, for any reason, to reach his decision in accordance with
sub-paragraph (1)-
(a) any of the parties to the dispute may serve a
fresh notice under paragraph 1 and shall request an adjudicator to act
in accordance with paragraphs 2 to 7; and
(b) if requested by the new adjudicator and insofar as it is
reasonably practicable, the parties shall supply him with copies of
all documents which they had made available to the previous
adjudicator.
(3) As soon as possible
after he has reached a decision, the adjudicator shall deliver a copy of
that decision to each of the parties to the contract.
Adjudicator's decision
20. - (1) The adjudicator
shall decide the matters in dispute and may make a decision on different
aspects of the dispute at different times.
(2) The adjudicator may take into account any
other matters which the parties to the dispute agree should be within
the scope of the adjudication or which are matters under the contract
which he considers are necessarily connected with the dispute and, in
particular, he may-
(a) open up, review and revise any decision taken
or any certificate given by any person referred to in the contract,
unless the contract states that the decision or certificate is final
and conclusive;
(b) decide that any of the parties to the dispute is liable to make a
payment under the contract (whether in sterling or some other
currency) and, subject to section 111(4) of the Act, when that payment
is due and the final date for payment;
(c) having regard to any term of the contract relating to the payment
of interest, decide the circumstances in which, the rates at which,
and the periods for which simple or compound rates of interest shall
be paid.
21. In the absence
of any directions by the adjudicator relating to the time for
performance of his decision, the parties shall be required to comply
with any decision of the adjudicator immediately on delivery of the
decision to the parties in accordance with paragraph 19(3).
22. If requested by one of the parties
to the dispute, the adjudicator shall provide reasons for his decision.
Effects of the decision
23. - (1) In his decision,
the adjudicator may, if he thinks fit, order any of the parties to
comply peremptorily with his decision or any part of it.
(2) The decision of the adjudicator shall be
binding on the parties, and they shall comply with it, until the dispute
is finally determined by legal proceedings, by arbitration (if the
contract provides for arbitration or the parties otherwise agree to
arbitration) or by agreement between the parties.
24. Where a party or the adjudicator
wishes to register the decision for execution in the Books of Council
and Session, any other party shall, on being requested to do so,
forthwith consent to such registration by subscribing the decision
before a witness.
25. - (1) The adjudicator
shall be entitled to the payment of such reasonable amount as he may
determine by way of fees and expenses incurred by him and the parties
shall be jointly and severally liable to pay that amount to the
adjudicator.
(2) Without prejudice to the right of the
adjudicator to effect recovery from any party in accordance with
sub-paragraph (1), the adjudicator may by direction determine the
apportionment between the parties of liability for his fees and
expenses.
26. The adjudicator shall not be liable
for anything done or omitted in the discharge or purported discharge of
his functions as adjudicator unless the act or omission is in bad faith,
and any employee or agent of the adjudicator shall be similarly
protected from liability.
PART II
PAYMENT
Entitlement to and amount of stage payments
1. Where the parties to a relevant
construction contract fail to agree-
(a) the amount of any instalment or stage or
periodic payment for any work under the contract;
(b) the intervals at which, or circumstances in which, such payments
become due under that contract; or
(c) both of the matters mentioned in sub-paragraphs (a) and (b),
the relevant provisions of paragraphs 2 to 4 shall
apply.
2. - (1) The amount of any
payment by way of instalments or stage or periodic payments in respect
of a relevant period shall be the difference between the amount
determined in accordance with sub-paragraph (2) and the amount
determined in accordance with sub-paragraph (3).
(2) The aggregate of the following amounts:-
(a) an amount equal to the value of any work
performed in accordance with the relevant construction contract during
the period from the commencement of the contract to the end of the
relevant period (excluding any amount calculated in accordance with
head (b));
(b) where the contract provides for payment for materials, an amount
equal to the value of any materials manufactured on site or brought
onto site for the purposes of the works during the period from the
commencement of the contract to the end of the relevant period; and
(c) any other amount or sum which the contract specifies shall be
payable during or in respect of the period from the commencement of
the contract to the end of the relevant period.
(3) The aggregate of any
sums which have been paid or are due for payment by way of instalments,
stage or periodic payments during the period from the commencement of
the contract to the end of the relevant period.
(4) An amount calculated in accordance with this
paragraph shall not exceed the difference between-
(a) the contract price; and
(b) the aggregate of the instalments or stage or periodic payments
which have become due.
Dates for payment
3. Where the parties to a construction
contract fail to provide an adequate mechanism for determining either
what payments become due under the contract, or when they become due for
payment, or both, the relevant provisions of paragraphs 4 to 7 shall
apply.
4. Any payment of a kind mentioned in
paragraph 2 above shall become due on whichever of the following dates
occurs later:-
(a) the expiry of 7 days following the relevant
period mentioned in paragraph 2(1); or
(b) the making of a claim by the payee.
5. The final
payment payable under a relevant construction contract, namely the
payment of an amount equal to the difference (if any) between-
(a) the contract price; and
(b) the aggregate of any instalment or stage or periodic payments
which have become due under the contract,
shall become due on-
(i) the expiry of 30 days following completion of
the work; or
(ii) the making of a claim by the payee,
whichever is the later.
6. Payment of the
contract price under a construction contract (not being a relevant
construction contract) shall become due on-
(a) the expiry of 30 days following the completion
of the work; or
(b) the making of a claim by the payee,
whichever is the later.
7. Any other payment under a
construction contract shall become due on-
(a) the expiry of 7 days following the completion
of the work to which the payment relates; or
(b) the making of a claim by the payee,
whichever is the later.
Final date for payment
8. - (1) Where the parties to
a construction contract fail to provide a final date for payment in
relation to any sum which becomes due under a construction contract, the
provisions of this paragraph shall apply.
(2) The final date for the making of any payment
of a kind mentioned in paragraph 2, 5, 6 or 7 shall be 17 days from the
date that payment becomes due.
Notice specifying amount of payment
9. A party to a construction contract
shall, not later than 5 days after the date on which any payment-
(a) becomes due from him; or
(b) would have become due, if-
(i) the other party had carried out his
obligations under the contract; and
(ii) no set-off or abatement was permitted by reference to any sum
claimed to be due under one or more other contracts,
give notice to the other party to the contract
specifying the amount (if any) of the payment he has made or proposes
to make, specifying to what the payment relates and the basis on which
that amount is calculated.
Notice of intention to withhold payment
10. Any notice of intention to withhold
payment mentioned in section 111 of the Act shall be given not later
than the prescribed period, which is to say not later than 7 days before
the final date for payment determined either in accordance with the
construction contract or, where no such provision is made in the
contract, in accordance with paragraph 8.
Prohibition of conditional payment provisions
11. Where a provision making payment
under a construction contract conditional on the payer receiving payment
from a third person is ineffective as mentioned in section 113 of the
Act and the parties have not agreed other terms for payment, the
relevant provisions of-
(a) paragraphs 2, 4, 5, and 7 to 10 shall apply in
the case of a relevant construction contract; and
(b) paragraphs 6 to 10 shall apply in the case of any other
construction contract.
Interpretation
12. In this Part-
"claim by the payee" means a written
notice given by the party carrying out work under a construction
contract to the other party specifying the amount of any payment or
payments which he considers to be due, specifying to what the payment
relates (or payments relate) and the basis on which it is, or they
are, calculated;
"contract price" means the entire sum
payable under the construction contract in respect of the work;
"relevant construction contract" means
any construction contract other than one-
(a) which specifies that the duration of the work
is to be less than 45 days; or
(b) in respect of which the parties agree that the duration of the
work is estimated to be less than 45 days;
"relevant period" means a period which is
specified in, or is calculated by reference to, the construction
contract or, where no such period is so specified or is so calculable,
a period of 28 days;
"value of work" means an amount
determined in accordance with the construction contract under which
the work is performed or, where the contract contains no such
provision, the cost of any work performed in accordance with that
contract together with an amount equal to any overhead or profit
included in the contract price;
"work" means any of the work or services
mentioned in section 104 of the Act.
EXPLANATORY NOTE
(This note is not part of the Regulations)
Part II of the Housing Grants, Construction and Regeneration Act 1996
makes provision in relation to construction contracts. Section 114
empowers the Lord Advocate to make the Scheme for Construction Contracts
(as regards Scotland). Where a construction contract does not comply
with the requirements of sections 108 to 111 (adjudication of disputes
and payment provisions), and section 113 (prohibition of conditional
payment provisions), the relevant provisions of the Scheme for
Construction Contracts have effect.
The Scheme which is contained in the Schedule to these Regulations is in
two parts. Part I provides for the selection and appointment of an
adjudicator, gives powers to the adjudicator to gather and consider
information, and makes provisions in respect of his decisions. Part II
makes provision with respect to payments under a construction contract
where either the contract fails to make provision or the parties fail to
agree-
(a) the method for calculating the amount of any
instalment, stage or periodic payment;
(b) the due date and the final date for payments to be made; and
(c) the prescribed period within which a notice of intention to
withhold payment must be given.
Notes:
[1] 1996 c.53.back
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