REUTERS | Yves Herman

A sea change in adjudication enforcement?

Are we witnessing a sea change in the Technology and Construction Court’s (TCC) approach to the enforcement of adjudicators’ decisions? Two recent TCC decisions suggest we may be. In both cases, the TCC took giant steps in developing adjudication enforcement practice. It is no coincidence that both cases were heard by Mr Justice Edwards-Stuart.

The question is, are we ready for such a big change?

(The two decisions

Earlier this month, Fionnuala McCredie and William Webb of Keating Chambers wrote about the judgment in Geoffrey Osborne Ltd v Atkins Rail Ltd. This week, Jonathan Lewis of 4 Pump Court has shared with us an unreported judgment in Anrik Ltd v AS Leisure Properties Ltd.)

The common law develops: adjudication enforcement

The common law develops through case law. The judicial development of common law in recent times did not start or end with one man, but mention judicial activism and Lord Denning may come to mind. He was as famous for his judgments being overturned by the House of Lords as he was for his dislike of the doctrine of precedent and his development of the common law. In Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130, when discussing the doctrine of promissory estoppel, he said:

“But what is the position in view of developments in the law in recent years? The law has not been standing still…”

Adjudication enforcement is a modern-day arena where the common law is not standing still. Although the Construction Act 1996 has not changed (yet), the common law connected with it has developed considerably since May 1998, when the Act came into force. Three examples of developing areas are:

  • Severing one part of an adjudicator’s decision.
  • Staying the execution of summary judgment to enforce an adjudicator’s decision.
  • Using CPR Part 8 before, during and after adjudication.

In each of these areas, Mr Justice Edwards-Stuart has surprised commentators.

Severing an adjudicator’s decision

In a series of obiter comments, Akenhead J has begun to move beyond “simple” enforcement and has begun to develop the principle that an adjudicator’s decision may be severed by the court on enforcement, if the circumstances are right. He has described this as “severing the good from the bad” (Cantillon Ltd v Urvasco Ltd). As yet, the right circumstances have not been before Akenhead J.

However, despite Akenhead J’s caution, in Geoffrey Osborne, Mr Justice Edwards-Stuart decided that he could sever one part of the adjudicator’s decision from the remainder, in what was one of the first adjudication enforcement cases he heard.

Staying execution of the judgment

The TCC has routinely refused to stay enforcement proceedings, save in exceptional circumstances, instead upholding the principle that an adjudicator’s decision should be enforced as part of the “pay now, argue later” doctrine introduced by the Construction Act 1996 (Macob Civil Engineering Ltd v Morrison Construction Ltd).

However, in Anrik, Mr Justice Edwards-Stuart has again entered the fray and suggested that a person applying for a stay of execution may need to satisfy a threshold test, which requires the court to investigate the merits of the underlying dispute before granting/rejecting the stay application.

Using CPR Part 8 to finally determine an issue

The idea of finally determining an adjudication dispute, or part of it, using CPR Part 8 is nothing new. Part 8 has been used by parties with increasing frequency over the last few years. (Recently, in Fenice Investments Inc v Jerram Falkus Construction Ltd, Coulson J suggested that the parties should be using Part 8 to resolve certain issues between them after the adjudicator’s decision has been issued). However, as long ago as 1999, in Bouygues UK Ltd v Dahl-Jensen, Bouygues sought a declaration under Part 8 in relation to the adjudicator’s jurisdiction.

Therefore, at first glance, Mr Justice Edwards-Stuart has suggested nothing new in Geoffrey Osborne. However, his comments in his key note presentation at a recent TECBAR meeting suggest we may start to see a different and more robust interpretation of what the court can do on a Part 8 application. His presentation, in part, looked at the Court of Appeal’s decision in Bouygues v Dahl-Jensen and the development of the principle that a court will enforce an adjudicator’s decision, even if he makes a mistake, provided the adjudicator answers the right question. (If he answers the wrong question, he has no jurisdiction and the decision will not be enforced.)

In his presentation, Mr Justice Edwards-Stuart noted in Bouygues v Dahl-Jensen that:

  • The Part 8 application for declarations was limited to whether the adjudicator had exceeded his jurisdiction because the parties’ contract included an arbitration clause. As such, the parties could not ask the court for a final declaration about the correctness of the adjudicator’s decision: that would be a matter for an arbitrator.
  • Without the arbitration clause, the parties could have asked the court to determine the issue of Dahl-Jensen’s entitlement to the retention, as this raised no disputed questions of fact and was suitable for Part 8.

He ended his presentation by discussing the Part 8 application in Geoffrey Osborne, where he determined the question of whether one party was entitled to payment otherwise than under a certificate. It was common ground that the adjudicator had made a mistake and, apparently, the payment mechanism of the contract question raised no disputed issues of fact. Interestingly, both his judgment and presentation did not mention that what he actually did was sever the adjudicator’s decision.

He ended with a slide that included this closing comment:

“It is, in my view, an essential requirement that the court is in a position to substitute a decision for the decision of the adjudicator – it is not enough to be able to say that it is wrong.”

A new era?

It is too soon to say that this is a new era for the TCC on adjudication enforcement. However, perhaps we would be wise to continue to expect the unexpected – at least for the time being.

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