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Lord Lucas moved Amendments Nos. 186 to 188:

Page 62, line 31, leave out ("and") and insert ("or").
Page 62, line 32, after ("under") insert ("Chapter I of").
Page 62, line 32, at end insert (" or the appointment of a receiver under Chapter II of that Part,").

The noble Lord said: I spoke to these amendments with Amendment No. 182. I beg to move the three amendments en bloc.

On Question, amendments agreed to.

Lord Williams of Elvel moved Amendment No. 189:

Page 63, line 2, after ("he") insert ("grants").

The noble Lord said: I have spoken to this amendment. I beg to move.

Earl Ferrers: When I saw this amendment, I could not think why the noble Lord had tabled it. I could not believe that it was necessary. I was not sure whether it was a frivolous amendment, a probing amendment or that he was just trying to be unusually awkward--I did not believe that that was likely because the noble Lord is not usually awkward. But I wondered whether I should come up with an unusually robust response.

I know that the noble Lord is an assiduous reader of Bills. I commend him on that. All of a sudden the light at Damascus hit me and I realised that there was a mistake and the noble Lord, Lord Williams, had found the mistake. I congratulate him on that. If I were to write a report on the noble Lord, rather like a headmaster at the end of the term I would say that he concentrated, was industrious and was sometimes right. On this occasion the noble Lord is right and I am happy to accept his amendment.

On Question, amendment agreed to.

Earl Ferrers moved Amendment No. 190:

Page 63, line 7, leave out ("void") and insert ("ineffective").

On Question, amendment agreed to.

Clause 110, as amended, agreed to.

Clause 111 [The Scheme for Construction Contracts]:

[Amendments Nos. 191 to 195 not moved.]

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Earl Ferrers moved Amendment No. 196:

Page 63, line 19, at end insert--
("( ) Where any provisions of the Scheme for Construction Contracts apply by virtue of this Part in default of contractual provision agreed by the parties, they have effect as implied terms of the contract concerned.").

The noble Earl said: The amendment aims to ensure that where the scheme for construction contracts operates, the relevant provisions will become an implied term of the contract concerned. That simply means that if the scheme's provisions are used they will have the same force as though they were written into the contract in the first place and parties may rely on them in the same way. That had been intended from the outset and we believe that an amendment is required in order to leave no doubt about the matter. I beg to move.

On Question, amendment agreed to.

[Amendment No. 197 not moved.]

On Question, Whether Clause 111, as amended, shall stand part of the Bill?

Lord Howie of Troon: When my noble friend Lord Williams and I recently visited the Minister, I said that I was tempted to place the draft scheme as an amendment to the Bill in the form of a schedule. My reason for doing so was to give the Committee an opportunity to discuss the scheme and possibly to amend it. I promptly realised that the noble Earl did not fancy that idea at all. Being the kind of person I am, I revised my opinion. Instead of tabling the scheme as an amendment, I decided with my noble friend Lord Williams to oppose the Question that Clause 111 shall stand part of the Bill.

Much of what I am about to say covers old ground over which we have trawled once or twice today. However, it is none the worse for that and it is worth repeating. We have all agreed that the draft scheme is more draconian than the ordinary contract. It is also much closer to arbitration than it is to adjudication. The reason for that is simple. So far as I can see, parts of this scheme have been lifted wholesale from the Arbitration Bill and shoved into the scheme. That is a convenient way of doing things. Just as the Government plagiarised the tax Bill for Clause 102, so they plagiarised bits of the Arbitration Bill for the scheme.

The difficulty with the scheme, which is more draconian than other arrangements, is that it will apply only to small contracts--the large contracts will operate under the standard conditions of contracts--and relatively informal contracts such as those not in writing. That is because the normal standard contracts will have been adjusted and amended to suit the requirements of Clause 102. For that reason, the weight of the scheme will bear most heavily on the small contractors and the small contracts and therefore the people least able to look after their own interests.

This is not the place to try to amend the scheme but the Bill should make clear, probably in Clause 29, that the adjudicator is not an arbitrator--and I repeat "not". I believe that the scheme is misconceived because it creates a final and binding arbitration with unreal time

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constraints instead of a quick enforceable decision which might be described, and has been described, as "pay now, argue later".

Clause 36 of the scheme seems to suspend the timetable while a court deals with the points of law. Again, that is part of an arbitration process and not an adjudication process. It also destroys entirely the idea of the quick fix which adjudication is intended to provide and which was, it will be recalled, the intention of Sir Michael Latham in his report.

The scheme is far too long. It takes several pages to appoint an adjudicator, quite apart from anything else. If one looks at the ICE sixth edition of the Standard Conditions of Contract, it can be seen that it covers the whole gamut of design, construction, contract management, payment, dispute settlements and much more in only 71 clauses with conciliation, which is much the same as adjudication, in one single subsection of 14 lines of text.

The scheme takes 66 clauses to do what the Institution of Civil Engineers does in 14 lines. And we know that many more contracts will be carried out under the sixth edition than under the scheme.

The scheme was no doubt conceived with the best intentions but it is really a monster. The Government should think again and withdraw it. I oppose the Motion that Clause 111 shall stand part of the Bill.

10 p.m.

Lord Williams of Elvel: I also oppose the Motion that Clause 111 shall stand part of the Bill for similar reasons to those given by my noble friend Lord Howie. From what we have seen so far of the scheme, it is complex, difficult to understand, confuses arbitration and adjudication, has far too many clauses, and needs serious pruning if it is to make any sense.

The idea that any scheme such as the draft that we have seen should be put into regulations is monstrous. As my noble friend said, at one point we had intended to table the scheme in draft as a new schedule to the Bill. That would have provided an opportunity to discuss it. Under the procedures of the House, it would have been possible to amend the new proposed schedule which would have enabled us to have a debate at least on some of the major points. But the more we thought about it, the more we decided that if we followed that procedure it would take up the time of this Committee not only for the whole of this evening and possibly the night but also tomorrow. We did not feel that my noble friend the Opposition Chief Whip would thank us very much if we went on through the night discussing the scheme in relation to construction contracts.

I know that the scheme is in draft but in its present form it is a bad document. In many cases it is also irrelevant because it addresses only certain points which obviously need to be addressed. But there are many matters which the scheme should cover. When we discuss the regulations--and I shall ask the Minister what he intends to do about such regulations--we shall make many suggestions. Unfortunately, when regulations come forward, they are in the form of a statutory instrument which we are not able to amend.

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My noble friend and I oppose the clause because we believe that the scheme is inefficient in what it sets out to do. It needs serious amendment. I hope that the result of the consultation process, which is taking place at present, will be serious amendment so that when the scheme comes forward in the form of regulations it is a sensible instrument of law.

Lord Berkeley: I support the remarks made by my noble friends Lord Howie of Troon and Lord Williams of Elvel and should like to make a few comments on the scheme for construction contracts. Perhaps it may be useful for Members of the Committee to imagine themselves in the position of a small or medium sized contractor who has heard about the adjudication procedure. He may decide to have a go at it, but will wonder whether he can do so without lawyers. He asks himself, "Can I go through this one or two month procedure without the benefit of lawyers?"

However, such a contractor will be faced with 10 to 12 pages of documentation. When he gets to Clause 61 of the scheme which states:

    "Powers of the court in relation to an award ... In such cases ... the Arbitration Bill shall apply",

he will be completely lost. I share the view expressed by my noble friends that the scheme needs to be completely rewritten, bearing in mind how such a contractor would feel when faced with such wording.

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