Barhale Limited v SP Transmission Plc [2021] CSOH 2
Successful challenges to an adjudicator’s jurisdiction are like buses it seems – you get none for ages and then two come along at once. Following hot on the heels of the Global Switch Estates case we discussed in January comes an interesting decision from the Scottish courts which also addresses jurisdiction and the enforceability of an adjudicator’s decision, Barhale Limited v SP Transmission Plc.
In this one the parties disagreed over the extent of excavation works required under their contract and how the works should be valued. Barhale commenced an adjudication, and the adjudicator twice emailed the parties setting out what he considered to be the principal question he had to answer: did the Works Information require the bulk excavation and filling work that was undertaken by Barhale, or not? SP Transmission addressed the question on both occasions arguing that in their view the dispute regarded the contractual method of measurement, but the adjudicator maintained that the primary question to answer was whether the Works Information instructed the bulk excavation. He decided in Barhale’s favour, awarding £196,000.
In the subsequent enforcement proceedings before Lord Tyre, SP Transmission argued that the adjudicator had failed to exhaust his jurisdiction because he did not consider its measurement argument. While Barhale accepted that a failure to exhaust jurisdiction could make a decision unenforceable, it argued (relying on the decision in Pilon Ltd[1]) that that could only happen if the failure was deliberate rather than inadvertent.
The court considered how previous cases have addressed the distinction between deliberate and inadvertent failure to address an issue, noting that such a distinction had not been expressly drawn in either Bouygues[2] or AMEC v Thames[3]; the distinction had instead been between not answering the right question at all and answering the right question but in the wrong way. Lord Tyre ultimately favoured the approach in the decision in Field Systems[4], that the pertinent question is whether the adjudicator has effectively addressed the major issues raised by either side.
Applying that principle to the facts he considered that the adjudicator had not effectively addressed one of the four issues raised for determination – how the work undertaken by Barhale was to be measured – which was a central point in SP Transmission’s case, as it had emphasised on several occasions, including in correspondence with the adjudicator. In not addressing that argument the adjudicator had failed to exhaust his jurisdiction, meaning his decision was unenforceable. While Lord Tyre considered it was unnecessary for such a failure to be deliberate, he judged that in this case it probably was, given the adjudicator’s terse response to SP Transmission in their communications regarding the question he was required to address.
Although this is a Scottish case it seems likely that the same logic would be followed by the English courts – it is not necessary for an adjudicator to reach the right answer for their decision to be enforced, but they must at least consider all the important questions.
[1] Pilon Ltd v Breyer Group plc [2010] BLR 452
[2] Bouygues UK Ltd v Dahl-Jensen UK Ltd [2000] BLR 522
[3] Amec Group Ltd v Thames Water Utilities Ltd [2010] EWHC 419 (TCC)
[4] Field Systems Designs Ltd v MW High Tech Projects UK Ltd [2020] CSOH 17
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