Speak now, or forever hold your peace: Challenging adjudicator's decisions

Speak now, or forever hold your peace: Challenging adjudicator's decisions

Court of Appeal: employers beware employees bearing secrets

A recent decision in the TCC serves as an important reminder that if a party is dissatisfied with an adjudication decision, it should not delay in making its challenges to the decision, especially if involved in serial adjudications.

The case of Prater Ltd v John Sisk and Son (Holdings) Ltd [2021] EWHC 1113 (TCC)) concerned a challenge to an adjudicator’s jurisdiction based on alleged invalidity of a previous adjudicator’s decision.

Background

The defendant, Sisk, had engaged the claimant, Prater, under an NEC3 Engineering and Construction sub-contract to carry out works to a new Boeing Fleet aircraft maintenance hangar, office and plant room at Gatwick Airport.

The parties had been involved in a series of adjudications arising out of the sub-contract and this case concerned the application for Summary Judgment for the enforcement of the fourth adjudication decision, the only adjudication whereby payment was sought as a remedy.

In Adjudication No. 1, Prater sought an amendment to the sub-contract completion date and the adjudicator decided that Prater was entitled to an adjustment to the completion date by four months.

In Adjudication No. 2, Prater sought decisions on various matters including the correct completion date following the decision in the first adjudication, the status of provisional sums and Sisk’s entitlement to deduct indirect losses from sums due.

In Adjudication No. 3, Sisk sought a declaration that certain compensation events claimed by Prater were not compensation events under the sub-contract.

In Adjudication No. 4, Prater sought payment of the sum of around £2.25m plus VAT, following Decisions 1-3. The adjudicator awarded Prater the sum of £1.75m plus VAT. This decision was in part, based on the findings made in the second adjudication.

Prater then applied to the court to enforce the fourth decision.

Sisk defended the application claiming that the adjudicator had no jurisdiction to reach the decision he did in adjudication No. 2 because Prater had referred multiple disputes rather than a single dispute. It is well established that only a single dispute may be referred to adjudication in any one referral, unless otherwise agreed.

Sisk argued that as the adjudicator had no jurisdiction to decide adjudication No. 2, he also did not have jurisdiction to decide as he did in adjudication No. 4, because the decision was party based on No. 2, which was invalid.

Decision

The Judge was not persuaded by Sisk’s arguments, referring to WC2.4(2) of the sub-contract which stated:

“If, after the Adjudicator notifies his decision a Party is dissatisfied, that Party may notify the other Party of the matter which he disputes and state that he intends to refer it to the tribunal. The dispute may not be referred to the tribunal unless this notification is given within four weeks of the notification of the Adjudicator's decision.”

Sisk had served a Notice of Dissatisfaction in relation to Decision 2 but had not taken any further steps to refer Decision 2 to the Tribunal, in this instance, the court. Accordingly, pursuant to Clause W2.3(11) which stated “The Adjudicator’s decision is binding on the Parties unless and until revised by the tribunal and is enforceable as a matter of contractual obligation between the Parties…..” the judge decided that Decision 2 remained (albeit potentially temporarily) binding on the Parties. This reflected the usual position under section 108(3) the Housing Grants, Construction and Regeneration Act 1996 (the 1996 Act). The judge noted that it is trite law that an adjudicator in a subsequent adjudication cannot re-open matters decided in an earlier adjudication. Indeed, were he to do so that would render the decision in the subsequent adjudication a nullity. If Sisk wanted to avoid the findings in Adjudication 2 being relied upon in a subsequent adjudication it was incumbent on Sisk not only to issue a Notice of Dissatisfaction under WC2.4(2) but to refer its challenge to the court. The judge went on to order summary judgment.

Separately, the court went on to consider (on an obiter basis) the contractor's jurisdictional challenge to decision No. 2. The judge concluded that whilst various matters were included in the second adjudication referral, all the issues raised were issues going to the determination of a single dispute.

The case reminds us that if a party to an adjudication wishes to challenge the validity of a decision, it must raise its objections without delay, otherwise, the adjudicator’s decision will be binding on the parties, and subsequent adjudicators will be bound and their decisions will be enforceable.

 

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