REUTERS | Ina Fassbender

Can you waive your right to adjudicate “at any time”?

Most people would think the answer to this question is “no”. Me too. However, I saw an interesting case report by McGrigors LLP  recently, which suggests not everyone thinks the answer is “no”.

McGrigors were reporting on a Scottish case: Phoenix Contracts (Leicester) Limited v Central Building Contractors (Glasgow) Limited t/a CBC Stone (Glasgow Sheriff Court, 24 June 2009, unreported). Phoenix argued that CBC had lost its right to adjudicate because it had waited too long before starting an adjudication. (CBC had started a claim in the Glasgow Sheriff Court in October 2008 and, by the time it issued a Referral Notice in June 2009 (referring the same dispute to adjudication), the parties were less than 2 months from trial.)

Phoenix asked the court to grant the Scottish equivalent of an injunction to stay the adjudication, arguing that CBC had waived its right to adjudicate because it had started court proceedings and then referred the same dispute to adjudication late in the day.

Despite the statutory nature of the right to refer a dispute to adjudication “at any time”, it appears the Sheriff thought there could be exceptions to this right – a party could waive its right to adjudicate – and the Sheriff granted the injunction. In reaching this conclusion, the Sheriff reviewed CBC’s actions and found 3 factors that were particularly relevant:

  • The court proceedings were well advanced when the matter was referred to adjudication.
  • The value of the claim was low (about £40,000).
  • CBC was unlikely to enforce the adjudicator’s decision before judgment was issued in the court action.

McGrigors’ bulletin goes on to explain that this decision was successfully appealed; CBC had not lost its right to adjudicate, and that leave to appeal to the Inner House of the Court of Session has been given, so the story could continue.

In the meantime, what does this mean for adjudication in England and Wales?

It is unlikely that this decision will impact on the well established principles from:

  • Cape Durasteel v Rosser, that the court has an inherent jurisdiction to stay court proceedings if started in breach of an agreement to adjudicate.
  • Hershel v Breen, that the court will refuse to grant an injunction to restrain an adjudication started when court proceedings are ongoing.
  • DGT Steel v Cubitt, that if there is a binding adjudication agreement, it is for the party who started the court proceedings to show good reason why the court should not exercise its discretion and grant a stay of those proceedings.

That said, if the Inner House of the Court of Session agrees with the Sheriff, that decision may be persuasive in English courts. But that’s a story for another day.

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