Adjudication: whether I’m right or wrong?
Shona McCusker on the English Technology and Construction Court’s decision in a construction case dealing with the difficulties in challenging enforcement of an adjudicator’s decision.
The English Technology and Construction Court’s (“TCC”) recent decision in Vinci Construction Limited v Beumer Group UK Limited serves as a reminder to the construction industry of the difficulty in challenging enforcement of an adjudicator’s decision. The TCC confirmed that whether an adjudicator’s decision is right or wrong is not a matter for the court to consider during enforcement proceedings. This blog considers the decision and the options available if you think an adjudicator’s decision is on the wrong side of right.
Vinci engaged Beumer under an NEC 3 Engineering and Construction Sub-Contract (with amendments) to, among other things, design and install a baggage handling system forming part of the new Pier 1 at the South Terminal of Gatwick Airport.
Vinci issued a payment certificate to Beumer claiming £9.67m of liquidated damages. Beumer did not pay and Vinci referred the matter to adjudication. By this point, Beumer had already raised six separate adjudications against Vinci in relation to the works. The same adjudicator heard three of the adjudications including the one referred by Vinci.
The adjudicator found in Vinci’s favour ordering Beumer to pay the £9.67m. Again, Beumer did not pay and Vinci raised enforcement proceedings in the TCC. Beumer challenged the enforcement proceedings on natural justice grounds claiming that:
- The adjudicator’s decision was inconsistent with his findings in the previous two adjudications before him;
- The adjudicator failed to provide proper reasons for his decision; and
- The adjudicator failed to order Vinci to disclose information from a previous adjudication.
The TCC rejected all three of Beumer’s arguments.
The TCC also noted that whether the adjudicator’s decision is right or wrong is of no concern to the court in enforcement proceedings. This principle is not new but none the less it remains a bitter pill to swallow for a party that believes the adjudicator has got it wrong.
What are the options?
The courts take a robust approach to upholding an adjudicator’s decision unless the decision is outside the adjudicator’s jurisdiction or there has been a breach of natural justice. A decision will be outside the adjudicator’s jurisdiction if it purports to decide a matter that was not referred in the adjudication. A breach of natural justice may occur if the adjudicator has been biased, failed to act impartially or there is a procedural irregularity. These are high hurdles to surmount.
Where there are no jurisdiction or natural just points to take, the only option for the losing party is to re-run the arguments in either arbitration or court proceedings. Whether Beumer will do this remains to be seen however given the contentious relationship between the parties to date, it seems a distinct possibility.
- If you are involved in multiple related adjudications, take care to ensure they do not overlap or seek a decision more than once on the same issue.
- Before deciding not to comply with an adjudicator’s award, consider the cost implications of enforcement proceedings. Ask whether there is a basis to challenge enforcement proceedings if the adjudicator’s decision is outside his or her jurisdiction, or if the adjudicator has adhered to the rules of natural justice.
- Arguments in enforcement proceedings that imply an adjudicator’s decision is wrong are irrelevant and running them will not win favour with the judge.
- If you decide to re-run the arguments in arbitration or court proceedings, pay close attention to the cost : reward ratio. Ask whether the time and cost will likely be outweighed by the potential reward. If not, points of principle can be costly!
Shona McCusker is an Associate in the Infrastructure, Construction and Energy disputes team at CMS firstname.lastname@example.org.