Practical Law

Regular readers of this column will note that I have, on numerous occasions over the last three years, set out my views on an adjudicator’s actions (whether in terms of what they have or have not done, or have or have not decided). Well this post is no different.

Just a few weeks ago I wrote about why I thought it was fair that adjudicators should get paid, even when their decisions were unenforceable. I know not everyone shares that view and after receiving some well-made responses to my post, I’m now wondering whether I should clarify it and say “yes, but…” in true lawyer style, since I’m beginning to think that, like all things, there must be exceptions to that rule. The judgment in Carillion v Smith also interested me and, in particular the timing of the decision in the context of a Part 8 application.

Carillion v Smith

Under the parties’ 2000 sub-contract, disputes were to be referred to adjudication under the rules of either CEDR or ORSA (now TeCSA). When the third referral was made in September 2011, that means either version 3.1 of the TeCSA rules, or the September 2008 CEDR rules. The judgment doesn’t say which were adopted, although I don’t think it matters too much, as both:

• Give the adjudicator wide powers to establish the timetable and procedure of the adjudication (paragraph 17 of TeCSA and paragraph 8 of CEDR).
• Are silent on what should happen if the parties agree amongst themselves to vary the adjudication timetable.

Adjudicator invited to resign

Shortly after receiving Mr Smith’s adjudication notice, Carillion challenged the adjudicator’s appointment, arguing that the same or substantially the same dispute had been referred to adjudication previously. The third adjudicator was invited to resign (he’d also been the adjudicator in the first adjudication between the parties).

It isn’t uncommon for adjudicators to continue in the face of resignation requests. Here the judgment notes that the adjudicator was “not… minded to step down”. It doesn’t set out why he felt he had jurisdiction to continue, but he must have done and that is what he did. Parties may feel that is unfair, but unless they go off to court during the adjudication to argue about it, there is little they can do but reserve their position and press on with defending the adjudication, saving the challenge arguments for another day.

Part 8 application

Carillion felt strongly enough on this occasion to apply to court for a number of declarations, including one about the adjudicator’s jurisdiction (or lack of). After being “partly encouraged by the court”, Mr Smith agreed with Carillion that in order to save costs, the adjudicator should hold back from issuing his decision until after the Part 8 hearing.

Akenhead J’s judgment sets out a detailed consideration of the issues raised in the second and third adjudications and concludes that the adjudicator lacked jurisdiction because the same or substantially the same dispute had been heard in the second adjudication. Carillion got the declaration it sought.

Adjudicator went ahead and issued decision

So far, none of this is particularly unusual. The standout feature for me is the comment in paragraph 52 of the judgment that the adjudicator issued his decision on 31 October, which was a few days after the Part 8 hearing, but before the judgment was handed down.

The judgment notes that the adjudicator wasn’t bound by the parties’ agreement that his decision should be deferred. Perhaps I should add that the judgment doesn’t mention whether he knew about the agreement, although if not, I wonder why not? I’d be surprised if either party had overlooked that particular bit of correspondence when dealing with the adjudicator. In my experience, adjudicators rarely suffer from a lack of information, particularly over such important issues as the adjudication timetable.

If an adjudicator is told that the parties have agreed that he should not issue or reach his decision pending the outcome of the Part 8 proceedings, I’m at rather a loss as to why a decision would be issued. In my experience, the parties often agree variations to the adjudication timetable. That is their right. If the parties agree to extend time and/or that the decision should not be issued, it is not usually for an adjudicator to insist on something else and to issue his decision in any event.