Skanska blasted for referral fee

Skanska is demanding that its subcontractors hand over at least £10,000 as a down payment if they lodge any form of adjudication proceedings against the company.

In a subcontract form from the main contractor, obtained by CJ, the company states in Part 8 of the agreement that the “minimum level of initial payment on account of the adjudicator’s fees and expenses” will be £10,000.

Skanska goes on to state in the document that the payment should be made “within seven days of the appointment of an adjudicator”.

The company also makes it unclear in the text whether any subcontractor lodging a dispute against the company will see any of its £10,000 returned, whether successful in their challenge or not.

Presented with the subcontract by CJ, Specialist Engineering Contractors’ Group chief executive Rudi Klein labelled the agreement a “disgrace” and questioned whether the document is in fact legal.

“This document is shocking and I would advise any subcontractor looking to sign this document to work with Skanska to put their pen away and walk away. This agreement is a complete farce. I also wonder whether it is in fact legal. Under the Construction Act, it states that a company has a right to go to adjudication at any time, with no pre-conditions.

“The terms are terrible. For example, if you were a subcontractor looking to claim back say £2,000 in retentions, you would have to fork out £10,000 before your case is even heard.

“Skanska is using this clause as a deterrent against adjudication action. Even more worrying is the fact that Skanska works on a lot of public sector contracts. How has this been allowed to happen, with the government trying to promote best practice, and what is the government going to do about this?”

In a statement, Skanska said: “Some four to five years ago, Skanska introduced into its standard dispute resolution procedure a clause whereby the referring party, whether it be Skanska or the other party, makes a payment on account of £10,000 to the adjudicator. 

“This offers a level of protection and assurance to any adjudicator and reflects what is becoming standard practice, in that adjudicators now normally require payment of their fees and expenses in full by the referring party, prior to releasing their decision.”

However, Adrian Gibbs, group director of the Confederation of Construction Specialists, told CJ: “This subcontract is unlawful and is intimidating.

“It goes against the spirit of the Construction Act as it has a pre-condition for the start of adjudication proceedings. I am very concerned by this.”