Adjudicators have a statutory duty to “act impartially”. But, in contrast to arbitrators, the adjudicator has no such duty to act fairly or to adopt procedures ensuring a fair means of resolving the dispute. Nonetheless, the Court of Appeal decision in AMEC Capital Projects Ltd v Whitefriars City Estates Ltd made it clear that adjudicators have a duty to act in accordance with the rules of natural justice.

If an adjudicator is found to have acted in breach of the rules of natural justice, the court will not enforce their decision. There is, however, a comparatively high bar for such a breach to be found. The Court has always placed a great deal of importance on respecting the principles behind the statutory scheme governing adjudication; timely resolution of disputes and the provisional nature of adjudicators’ decisions. As Chadwick LJ stated in Carillion Construction Ltd v Devonport Royal Dockyard [2005] EWCA Civ 1358:

“The objective which underlies the Act and the statutory scheme requires the courts to respect and enforce the adjudicator’s decision unless it is plain that the question which he has decided was not the question referred to him or the manner in which he has gone about his task is obviously unfair. It should be only in rare circumstances that the courts will interfere with the decision of an adjudicator.”

In the recent case of Corebuild Ltd v Cleaver and another [2019] EWHC 2170 (TCC) it was determined that there was such a rare set of circumstances and summary judgment on enforcement of an adjudicator’s decision was refused on the basis there was a material breach of natural justice.

Background

The underlying facts are project specific and not of wider interest, save to note that they involved works done under a building contract which was terminated by the claimant. The claimant then successfully adjudicated against the defendants and was awarded £80,000. The defendants resisted enforcement proceedings and the claimant sought summary judgment.

The defendants argued that summary judgment should be refused as the adjudicator had breached the rules of natural justice by asking himself the wrong questions and not considering all the defendants’ submissions. They further argued that the decision was based on an argument not raised by the claimant and which the defendants had no chance to address.

Decision

Mr Adam Constable QC agreed that the adjudicator had breached the rules of natural justice and dismissed the application for summary judgment. Accordingly, the adjudicator’s decision was not enforced.

Mr Constable reached his decision on the basis that the defendants “were not given the opportunity to address the adjudicator, because the adjudicator’s decision was based upon a point not argued by the Claimant and not canvassed by the Adjudicator.” In determining that point, Mr Constable set out the following principles, in accordance with Cantillon Limited v Urvasco Limited [2008] EWHC 282:

(a) It must be established that the adjudicator breached the principles of natural justice;

(b) Any breach must be material;

(c) Breaches will be material if the adjudicator has failed to bring a decisive point, or one of potential considerable importance, to the attention of the parties;

(d) Whether the point is decisive or of potential importance is a question that must be judged on a case-by-case basis; and

(e) It is only if the adjudicator goes off on a frolic of his own, i.e. wishing to decide a factual or legal basis that has not been argued by either side, that the breach of natural justice would put the adjudicator’s decision in doubt.

Although Mr Constable had some sympathy with the defendants’ criticisms of the brevity with which the adjudicator dealt with some of the submissions, this by no means amounted to the adjudicator asking the wrong questions. He made clear that, so long as the adjudicator generally endeavoured to ask the questions that were central to the matter in question, then just because he may have answered incorrectly does not mean that there has been a breach of natural justice.

Implications

The case does not make significant changes to the law concerning adjudication and natural justice, but it serves as a useful example of how it can come into play.

This case also reinforces the high bar that must be met in order for an adjudicator’s decision not to be enforced as a result of a breach of natural justice. An adjudicator simply getting the answer wrong does not amount to a breach of a material justice.

Practical tips

In this case, both parties represented themselves in person, but unfortunately for the claimant the defendant happened to be a leading barrister. This case serves as a reminder that legal expertise can be crucial in securing, or indeed resisting, adjudication awards.

The case also serves as a reminder of the importance of reading an adjudicator’s decision carefully, to determine whether there is any basis for challenging that decision (noting that this is unlikely to be the case in the vast majority of decisions).

Justin Mendelle is a Partner and Head of Construction at Sharpe Pritchard and advises on all aspects of construction adjudications. Michael Comba is a Trainee Solicitor working in the Construction Team.

This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published.


The Court of Appeal’s decision in Triple Point Technology v PTT [2019] EWCA Civ 230 has cast some doubt on the decision in last year’s case of GPP Big Field LLP v Solar EPC Solutions SL [2018] EWHC 2866, which had accepted that liquidated damages clauses may continue to accrue beyond contract termination.


Background:

The University of Warwick (Warwick) contracted Balfour Beatty Group Ltd (Balfour Beatty) under an amended JCT 2011 D&B to design and construct the National Automotive Innovation Centre (the Centre). The works were split into 4 sections. Balfour Beatty took possession of each of these sections on the 20 April 2015. However, the dates for completion specified for each section varied – section 1-3 were to be completed by April 2017 but section 4 had a later completion date of July 2017. Warwick was entitled to recover liquidated and ascertained damages (LADs) in circumstances where Balfour Beatty did not achieve Practical Completion, with different rates of LADs applied per section.


Background:

GPP Big Field LLP (“GPP”) was the Employer to 5 Engineering, Procurement and Construction contracts (“EPC contracts”) to build solar plants in the UK. The Contractor, Prosolia UK Ltd, is currently insolvent and therefore GPP sued its parent company, Solar EPC Solutions SL (“Solar”) as guarantor in order to recover both liquidated damages (“LDs”) and unliquidated damages for aspects of the Works which were late or non-completed.

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